Prudent, planned and financially sustainable are not words you’d typically associate with Gen Y, but new research from the 2015 Future Leaders Index reveals 18-29 year olds today are a fiscally conservative bunch, worried about their financial future.
Far from blowing all of their cash on fast living, making it rain and hedonistic trips overseas, they’re actually counting their pennies and squirrelling away for a rainy day.
Sky-high property prices are the main driver of this insecurity; young people rate unaffordable housing as the number one issue Australia will face in 2020.
Despite this, they’re still committed to the Aussie dream of owning a home, with 75 per cent willing to take on debt for a mortgage and 72 per cent believing it’s important to buy a home as soon as you can.
Of the young people surveyed who had bought a property, 62 per cent of people who bought their first home to live in had help from mum and dad, as did 72 per cent of young people with an investment property, highlighting the shifting nature of the modern parent-child relationship.
Other factors influencing 18-29 year olds’ financial habits are the increasing rate of unemployment (which typically hits young people the hardest), and the weakening economy. For a generation that’s grown up during Australia’s greatest period of prosperity and only known ‘good times’, the prospect of an uncertain future weighs heavily.
Huge wealth gap between city and country, men and women
The report also highlighted the significant gap between the financial situation of young people in capital cities compared to those in regional areas, as well as between men and women.
City dwellers are on average almost 38 times better off when you compare their net financial position to their regional counterparts, while men are around three times better off than women in this age group.
Those who have achieved higher education have the strongest net financial position, while on a capital city level Melbourne trumps Sydney as the city where young people have the highest net wealth.
The sensible financial habits of 18-29 year olds
For a generation once widely derided as frivolous and financially irresponsible, it’s clear that frugality and conservatism is the new normal for young people.
Seventy per cent are working either part-time or full-time, and as a group they’re savings savvy and canny consumers.
Ninety-three per cent have at least some money saved, with 39 per cent having $5,000 or more in savings. The most common reason cited to save was ‘just because’, reflecting desire for safety and financial stability.
And they’re shopping smart, with 65 per cent buying groceries on special, 62 per cent only upgrading technology when needed, 53 per cent aiming to buy fewer material goods and 49 per cent buying generic brands to save money.
Half of this age group admit to having some level of debt, with the average debt sitting at $4,599 per person, but when you take into account average savings of $8,271 they’re still in a positive position.
Still, debt is not spread evenly, and some young Australians carry much higher levels of debt than others.
The report is the first of three white papers put together by The Co-op in conjunction with accounting firm BDO that examine young people’s attitudes to life.
The next two papers, not yet released, will focus on lifestyle followed by career and employment attitudes respectively.
Main image: Paul Townsend, Flickr