“The rental market is currently,in no uncertain terms,an unattainable,unbelievable minefield,” says the 31-year-old,who rents alone in te Melbourne suburb of Abbotsford.
Leslie had hoped to fly to Mexico to celebrate his birthday next year,but rising living expenses have almost killed that idea.
“My savings account has been all but decimated,” he says.
With large chunks of their pay going towards rent or repayments,or trying to save for a deposit,Wood says Millennials’ reduced spending habits was part of a longer-term trend of younger people spending less.
Spending on eating out has increased among all age groups since the COVID-19 lockdowns,but Commonwealth Bank data released in May showed that among under-35s,there was only a 7.1 per cent uptick in spending on eating out in the 12 months before March. That compared to an 18 per cent increase among over-55s.
The bank’s data showed that despite inflation,spending by its customers between the ages of 25 and 29 had barely risen,which suggests belts were being significantly tightened.
Meanwhile,Leslie obtained an apartment through the National Rental Affordability Scheme in 2021 when he was on a low-income job.
“I’m terrified to my core of losing my apartment and having to dive into the piranha tank that is the city’s rental market,” Leslie says.
Generation X (born mid-1960s to early 1980s)
Withfewer Australians under 35 having children,the Generation X and Xennial – or “Elder Millennial” – age groups are dealing with the financial pressures of larger households with children,recent upgrades to larger homes,car purchases,and daycare and school fees.
“This is where you start to see a large divergence in financial outcomes for people,” says Grant. “By the time people hit their mid-40s they are either going to be well-off or less well-off.”
Jeremy Grey is having to find a way to cut back. The 48-year-old single father of three,who lives in a modest,orange brick rental home in Reservoir,in Melbourne’s northern suburbs,can no longer afford groceries,such as cheese and yoghurt,during his weekly shop.
Increasingly,frozen meals are creeping into the family’s dinners as Grey,who works in administration for the Community and Public Sector Union,finds himself having to choose between paying a utility bill or buying ingredients needed for a home-cooked meal for his children,aged 16,17 and 19.
“We have cut everything in our budget back to the absolute bone,” Grey says. “We are on the cheapest phone plans,we have scrutinised and cut back on everything.”
Last month,his gas bill was $280,up from $266 for the same time last year,while his electricity bill has climbed from $168 to $200.
Grey,a lifelong renter,says his goal has always been to one day own a home,but feels even saving enough for a 10 per cent deposit is impossible.
An older Millennial,Robyn Cantali,from Concord in Sydney’s inner west,is 39 and has three children under the age of five. They attend a mix of council-run and private daycare so she can work full-time. Her mother,who also works,takes the youngest child two days a week.
Robyn and husband Alexander receive the childcare subsidy,after the federal government expanded access to families earning north of $350,000. But their childcare centre followed by increasing fees. Still,Robyn says things are better than before,when the fees almost equalled her take-home pay. Starting her eldest at a Catholic primary school next year will be cheaper than daycare.
The Cantalis describe themselves as fortunate and comfortable:Robyn is a deputy principal at an independent school and Alexander works as an engineer. But the current economic situation means they are further behind on financial goals than they would like.
While they save for a place of their own,they rent a house owned by a family member. Robyn also has a mortgage on an investment property in Canberra (she has not increased rent in line with interest rates because she knows the tenant can’t pay).
This year could have been the year they bought their own place,but banks have cracked down on lending,testing serviceability against a 3 per cent rate buffer.
So,the family is cutting back. A trip to Europe became one to Fiji;they have health insurance but not extras cover. But there are some costs they have to bear:like many,they were shocked when their electricity bill hit $1000 last quarter.
“We look for cheaper or free events now,for the kids,” Robyn says.
Grant says families with children can find it harder to cut back their spending.
“It’s hard to go backwards;if you have put your kids in a private school,for example,it is a big imposition to withdraw them. You also have increased medical expenses,costs of food and shelter,” he says.
Australians bore the highest quarterly increase in the cost of house,home contents and motor vehicle insurance since 2020 in the June 2023 quarter,according to the ABS’s Consumer Price Index. Premiums cost 14.2 per cent more than they did at the same time last year.
Baby Boomers (born mid-1940s to mid-1960s)
It is a stereotype:the Boomer who says things were tougher “back in my day”. But,although he worked hard for what he has,retiree and part-pensioner Alex Gerrard says he can’t in good conscience say he had it harder than those now of working age.
“I feel really sorry for the younger ones,the ones who got sucked into the mortgage because they were told it wouldn’t go up,” says the 68-year-old from Bardwell Valley in Sydney’s south.
“It is hitting them hard. You can see that when you go to restaurants,you find that everything is empty.”
Associate Professor Sam Tsiaplias,a macroeconomics research fellow at the Melbourne Institute,says Gerrard’s observations are right:cost-of-living pressures on employees started to exceed that of pensioners and beneficiaries from about August last year.
“And that is largely because of higher mortgage rates,” Tsiaplias says. “Households that have purchased housing,that have mortgages and are paying interest on a large principal,they have really experienced the biggest rise ... People who bought a while ago aren’t feeling that.”
Gerrard put down a deposit on his first home,a house near Penrith in the city’s west,with six years of saving from a customer service job,and he and his then-wife paid it off within five years. This is not an uncommon story:census data shows Baby Boomers were three times more likely than Millennials to own their home without a mortgage when they were aged between 25 and 39.
Twenty years ago,he purchased his current home,which he owns outright,for $575,000. “It would probably go for $2 or $3 million now,it’s astonishing,” he says.
Gerrard travels to England to visit his 88-year-old mother and his sisters every couple of years,but not in peak seasons. He dropped his private health insurance six years ago,and thinks he is still ahead even though he recently visited a private hospital to remove a skin cancer,which he paid – “a lot” – for outright.
“Probably my biggest financial achievement was being able to send my son and daughters to private schools,” Gerrard says,adding that this took about half his wages at the time.
Eesa Witt,71,from Erskineville in Sydney’s inner west,also feels fortunate to have helped her children when they needed it:the former nurse and her then-husband remortgaged their house 15 years ago to help their son purchase his.
Retiring 10 years ago,Witt says she feels lucky her apartment – in a part of Sydney which has rapidly gentrified since the 2000s – was not included in the assets test for her pension.
She’s considered switching power providers,and tries to be more mindful at the supermarket. But she still wants to enjoy what she is passionate about.
“I subscribe to two theatre companies. I know we are all struggling,but the arts always struggles,so that is important to me,” she says.
Measuring cost-of-living pressures on people who have finished their working life and own their home outright can be difficult:they may have reduced working hours,or are in retirement,so their ability to earn additional income is limited. But,that extra personal time is also a resource.
“Older households have a lower opportunity cost of time,” Tsiaplias says. “They can cook at home,they can do things that reduce their spending on services.”
Associate Professor Ben Phillips from ANU’s Centre for Social Research and Methods,says Boomers have actually experienced the greatest increase to their cost of living:rising prices are more heavily experienced by those with higher disposable income.
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