When it comes to Millennials and how they shop and save, there is more than meets the eye, according to a recent report by buy-now-pay-later company Afterpay Touch Group.
Frequently dismissed as Australia’s largest avocado consumer group, millennials make up 44% of the Australian workforce and contribute one out of every three dollars spent in the Australian economy. Forward thinking companies like Afterpay are taking a closer look at this growing consumer group’s spending habits.
The report indicates that Millennials are responding to greater financial pressures in innovative ways, speaking a different fiscal language to their forebears.
One of the greatest points of contention between Millennials and Baby Boomers has been their different attitude to housing investments. The report suggests that this could be attributed to a tendency towards risk aversion.
Financial advisor Dr Andrew Charlton notes that “Baby boomers could buy a house for around five times the annual household income, and enjoyed free education. For Millennials houses cost eight times the average household income and the average HECS debt is $19,000.”
Millennials instantly saddled with debt upon leaving University, and they are entering an uncertain employment market. Underemployment has tripled in the past forty years to 12%. Even previously secure career paths like law are now saturated with graduates.
The Afterpay report indicates that young people are not confident that debt accrued after University will be easily repaid. It is understandable then that they are delaying big investments like having children and taking on mortgages. But this doesn’t mean they aren’t looking to the future.
It indicates instead that millennials are suspicious of strategies used by previous generations to generate wealth. Millennials expressed a strong preference for relying on savings over banks, credit and high risk investments.
Harnessing technology to save:
Millennials are 37% less likely than the generation before them to hold a credit card, and a mere quarter of millennials said they would rely on banks if they needed to raise funds.
Increasingly, millennials are viewing credit and banks as a last resort.
One in three millennials are using online tools to track their expenditure, save and budget. And the tools are working, millennials are 30% more likely to save regularly than their parents and 80% budget.
And compared to only 28% of older Australians, 72% of young people research purchases of $100.00 or more in store.
For large purchases millennials are using BNPL services like Afterpay. Of Afterpay’s 2.5 million Australian users 69% of them are under the age of 34. Millennials report feeling supported by Afterpay’s built in protections, like timely payment reminders and low interest, in managing expenses and avoiding debt.
Something this millennial liked most about the report? There has been zero generational increase on spending on “meals eaten out”. It seems Boomers were out to lunch far more than they would like us to think.
The Carousel would like to thank Ruby Feneley for the article.