11 Oct 2011
Generation Y have long been known as the generation interested in buying all things shiny and new, but as it turns out, they may be less inclined to spend up then other demographics.
Recent findings from the Reserve Bank show that Generation Y is in fact the generation who has the most penchant to save.
From the years 2006 until 2009, savings by Australians aged 15 – 29 soared by over 10 percentage points in comparison with just a 4 percent increase by baby-boomers (45-59 years).
Those worried about losing their jobs and those with larger holdings in financial assets have been the ones more active in saving.
The reason for the increase in younger people’s saving habits can be partly put down to the need to save for a deposit on a house, but as saving ratios were shown to rise for renters, home purchasers and home owners; this can’t be the only reason for the increased savings.
While there are likely many reasons for the shift in saving behaviour amongst Generation Y, what is apparent is that households are spending their money on different things now than they were in the past.
Australian households are splurging more on things like holidays, pay TV and the internet; and spending less on retail goods such as clothing and footwear.
It probably comes as no surprise that retail spending has gone down though, as we have seen many retailers struggling to adjust to new consumer spending habits.
Overall though, a nation of savers should be seen as a good thing, as it means that Australians a building a strong financial foundation for their future. In light of these recent findings though, many of us will have to start re-thinking our views on Generation Y, as it seems they are much financially savvy than they have often been given credit for.