The cost of being young in South Africa: Gen Z's financial hurdles

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The study draws on data from Stats SA, National Treasury, the Quarterly Labour Force Survey, and the Household Affordability Index, using inflation-adjusted benchmarks across housing, transport, education, groceries, and debt to paint a generational picture of how graduate affordability and purchasing power have shifted relative to income.

In 2005, Millennials graduated into an economy where salaries were broadly aligned with essential costs like housing, transport, and education. 20 years later, Gen Z faces a far harsher reality: youth unemployment at 46% according to the latest Quarterly Labour Force Survey, soaring rents up, student debt tripled, and salaries that have only risen, but lost around 21% in real terms when adjusted for inflation.

This widening gap has eroded purchasing power, delayed financial independence, and left many Gen Z graduates reliant on family support well into adulthood.

Stagnant graduate earnings

While there isn’t reliable data for the average graduate salary in South Africa specifically in 2005, most available sources provide estimates for later years such as 2008.

Graduate salaries during that period varied significantly by employer and industry. More than half of all graduate vacancies offered starting annual salaries between R75,000 and R100,000, equivalent to roughly R6,250–R8,333 per month, while the top 20% of roles paid above R175,000 per year, or about R14,583 per month, according to Mail & Guardian, 2008.

In comparison, the average internship salary in South Africa in 2025 ranges between R6,000 and R9,000 per month, depending on the city and field. For instance, in September 2025, Indeed reported an average intern salary of approximately R5,847 per month, while Glassdoor indicated an average total pay of R9,000 per month in October 2025.

When compared to 2008 graduate salaries, this represents a nominal increase of just 8% to 44% over nearly two decades, a rate that falls far behind inflation and overall economic growth during the same period. This contrast highlights how, despite two decades of economic expansion, entry-level earnings have remained largely stagnant in real terms, reinforcing the persistent affordability and financial independence challenges faced by young professionals entering today’s workforce.

Soaring rental costs

Rental markets add another layer to the affordability challenge. In 2005, renting was far more manageable for young professionals; the average monthly rent of around R1,500, according to archived data from the South African Property Owners Association (Sapoa) and early PayProp rental trend estimates, accounted for roughly 20% of a graduate’s income.

This left room for savings, travel, and other discretionary spending, and many graduates were able to live independently in centrally located apartments or shared houses near work or university hubs.

By contrast, in 2024, the average rent across South Africa had climbed to R8,598 per month, according to PayProp’s Rental Index Annual Market Report 2024 Edition.

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For early-career graduates earning between R6,000 and R9,000 per month as reported by Indeed and Glassdoor, 2025, rent now consumes between 48% and 64% of their income. Even more affordable options, around R4,000 per month, according to Private Property (2025), still account for nearly half of a lower-earning graduate’s take-home pay.

When combined with deposits, utilities, and transport costs, this leaves little to no financial margin, making independent living increasingly out of reach and forcing many Gen Z professionals to rely on shared accommodation or family support, a stark reversal of the financial autonomy many Millennials enjoyed two decades ago.

Even with these options, rental costs represent a substantial portion of income, forcing many young professionals to rely on family support or shared accommodation. Combined with large deposit requirements, and rising living costs, this means that affordable renting remains a major hurdle, making financial independence a significant challenge for the majority of Gen Z entering the workforce today.

Rising everyday expenses

Basic living costs have surged in proportion to earnings as well. Monthly groceries rose from around R1,500 in 2005 to a household food basket of R5,443 in 2025, a 263% increase that now consumes a far larger share of take-home pay.

For Millennials entering the workforce in 2005, food was a predictable and relatively stable portion of their budget, leaving room for savings or discretionary spending. For Gen Z graduates, however, escalating grocery bills compete directly with rent, transport, and debt repayments, forcing many to cut back on nutritional quality or rely on cheaper, less healthy alternatives.

This shift highlights how rising food costs don’t just affect finances but also quality of life and wellbeing.

Student debt has tripled over the past two decades, with the average NSFAS loan balance rising from R30,000 to R90,000, a 200% increase. Unlike Millennials, who entered the workforce with comparatively lighter debt loads, today’s graduates are starting their careers in the red, often before earning their first salary.

Servicing this debt delays milestones like moving out of shared housing, purchasing a car, or saving for retirement. It also widens the generational wealth gap, as Gen Z graduates are forced to prioritise repayments over wealth-building opportunities, leaving them financially disadvantaged compared to their Millennial counterparts at the same stage of life.

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Transport costs have also escalated sharply. The average monthly public transport fare has risen from R561 in 2005 to R850 in 2025, a 52% increase that varies by city and travelling distance.

Buying a car has become even less affordable, with the average price jumping from R65,000 in 2005 to R178,800 in 2025, a staggering 175% increase, including insurance.

Fuel costs have escalated dramatically over the past two decades, placing additional strain on graduates’ already stretched budgets. In 2005, the average petrol price in South Africa stood at around R5.02 per litre, while diesel was priced at approximately R5.14 per litre. By 2025, petrol costs have surged to about R21.14 per litre and diesel to around R19.47 per litre, increases of over 300% and nearly 280%, respectively.

Income vs expenses

This steep rise mirrors a broader trend of living costs outpacing income growth. For early-career professionals earning between R6,000 and R9,000 per month, fuel alone can now consume 15–25% of their income, depending on commuting distances and transport needs.

Rhyan O’Sullivan, managing director at The TEFL Academy said: “For many young South Africans, the dream of financial independence feels further away than ever before. Gen Z isn’t struggling because they lack ambition or ability; they’re facing an economic landscape that has fundamentally shifted. Yet despite the odds, they’re showing remarkable adaptability, finding new ways to build meaningful lives on their own terms.”

The TEFL Academy notes that this is not just an economic issue, but also a social one: many Gen Zs remain dependent on family support into their late 20s, are delaying homeownership and family formation, and are increasingly reliant on credit. Despite being more educated and digitally skilled than Millennials were in 2005, today’s young adults feel less financially secure and have fewer opportunities to build wealth.

Brendan Pitt, a South African working as an English Foreign Language teacher in Thailand shared his experience and said: “For me, coming to Thailand was part personal and part practical. Limited job opportunities in South Africa, made it harder each year to secure decent work. In contrast, living costs in Thailand are significantly lower and the teaching lifestyle offers flexibility and breathing room.”

The Cost of Being Young in 2005 vs 2025 in South Africa aims to spark discussion about the widening affordability gap and the urgent need for policies and pathways to support today’s youth. While Millennials face challenges, the report makes clear that Gen Z in South Africa is paying significantly more of their income for basic survival, housing, food, education, and transport, even as nominal earnings have risen.