Why most Young People are Financially Broke ?

6 common reasons

Young people and financial problem

I am broke! I am stranded! These are common phrases among most young people particularly during the third week after the payday. Some of these people will sometimes take bank overdraft or small credit from friends and family to survive.

However, if you often become out-of-pocket before the next pay, have you ever wonder why you are always under this circumstance. I have observed that most young people care less about managing personal finances.

Check around the corner, and you will found many young people who have work for more than 10 years and possibly earn a monthly average salary of D12,500 and yet do not have assets up to D150,000.

This can be a significant problem for a country that is graduating more and more youths into workforce market.

The question we should ask is why most young people are broke? Here are few reasons I gathered.

1. Poor financial literacy

Let us first go back a bit and assess the educational background of these young people. They didn’t learn about basic financial literacy in school. Yes, from primary school to universities in the Gambia, the focus has been on the general knowledge and specialisation. Imagine of Bakary who graduated with a law degree, and throughout his 23 years of schooling, no one taught him how to manage his money. Government, lectures and parents know that money will be one of the major resources a lawyer will earn as an employee or entrepreneur.

There are three group of people to blame for this: first is the young people don’t want to learn, second is the parents and last is the government.

There are many researchers who concluded that financial literacy affects financial knowledge, and enhanced financial knowledge translates into more savings, along with an increased likelihood of starting new income-generating activities.

2. Poor Use of Credits

Some people simply can’t control their spending habit. They will spend all their earnings and start to take temporal overdraft from banks. Next to that is the personal loan, car and other loan payments which can eventually make their conditions worse if not properly manage. A small credit can be turned into a major debt if payments are not made on time. Bad credit may require visiting credit repair companies like this website.

The loan repayment includes interest and principal which leaves little or no money to save. Whereas if they have saved first, they would have had enough money to at least fund either a car or deposit for a house.

Be careful, consumer loans are bad as they do not add value.

3. A desire for expensive items

One common wish among many young people is to use the latest smartphones, drive a nice car and live in an expensive place. These desires require huge cash flow as the cost of a good smartphone or a nice car is not cheap. Some end up borrowing from their banks or taken a lease at very high rates to pay back over time. This again leaves little or no cash to save.

4. Poor savings habit

Many young people hardly cultivate the habit of “save some and chop some”. They would prefer to spend a large chunk of their take-home pay. This is also a factor of no personal financial plan or goal.

It does not matter your age or number of years working experience; everyone should have at least one goal to save some money.

You can learn more about the reasons to save or how to set up a savings plan.

5. Reckless Financial Lifestyle !!

Some people decided to adopt a lifestyle that is not worthy of emulation. I will call it financial reckless, a lifestyle which includes constant partying, clubbing and travelling. While it is not a crime for one to party and enjoy his hard-earned money, there are situations where many young people do it excessively. These habits affect your ability to save and even plan for personal development and growth.

Whatever you earn in life, it should be manage based on the principle of chop small and save small

6. Peer group influences and Societal expectation

The influence of peer groups is another reason that affects many people’s savings habit. It is generally believed that our friends can influence our priorities. Additionally, there is an unofficial competition among many work colleagues which sometimes lead to more spending.

This is not saying that peer groups are bad. However, one should join a group that have focus priorities. For example a mastermind group such as investment club, personal development, communities services etc.

Furthermore, one of the good practices found in our communities is the culture of giving to others. This includes our close families, religious houses and others. However, you will agree that some people overdo these helping activities. They sometimes put immense pressures on their finances making them hardly save or even invest for themselves.

In personal finance, we encourage you to pay yourself first before helping a family member or any other person. Think about the future. Will you be happy to tell your children that you could not afford their medical bills or school fees due to the social support you have given to others? I do not think so.


These are some of the reasons why many young stars go broke on a continuous basis. It is not peculiar to Gambia or Africa only; however, it is worse in countries where the youths have not learn about the basic of personal financial management. What is the solution? Let us learn about personal finance and government should introduce financial literacy in our schools. Your comments are welcome

About Ebrima Sawaneh 118 Articles
My Name is Ebrima. I write about personal finance, small business, and The Gambia to support young people. I am an accountant, banker, and Amazon international bestselling author. Feel free to drop a message or download my free eBooks - HERE read

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