Young adults aged between 18 and 28 were the biggest demographic to report pulling back on spending,financial stress due to cost of living pressure,and missing a mortgage repayment in the past six months,according to a report by comparison site Finder.
Finder’s new cost of living report shows the generation feeling the greatest financial burden is Generation Z.Elke Meitzel
The report also revealed that Gen Z felt the greatest pressure to find an extra job this year,at 56 per cent,compared with Gen X’s 26 per cent or Baby Boomers’ 7 per cent. Gen Z was also the largest group to report enjoying life less than two years ago due to financial pressures (70 per cent),followed by Gen Y (68 per cent).
“The most heavily affected demographic when it comes to cost of living is not the Boomers or the Gen X home owners that you would expect – people with mortgages – the people who are experiencing directly the effect of cash rate increases,” said Finder head of consumer research Graham Cooke.
“But actually,Gen Z and Gen Y,Millennials and those in their early 20s,are the ones reporting[they’re] experiencing the highest financial burden. They’re the ones making the bigger cuts,they’re the ones feeling more pressured to have a second job due to the increased cost of living.”
The biggest factor behind the generation-driven trend was that Baby Boomers and Gen X had likely paid off a significant portion of their mortgages and therefore were in a more comfortable financial position,said Cooke,while Gen Z had been in the workforce for the shortest time and had the least savings,making them more vulnerable to cost of living pressures.
‘That dream of purchasing their own place is starting to now be pushed out further.’
Glen Hare,financial advisory firm Fox&Hare
On average,Generation Z has $13,300 in savings,representing less than half of their Gen Y peers,who have $27,000 saved up. Gen X has $41,400,while Baby Boomers are sitting on $51,300,the report showed.
Costs associated with groceries,rent and mortgages were the top reasons for financial stress,followed by petrol and. Over 2022,Australian Bureau of Statistics figures showed the consumer price index rose by 7.8 per cent,the highest movement since 1990,with.
Glen Hare,co-founder of financial advisory firm Fox&Hare,which has predominantly Gen Y and Gen Z clients,said these cost pressures had delayed younger clients’ goals of one day owning their own home.
“It’s been quite disheartening for a lot of people,” Hare said. “Rent[has] increased exponentially for a lot of our members,which then subsequently meant they save less,which means that dream of purchasing their own place is starting to now be pushed out further.”
Young people are choosing to stay at home longer,and,Hare said,resulting in lower savings and a that is already playing out in shopping carts and at supermarkets.
The volatility in the past few years,encompassing a pandemic,disrupted workplace arrangements,Russia’s war on Ukraine,and high inflation and increasing interest rate environment,had left many young people disillusioned about managing their money,Hare said.
“There are so many pressures outside of their control to some extent ... they almost turn their back on the financial world because they’re like,‘I don’t have control over these particular factors,there’s nothing I can do about it’. So they put it in the too-hard basket and go,‘I’ll deal with that later when things calm down.’”
He urged people not to bury their head in the sand. “Yes,it’s really challenging,but don’t feel like there’s nothing you can do ... If you’ve got a strategy,if you work through the numbers,you can move forward.”
Cooke said the one upside of rising interest rates was that savings account rates were also rising,with competition heating up among banks.
“The most important lesson from this for consumers would be to try and put the power back in your pocket,rather than in the pocket of the banks,the electricity suppliers and the broadband suppliers and the mobile phone companies.”
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