We all know Gen Y's, those born between 1976 and 1993, aren’t scared to ask for what they want. And according to a recent survey* by REST Industry Super, they are also calling for help with saving money.
Interestingly they don’t want to talk to their parents about it and certainly not their friends. They just want someone to show them how to save, and much earlier in life.
In the absence of being taught, Gen Y is trying to work out good saving strategies for themselves. For some this means sorting their money for the month into envelopes, for others it’s closing their eyes at the ATM and hoping for the best.
Despite popular opinion, many Gen Ys are actually debt adverse.
Dubbed “short term savers”, the average Gen Y has good plans to cover their everyday expenses like rent and food but when it comes to long term goals they fall markedly short.
This focus on lifestyle goals is natutrally more concentrated on short and medium term goals like holidays and cars and the occasional blow out to fund an experience.
- 4 out of 5 Gen Ys save some money every month
- savings are for short term goals, such as travel, or no goal at all
- the only real debt is study related for 40 per cent of Gen Ys
- only 55 per cent bought their first home by their early 30s
- the median size home loan is $200,000 to $300,000
- 25 per cent aren’t aware of initiatives like salary sacrifice or the government’s super co-contributions scheme
- Gen Y steers away from short-term personal debt, including credit cards
- 36 per cent said they did not have a credit card or store card, the median balance for those that did was between $1,001 and $2000
- the majority of their spending is on necessities
- 47 per cent (18 to 20) said they spent less than $100 per month on entertainment and recreation
Many respondents expressed that they fell short of where they thought they would be at this stage of life but were optimistic they will earn at least $100,000 at some stage. Some 15 per cent also had expectations that they would, in time, be rich.
Then again, some respondents said they thought they would never earn that much. As REST CEO Damian Hill points out it’s not enough to hope that your salary will increase to put you in a position to save.
“Financial education should start early. It’s up to schools, parents, the government and the financial sector to up the ante on financial literacy for this generation so they are better prepared for the future, education programs could start around budget planning, debt management and understanding super.”
With 5.7 million Australians categorised as Gen Y, it is clear that a sizable proportion of our population is under prepared for building a solid finacial foundation.
The grim reality is that the Gen Y is not only facing getting their own personal finances in order but also a systemic intergenerational debt burden, currently some $514 billion across all levels of government.
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* The WealthStyle: Gen Y’s Spending, Saving and Debt Choices White Paper was commissioned by REST Industry Super.