How Financially Savvy are Gen Y compared to Baby Boomers?
Are you a member of Generation Y – the group of 20 and 30-something Australians?
If so, you’re probably accustomed to copping the collective labels of “spoilt” and “extravagant”.
But does your financial behaviour bear this out?
Or are you one of the 45 per cent of Gen Yers with financial goals and a plan in place to ensure you achieve them?
Seeking advice and developing a long-term investment strategy can be the first step towards financial independence, and you’re never too young to begin.
What are Gen Y up to?
So how do Gen Yers compare with their baby boomer and Generation X counterparts when it comes to managing money and putting some aside for a comfortable future or rainy day?
According to the latest RaboDirect Financial Health Barometer, an annual survey of the financial habits of more than 2000 Australians, less than 15 per cent of Gen Yers had savings that would last more than six months if they lost their jobs.
Gen Yers scooped the pool with impulse purchases, buying an average of 2.8 items that caught their eye each week, compared with the boomers’ more restrained 0.9 purchases.
While they may give in to their impulses, the average monthly savings of Gen Yers was $272 more than baby boomers.
Gen Yers are actively saving an average of $943 a month.
If they saved this money wisely they could have a growing savings pool that could be used for investments.
Over a quarter of Gen Yers allotted themselves a specific amount of ‘pocket money’ each month, allowing them to curb their spending and put more money aside for savings.
However, less than 40 per cent of Gen Ys had savings accounts for specific purposes, such as holiday savings and major purchases.
Start saving money yesterday
What’s the key to casting off your spendthrift ways and setting yourself up for a comfortable mid-life and relaxed retirement on your own terms?
Remember the story of the hare and the tortoise, advises Elston Partners’ head of strategic advice Darren Withers.
Establish some goals, write a plan for achieving them and get going today – not five or 10 years down the track.
“Young people need to be disciplined and hold themselves accountable for putting a plan in place and sticking to it”
A list of the big things you’d like to do in the future and an idea of the type of lifestyle you’d like to lead in retirement may help shape your savings and investment strategies.
“Young people need to be disciplined and hold themselves accountable for putting a plan in place and sticking to it,” Withers says. “It may sound very simple and straightforward, but it can often be very challenging for some people.”
Ask a professional for financial advice
Cash, houses, shares, investment properties, superannuation – they might all comprise part of your plan, but getting the balance and the timing right can be a challenge.
While family and friends may be forthcoming with well-meaning advice, seeking professional financial advice can be a wiser bet.
An advisor can help you set goals, develop a plan and check in on your progress periodically, Withers says.
Ensure you’re on track by reviewing and adjusting your strategies as your circumstances change.
Gen Y, it’s time to get working on your investment plans to set yourself up for the future.
Seeking professional help can take your savings goals from a dream to a reality.
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