We always listen to older people telling us how bad things were when they were young. But Gen Z can beg to differ – it is worse for them.
Twenty years ago, Millennials who were just starting out in adult life thought they had it tough with everything being so expensive.
And now, twenty years later, Gen Z is saying the same thing: it is expensive to be an adult!
A new report by The TEFL Academy reveals that the cost of living for young South Africans escalated sharply over the past two decades, contrasting the realities Millennial graduates entering the job market in 2005 faced with those of Gen Z graduates in 2025.
The study draws on data from Statistics 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 buying power shifted compared to income.
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Millennials had it so much better than Gen Z starting out
Rhyan O’Sullivan, managing director at The TEFL Academy, points out that in 2005, Millennials graduated into an economy where salaries were broadly aligned with essential costs like housing, transport and education.
“However, 20 years later, Gen Z faces a far harsher reality of youth unemployment at 46% according to the latest Quarterly Labour Force Survey, soaring rents, student debt that tripled and salaries that only increased, but lost around 21% in real terms when adjusted for inflation.
“This widening gap eroded purchasing power, delayed financial independence and left many Gen Z graduates reliant on family support well into adulthood.”
While there is no reliable data for the average graduate salary in South Africa specifically for 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 to 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 in 2008.
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Low average starting salaries for Gen Z can buy almost nothing
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.
Compared to 2008 graduate salaries, this represents a nominal increase of just 8% to 44% over nearly two decades. This rate falls far behind inflation and overall economic growth during the same period.
O’Sullivan says this contrast highlights how, despite two decades of economic expansion, entry-level earnings remained largely stagnant in real terms, reinforcing the persistent affordability and financial independence challenges young professionals entering today’s workforce face.
He says rental markets add another layer to the affordability challenge.
In 2005, renting was far more manageable for young professionals with an 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, which 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.
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Gen Z cannot afford rent for a place to stay independently
Fast forward to 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.
For early-career graduates earning between R6 000 and R9 000 per month as reported by Indeed and Glassdoor in 2025, rent now consumes between 48% and 64% of their income.
Even more affordable options, of around R4 000 per month, according to Private Property, 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.
This forces 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. Talk about the good old days.
Even with these options, rental costs represent a substantial portion of their 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.
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Basic living costs are much higher for Gen Z
In addition, basic living costs also surged in proportion to earnings. Where Millenials paid around R1 500 in 2005 for a household food basket of R5 443, a 263% increase now consumes a far larger share of take-home pay in 2025.
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.
However, for Gen Z graduates, 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.
O’Sullivan says this shift highlights how rising food costs do not just affect finances but also quality of life and well-being.
Student debt tripled over the past two decades, with the average NSFAS loan balance increasing from R30 000 to R90 000, an increase of 200%.
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.
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Paying student debt delays other milestones like buying a house or car for Gen Z
O’Sullivan warns that servicing this debt delays milestones like moving out of shared housing, buying 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.”
Transport costs also escalated sharply, with the average monthly public transport fare increasing from R561 in 2005 to R850 in 2025, a 52% increase that varies by city and travelling distance.
Buying a car also became 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 also 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 surged to about R21.14 per litre and diesel to around R19.47 per litre, increases of over 300% and nearly 280%.
This steep increase 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.
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Will financial independence remain a dream for broke Gen Z?
O’Sullivan says for many young South Africans the dream of financial independence feels further away than ever before.
“Gen Z is not struggling because they lack ambition or ability; they are facing an economic landscape that has fundamentally shifted. Yet despite the odds, they are showing remarkable adaptability, finding new ways to build meaningful lives on their own terms.”
He says this is not just an economic issue, but also a social one: many Gen Zs remain dependent on family support into their late twenties, 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,” O’Sullivan points out.
Brendan Pitt, a South African working as an English as a Foreign Language teacher in Thailand shared his experience:
“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.”
