Digital financial education: preparing young people for responsibility in South Africa

Financial education is an essential tool for economic empowerment and the building of a more equitable society. Here in South Africa — a country historically shaped by deep inequalities and financial exclusion — this kind of knowledge is even more critical.

In a context where access to credit is growing rapidly and digitalisation is reshaping financial relationships, equipping young South Africans to make informed decisions has become a matter of urgency.

This article explores the role of digital financial education in empowering young people, highlighting its social and economic impacts, the main challenges faced, and innovative solutions — such as the use of technology — to spread knowledge and promote responsible credit habits from an early age.

The state of financial education in South Africa

Despite technological progress and increased access to banking services, South Africa still faces a concerning gap when it comes to financial literacy. Various studies show that a significant portion of the population lacks the basic knowledge needed to manage personal finances — such as creating a budget, avoiding excessive debt, or understanding how credit works.

This gap contributes to high levels of indebtedness, low savings rates, and reliance on informal lending sources — often with exorbitant interest rates.

The lack of financial education makes young people particularly vulnerable, as many enter adulthood without any preparation to deal with decisions that directly affect their financial futures.

The role of financial education in youth empowerment

Financial education is a cornerstone of individual empowerment. By understanding the concepts of budgeting, credit, saving, and investing, young people gain the autonomy to make informed decisions, avoid financial pitfalls, and build a stable future.

Incorporating financial education into school curricula can be transformative. Young people who learn how to manage money early on are more likely to become adults who are financially responsible and capable of planning for the long term. This not only improves their personal lives but also helps reduce economic disparities.

Beyond the classroom, the active involvement of parents and guardians is essential. Encouraging children to save part of their pocket money, teaching them the value of money, and involving them in discussions about the family budget can instil healthy financial habits from an early age.

Digitalisation as an ally of financial education

In a country with high mobile device penetration, technology stands out as a powerful ally in democratising access to financial education. Digital platforms, mobile apps, and online courses have made learning more accessible and interactive — even for young people in remote communities or with limited access to formal institutions.

Tools like Moneyversity+, created by Old Mutual, are excellent examples. The platform offers courses, videos, articles, and simulators tailored to different levels of financial literacy — from beginner to advanced. One of its standout features is content specifically designed for younger audiences, including gamified tools and a special section for children, encouraging early engagement with financial learning.

These digital solutions enable young people to learn about credit, compound interest, financial planning, and the risks associated with debt in a practical and locally relevant way.

Responsible credit and the risks of misinformation

As young South Africans gain greater access to financial products — such as credit cards, microloans, and financing options — the risk of misusing these tools also increases. A lack of understanding around interest rates, contracts, repayment terms, and credit scores can lead to chronic debt.

The overuse of informal lending, which is common in underbanked areas, worsens the situation. Many young people turn to these mechanisms without fully understanding the consequences, often finding themselves trapped in cycles of debt with exorbitant interest rates and unfavourable terms.

Digital financial education must therefore focus not only on how to access credit, but also on how to do so strategically and responsibly. Teaching how compound interest works, for example, is key to helping young people grasp both the potential of investments and the dangers of poorly planned borrowing.

Compound interest: from risk to opportunity

Compound interest is a powerful tool — both for building wealth and for financial downfall. That’s why understanding how it works should be a central focus of digital financial education.

Practical example:

• A young person invests R1,000 at an annual return of 5%.
• After one year: R1,050
• After two years: R1,102.50
• After three years: R1,157.63

This steady growth illustrates the potential of compound interest when it comes to saving and investing.

On the other hand, if the same young person takes out a loan with compound interest without understanding its implications, the debt can increase rapidly, putting long-term strain on their income.

The key is to show how time and consistency can be powerful allies — when used strategically, especially in the context of credit.

Encouraging youth entrepreneurship and access to productive credit

Financial education also plays a key role in preparing young people to become entrepreneurs. As in many parts of the world, digital entrepreneurship is gaining traction in South Africa as a pathway to financial independence — especially among younger generations. With access to online platforms and mobile payment tools, it is possible to launch small businesses at low cost and with wide reach.

However, the success of these ventures largely depends on the ability to manage financial resources and make informed decisions about credit, investment, and risk management. Credit can be a powerful driver of growth — but only if used responsibly and strategically.

Educational platforms should include content geared towards entrepreneurship, teaching young people how to draw up a business plan, calculate costs, understand cash flow, and negotiate with financial institutions.

The role of insurers and financial protection

Another often-overlooked aspect is risk management. For young entrepreneurs or informal workers, Trade Credit Insurance (TCI) can be a vital tool.

This type of insurance protects against losses caused by customer non-payment. In South Africa, where the economic environment is volatile and exchange rate fluctuations directly affect businesses, TCI offers an important layer of stability and viability.

Introducing young people to these protection mechanisms — even at a basic level — broadens their understanding of financial risks and helps build a culture of planning and economic resilience.

Challenges and solutions to expanding access to financial education

Despite the progress made, several challenges remain. Among them:

• Inequality of access: Rural and marginalised communities often lack access to digital educational resources.
• Culture of financial exclusion: Some believe that financial education is only relevant for people with high incomes.
• Lack of contextualisation: Many programmes fail to consider the cultural and economic realities of local communities.

To overcome these challenges, it is essential to:

• Personalise content – tailoring it to the language and needs of different social groups (youth, women, low-income families, etc.).
• Broaden partnerships – bringing together government, the private sector, schools, and NGOs.
• Invest in digital infrastructure – expanding internet and mobile connectivity in remote areas.
• Demystify the content – making the language more accessible and the learning process more practical.
• Include financial education in formal education – from primary through to higher education.

Conclusion

Digital financial education is more than just a strategy for economic literacy — it is a tool for social transformation. For African countries, preparing young people for responsible credit use means investing in a fairer future, with more informed citizens, better-equipped entrepreneurs, and a more resilient economy.

Technology has the potential to break down barriers and accelerate this process. It is up to governments, schools, businesses, and society as a whole to create an ecosystem where learning about finances becomes a natural part of growing up. With the right information, planning, and support, young South Africans can not only avoid unnecessary debt, but also become drivers of their own economic development.