RIO DE JANEIRO, BRAZIL – A survey by SPC Brazil shows that 47 percent of people in the so-called Generation Z, who are now between the ages of 18 and 25, have no control over their spending.
SPC Brasil is a technology company linked to the National Confederation of Store Managers (CNDL) that processes and stores all credit operations carried out by companies in the country.
The reasons behind the lack of financial control range from not knowing how to do it (19 percent) to laziness (18 percent), lack of habit or discipline (18 percent) and not having any income (16 percent).
The data shows a record indebtedness among the youngest, says SPC Brazil chief economist Marcela Kawauti.
“The main debts are the traditional ones, and the credit card is still very prevalent. In this stage of life, the credit card is probably used to pay everyday bills, and not basic bills,” Marcela says.
“So, these youths are also indebted for things they shouldn’t pay for in installments, but in cash”.
Advertising student Jhulia Costa, 18, who lives in São Paulo and began her internship, has a credit card with a limit that she considers high and is already in debt. Jhulia says that she decided to make purchases and then could not pay the card bill on time. The debt quickly escalated from R$900 (US$225) to R$1,500.
“It’s the youths’ thing: they want to buy that and then, at the end of the month, they can’t pay it. I went out buying clothes, hair things…”, says the student, who intends to pay what she owes as soon as possible.
“I’m going to have to sit down and make a spending list, to see what I can cut for the moment and pay this debt by the end of the year. I’m controlling myself, I’ve given up the card, I’ve blocked it, I’ve canceled everything, now only debit.”
Marcela Kawauti considers the lack of financial education a big problem.
“Even among the youngest, the problem of financial education is very severe. Despite being at the forefront, having more desire for technology, they still have traditional means of indebtedness, and traditional means of controlling or not controlling their budget, mainly because they lack financial education,” she says.
To help avoid debts, there are several strategies. An app service, unprecedented in Brazil, advances employees’ salary through the days worked, by prior agreement with the company. The amount goes directly into the user’s account. There is no interest charge, just a fee of R$9 to receive the amount upfront.
Companies of this kind are common in the United States and are now reaching Brazil.
One of them is Xerpay where American John Delaney is the chief operating officer (COO) in São Paulo. The COO is in charge of managing the company’s day-to-day operations, performing routine monitoring of the business and reporting all the company’s operations to the executive director.
According to Delaney, it is more advantageous to anticipate salary than to take out a loan to pay off a debt.
“It is much cheaper to advance the salary that the employee has already earned than to borrow in the traditional market, where the person pays high interest, particularly in the current Brazilian scenario. And there’s also the issue of default: if you don’t pay the amount due, you end up with more burdens and fines and expenses.”
When it comes to avoiding debt, everyone has their own way. Marketing student Vitor Freitas, 18, is keeping a good financial discipline.
“I don’t have a credit card, I don’t have anything. My decision. You have to know how to use it, don’t you? At the moment, I’d rather not. I keep everything organized in a worksheet, I keep it on my computer, and I keep it organized”, explains Vitor.
SPC Brazil recommends that youths should prioritize their financial lives. “Indebted youths should make the most of the fact that they have fewer financial responsibilities and put financial life at the top of their list of priorities. It is important that the debt is paid as soon as possible to avoid charging interest,” says the company.
Source: Agência Brasil