Investigating the attitudes of young employed graduates towards debt management

Abstract

The purpose of this study was to investigate the attitudes of young employed graduates towards debt management. Literature has observed that young graduates in emerging economies are highly indebted and thus consequently prolong or increase the time they need to accumulate wealth. Young graduates are perceived to have a potential to earn high income and have access to excessive debt while socially pressured to live a life of high social status, which may lead to taking on debt to finance their current lifestyle. This study therefore establishes the causes of high incidence of debt among employed young graduates in the Gauteng Province, South Africa. This study adopted a mixed method approach using a sequential explanatory design where the quantitative phase was firstly conducted through a Likert scale questionnaire that was distributed to 150 young graduates employed and residing in Gauteng Province. This was followed by the qualitative phase where interviews were conducted with 15 young graduates from the quantitative phase. Quantitative data was statistically analysed using the Statistical Package for Social Science (SPSS) and Statistical Analysis System (SAS), while qualitative data was analysed through open coding with the aid of ATLAS.ti, findings were interpreted and discussed. The main findings indicate that young graduates are raised in a credit-led environment where they have easy access to debt, and they possess little or no financial literacy, which leads to the increase in the use of debt when they start employment. The study recommends the introduction of financial education at an early stage in the education system to ensure that young graduates are prepared when they enter the labour market and for it to be of benefit to them in making debt decisions. The study further recommends the review of policy on the issuing of debt by financial institutions.