Young debt compromises wealth formation

Increased access to credit, combined with immediate consumption and lack of financial education, has led more and more young Brazilians into debt in the first years of their adult life.

According to Thiago Godoy, financial educator and presenter of Resenha do Dinheiro, the main impact of early debt is the time lost to build wealth.

"The most expensive aspect of this process is the time that the debt takes away from young people. They enter adulthood already financially suffocated, without being able to build reserves, invest or achieve any type of stability", he states.

The construction of assets happens gradually and directly depends on time and financial conditions, analyzes the presenter.

Godoy states that the current scenario is different from that experienced by previous generations, mainly due to easier access to credit.

"Today, anyone can open an account, have a credit card and make purchases using their cell phone. Consumption happens very quickly, and the financial impact only comes later", he says.

Data from the Central Bank's Financial Citizenship Report helps to size up the scenario. According to the survey, the number of young people in debt practically doubled in eight years, from 13.7 million in 2016 to 27.6 million in 2024.

Credit cards appear as the modality most used by young people, while the use of loans and payroll loans has also increased in recent years.

Finance expert Simone Santolin explains that, although access to digital banks, credit and investments has increased in recent years, basic concepts such as budgeting, interest, emergency reserves and long-term planning are still little discussed in schools and even in the family environment.

For the expert, early debt creates a cycle that makes it difficult to form assets at a stage when time could work in favor of investments.

"The sooner a person starts saving money, the greater the positive impact on the future tends to be. But when income is already compromised by debt, it becomes more difficult to build financial stability", he states.

Thiago Godoy also draws attention to the emotional impacts caused by chronic default.

"Financial stress affects the ability to make conscious decisions. The person becomes emotionally pressured, more impulsive and with less self-control. This ends up snowballing", he analyzes.

Despite the worrying scenario, Santolin proposes habits that can help avoid default and improve young people's relationship with money.

"Knowing exactly how much you earn and how much you spend is the first step. Creating the habit of saving part of your income, even if little, and using your credit card responsibly make a difference in the long run", he advises.

Dinheiro Review
Carried out with the support of B3 and the investment manager BlackRock, the program is presented by Thiago Godoy, the "Financial Daddy", Marilia Fontes, founding partner of Nord Investimentos; Bernardo Pascowitch, founder and CEO of Yubb, proposes a light, direct and uncomplicated approach to topics related to financial education and investments. The attraction addresses the main themes of the economy weekly with the informality of a conversation between friends - without compromising on analysis.

The Money Review airs every Friday, at 7pm, on the CNN Money YouTube channel and on Sundays, at 3pm, on CNN Brasil.

Source: CNN