Young employees need financial education

Unemployment is always at the top of the most pressing problems affecting Kenyan youth. It is a means to improve one's livelihood while contributing positively to the growth of the nation.

The appointment to a new job always brings forth joy and optimism that one’s financial difficulties have come to an end.

However, a deeper look into this segment of newly-employed Kenyans shows a group saddled with debts and hopelessness.

Recent years have seen a large increase in financial inclusion due to the emergence of many banking institutions. This means a large number of Kenyans have access to bank accounts as well as the vast array of loan products offered.

The ease of financing has boosted the economy, with many seizing the opportunity to obtain investment capital through credit facilities. A majority of financiers prefer lending to government employees on a check-off basis. This is generally considered to be risk-free because government employees are perceived to possess better job security.

Young Kenyans joining the public workforce, especially teachers and policemen, are finding it increasingly hard to escape the allure of these credit products which are usually packaged in very attractive ways so as to capture the attention of a young ambitious mind.

Debt fatigue

They are tempted to borrow large sums with lengthy repayment periods often for consumption purposes. The common trends include purchasing new cars, furnishing of residential houses, investing in poorly thought-out side hustles and other extravagant consumption trends brought on by peer influence.

Typically, after a few years of payment, debt fatigue sets in. This happens when the borrower starts to feel permanently broke because of the sustained loan deductions as well as frustrated by the never-reducing loan amount because of the extremely long repayment period.

This is mainly amplified by the fact that most people will apply for such loans when they are young and without many personal expenses. In a few years, they are faced with the need to start their own families, which often comes with increased expenditure.

The resulting pressure gives the temptation to rush for loan top-ups whenever an opportunity is offered by the financier, hence setting off a life-long cycle.

The predicament causes a lot of disillusionment with the employed youth. It leads to low workplace morale, depression as well as an increased susceptibility to engage in improper practices such as fraud and extortion.

Employers should consider offering training sessions in personal finance management for newly recruited employees in order to arrest these situations before they occur. Young Kenyans are advised to be patient when making important life decisions to avoid rushing into bad decisions.

Martin Mureithi, Meru