Gen Y: poor financial habits
With their poor financial management and free-spending habits, Generation Y is particularly vulnerable to the future economic downturn, according to Mission Australia’s National Survey of Young Australians.
The survey found they have a more self-centred approach to finances than their predecessors, with 68.9 per cent of their income stemming from parental or family sources.
Further reinforcing this, statistics from the Insolvency and Trustee Service Australia (ITSA) reported that between 1998 and 2006, excessive credit card usage contributed to soaring bankruptcies among Gen Y, going up 118 per cent and expected to climb even higher.
Hall Chadwick insolvency partner Paul Leroy said these statistics demonstrate how ill-equipped, “both financial and economically”, Australia’s youth were and showed their vulnerability to the future economic downturn.
“If Generation Y fail to change their ‘spend now, save later’ habits, they are going to have to give up material benefits we enjoy in retirement, such as owning a house, driving a nice car, and cruising around the world,” he said.
“To change those habits, Generation Y needs to be first taught how to manage their everyday finances.” According to Leroy, Gen Y consumers were also unlikely to consider future retirement plans and demonstrated a higher inclination to ‘live for the present,’ or buy now, pay later.
“Parents should start teaching their Generation Y children how to manage personal finances, by avoiding impulse buying and encouraging saving habits, particularly regarding their future retirement,” he said.
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