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Millennials are actually better savers than their parents

Jessica Yun
Couple freelance work at home in early morning in the kitchen. (Getty)
Couple freelance work at home in early morning in the kitchen. (Getty)

Millennials are often painted as irresponsible with money and trigger-happy when it comes to spending disposable income.

But it seems this image isn’t exactly true to life: new research commissioned by Afterpay has shown that millennials, defined in the research report as those born between 1981 and 1996, are actually better at saving than their parents.

Where 36 per cent of millennials say they save regularly, only 28 per cent of older Aussies say the same.

Similarly, four in five millennials have a budget, in contrast to less than two thirds (67 per cent) of their older counterparts.

They’re also savvy: having grown up with technology, 72 per cent of millennials use technology to compare prices online before they go shopping, while only 28 per cent of older Aussies do the same.

And it appears the love affair with credit cards might just be a generational thing, with millennials 37 per cent less likely to own credit cards and shouldering 45 per cent less credit debt.

Instead, they’re turning to ‘buy now, pay later’ alternatives such as Afterpay to purchase and own products now while staggering payments for months or even years.

However, it’s had the effect of being just a different avenue of debt accumulation. Its popularity has sparked concern within the finance sector, consumer associations as well as Australian senators, who called an inquiry into the ‘buy now, pay later’ industry.

What are they spending their money on?

Millennials’ spending habits are different to those that have come before them. It’s not surprising given that the economic circumstances millennials have grown up in don’t resemble that of their parents’.

“Millennials face greater financial pressures than previous generations,” said Andrew Charlton, co-owner of economic consultancy AlphaBeta commissioned by Afterpay.

Over the last decade alone, house prices have skyrocketed. At the same time, millennials who graduate uni these days now have to contend with a HECS debt that is on average 79 per cent bigger than Gen X had to face in their day.

“For example, baby boomers could buy a house for around five times the average household income and enjoyed free education, but for millennials, houses cost eight times the average household income and the average HECS debt is $19,000.

“In response, Millennials are making different spending decisions to past generations and are actually spending more wisely – including cutting back on discretionary purchases, saving more, and using new technologies to help them budget effectively and spend differently.”

It sounds stressful, but they’re not turning to dangerous habits to cope.

In fact, this generation is spending 16 per cent less on alcohol and 71 per cent less on cigarettes.

It’s just as well, since smokers pay twice as much on life insurance fees than their non-smoking counterparts.

Meanwhile, spending for public transport has gone up 24 per cent, as has private health insurance (23 per cent). There’s also been a 14 per cent increase in spending on clothes.

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