DebtBusters' Q2 2025 Debt Index reveals that, on average, South Africans use 70% of their take-home pay to service debt. The ratio increases to 138% for individuals taking home over R20,000 a month and 185% for those earning R35,000 or more. The report also maps out the rapid debt accumulation that occurs during key millennial life stages, with individuals born between 1980 and 1999 now representing a combined 66% of all people applying for debt counselling.
Afua Darko, business head of Sanlam Credit Solutions, notes that, while often viewed with apprehension, debt counselling is emerging as a powerful yet underutilised lifeline for millennials seeking to regain control and build a stable financial future.
“Debt has become a necessary income supplement for many millennials. The challenge is that they were aggressively exposed to credit from a young age without the accompanying financial education. That's why we've made it our mission to bridge that literacy gap, transforming credit from a source of stress into a tool for sustainable growth.”
The millennial debt trap
The financial burden carried by millennials is not due to a single cause but rather a perfect storm of economic factors. The DebtBusters Index highlights that since 2016, the cumulative impact of inflation stands at 51%, meaning today's pay packet buys 49% less than it did just eight years ago. This decline in purchasing power has occurred during a period where credit has become more accessible than ever.
Darko says millennials came of age when credit cards and store accounts were front and centre, often marketed to build a credit history. “The reality is that without understanding how to manage it, this early exposure can quickly lead to a debt spiral. Add pressures like ‘black tax' and unforeseen life events to salaries that aren't keeping pace with inflation, and you have a generation running to stand still.”
Shifting the narrative from last resort to proactive strategy
A significant barrier preventing more millennials from seeking help is the persistent stigma surrounding debt counselling. It's often mistakenly seen as a financial failure or a permanent black mark on one`s record, a perception that Darko is keen to change.
“We need to shift the narrative. Entering debt counselling is not a failure; it's a proactive and courageous decision to take control of your finances. I've always compared it to starting a new health kick. It requires discipline, focus, and hard work over a set period, but the life lessons you learn and the financial fitness you achieve are transformative. No one is writing reviews about the positive, life-changing lessons learned, so those stories often go unheard.”
She adds that this process empowers individuals by restructuring their debt into a single, affordable monthly payment. It provides legal protection from creditors and, crucially, forces a fundamental re-evaluation of one`s budget, instilling habits that last a lifetime.
How debt counselling rebuilds financial futures
The debt counselling process is a structured journey back to stability, built on transparency and practical planning.
Darko explains: “The first step is a detailed, line-by-line budget. Debt counsellors consider everything from rent and groceries to subscriptions and transport. This income, living expenses, and total debt assessment is often an eye-opener, revealing exactly where money is going.“
From there, a debt counsellor negotiates with creditors on the client's behalf to reduce interest rates and extend repayment terms, formulating a manageable repayment plan. South Africans can access this service through registered debt counsellors like DebtBusters.
According to the National Credit Act, the process involves regulated fees for application and restructuring, but these costs are built into the new, reduced monthly instalment. For example, if someone`s current monthly instalments equal R2,000, their debt counsellor may reduce this to R1,500 per month, where R1,400 will be sent to their creditors, and R100 will count as their debt counselling fees.
“The beauty of this process is that you come out with a clean slate and, more importantly, a completely reconditioned mindset towards money. You`ve spent years living within a strict budget, distinguishing between needs and wants, and seeing your debt balances decrease every month. You emerge debt-free and with the skills to manage your finances confidently for the rest of your life.”
The power of seeking help early
Perhaps the most critical message for millennials feeling the financial squeeze is the importance of early intervention. Too often, people wait until their situation is dire, at which point options can become limited.
“One of the most heartbreaking things is speaking to someone who has waited too long, whose situation has become so severe that even debt counselling can't provide a sustainable path forward. It should never be a last resort. The time to seek help is if you`re feeling the pinch and your current methods of keeping your head above water are no longer working.”
Millennials have an opportunity to achieve financial freedom
Sanlam Credit Solutions provides the tools and support for this journey. By blending innovative technology, such as an AI-powered credit coach, with the essential human element of dedicated financial experts, the platform empowers South Africans to understand their credit, manage their debt, and plan for a more secure future.
Darko concludes: “Ultimately, financial freedom is about having choices. Debt counselling is a powerful tool that gives millennials the option to break the cycle, rebuild their finances, and step into a future defined by confidence, not by credit.
https://www.news24.com/brandstory/partner-content/millennials-drowning-in-debt-why-70-of-their-salaries-go-to-repayments-20251007-0819
