A new study has found that Gen Y is largely ‘financially fit’, while other sectors of the community struggle to keep on top of money matters.
When it comes to making smart financial decisions, it can be hard to know where to begin. This is because people are all different and while there are those that have a knack for counting pennies, others find it difficult to hold onto loose change.
But there are often key trends among different segments of the community that offer an insight into the factors that play on our minds when we choose to spend or save money.
Despite a somewhat negative reputation for being fickle and at times a little too carefree, it seems that Gen Y is starting to flex serious financial muscle.
And while convention would dictate that wisdom comes with age, recent reports suggest that the other may be true.
Results from the Bankwest Financial Fitness Index were released today (March 1) and they have gone some way to break down stereotypes.
According to the study the vast majority of people under the age of 32 are what the banking group calls “financially fit” – which means they are saving regularly, have little debt, adequate insurance and low housing costs.
This means that Gen Y may be a lot more conservative in their spending habits than previously thought.
Bankwest’s nationwide survey reviewed the economic attitude of about 1,000 young people.
From this pool of people it was determined that as many as one in four individuals were financially fit, with some experts suggesting that the Global Financial Crisis is influencing the way young people think about money.
“Generation Y is the least burdened with long-term debt, such as a mortgage, so they have the most leg room to change their immediate habits,” Bankwest Retail chief executive Vittoria Shortt told the APP.
“The fear of rising unemployment is driving their conservative spending behaviour, including reduced dependence on credit cards,” she added.
But surely these are just some of the reasons why young people are starting to clean up their spending and heed financial advice.
The study did not look into the impact other social and personal concerns may have on the bank balance of those 32 or under, however now that attitudes are changing, this may take place at a later stage.
Gen Y weren’t the only ones who had to be honest about their spending habits for this report, as researchers probed the finances other social demographics such as Gen X, baby boomers and retirees.
Those in the 60 plus category are putting their working kids to shame and making sure not to over extend themselves – which is important given that most Australians are living well into their 80s, placing additional pressure on personal savings.
Men were also more likely than women to have attained some level of financial security, with greater savings than their peers and access to economic resources.
Those aged from 33 to 46 were the least likely to be in a strong financial position and were identified as having difficulty managing money.
The overall trend shows a country divided due along economic lines, with at least as many people struggling to dot their I’s and cross their T’s as those who are easily keeping on top of their personal finances.
This may not be the fault of individuals, with rising energy, food and transport costs all taking their toll on personal finances.
Strained finances may also represent increased financial commitments such as the costs associated with running a household or taking care of ageing family members.
Sitting down to organise a financial plan may help individuals make positive long-term financial decisions that will help make sure there is always something left over for the next rainy day.
ipac is one of Australia’s largest financial advisory firms and has offices based across the country. A wholly-owned subsidiary of the AMP Group, ipac specialises in research and financial advice that helps clients lead happier, more fulfilling lives.
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