Yahoo Finance Boomers spending up on ‘cruises and restaurants’ while young Aussies cut back on groceries
Young Aussies are bearing the brunt of the cost-of-living crisis, new research has revealed.
Older Aussies are spending up on everything from travel to eating out, while younger Aussies are bearing the brunt of the cost-of-living crisis and cutting back on essentials like groceries, utilities and medical needs. And one economist told Yahoo Finance the generational “chasm” is not getting any better.
The divide between Baby Boomers to Gen Zs was laid bare in Commonwealth Bank IQ’s latest Cost of Living Insights Report, which was based on the spending data of its more than seven million customers. It found Aussies in the 25 to 29 age bracket slashed their spending by 3.5 per cent last year - more than 7 per cent when adjusted for inflation.
This included spending on both discretionary and essential items, including health insurance (down 10 per cent), utilities (down 7 per cent) and groceries (down 4 per cent) despite price hikes on these expenses. It was a different story for older Aussies, with over 60s increasing their spending above inflation across the board, including spending on travel (up 11 per cent), retail (up 9 per cent) and eating out (up 7 per cent).
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Think Forward CEO and lead economist Thomas Walker told Yahoo Finance it was clear the cost-of-living crisis was hitting younger generations the hardest, while older Aussies were able to spend their money on “cruises and restaurants”.
“They are in precarious work, they have to pay these spiraling rents or these rapidly rising mortgage costs, healthcare costs are going up, it’s getting more expensive to study - there’s all these pressures that are falling on younger generations,” Walker said.
He believes the biggest driver of this intergenerational inequality is the tax and transfer system, which largely benefits older Aussies.
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“We as a country over the last two or three decades have decided to financialise our housing system, financialise our university education sector and basically change our tax system,” Walker said.
“So if you’re a wealthier, older Australian, you get all these tax breaks through negative gearing or franking credits or capital gains concessions, which aren’t available to younger people because they haven’t had the time to buy investment properties or build up wealth and may never be able to at this rate.”
Aussies making ‘difficult choices’
CommBank iQ head of innovation and analytics Wade Tubman said the data highlighted the “difficult choices” younger Aussies were making and the “wide gap in spending patterns” across age groups.
“Compared to the national experience, where most people have had to increase spending on essentials, we are seeing the opposite trend amongst those in their 20s, with essential spending falling at a similar rate as discretionary,” Tubman said.
Nationally, spending increased by 2.5 per cent, with essentially up 3.6 per cent. Customers spend an average of $1,472 per month, which is mainly driven by the increased cost of insurance, utilities, pharmacies and supermarkets.
“Many Australians are having to allocate more of their wallet to essential living expenses, rather than other areas where they may prefer to direct their spending,” Tubman said.
Things ‘not getting better’
Walker believes last week’s federal budget included some “tinkering around the edges” but ultimately did not go far enough to alleviate many of the cost-of-living concerns facing young people.
“More broadly we need to have this conversation about the intergenerational fairness of our economic and tax systems,” Walker said.
“The economic situation for younger generations is pretty precarious and it’s not getting better.”
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