Y it needs to change
Tags: retirement
It is fascinating that terms created to assist in demographic research for advertisers would become mainstream words in today’s society. It all started with the post-war baby boom to categorise the aptly named, “Baby Boomers” through to our present-day youngsters known as the Alpha Generation or “Gen A”. But it seems the generation that has attracted the most attention in recent years is “Gen Y”.
Whether you like this labelling or not, if you delve into how the generations interact with one another when it comes to money, it can be very interesting.
There is no doubt that Generation Y, the children of the Baby Boomers, is the driver of the next economy. Currently aged in their 20s to mid-30s, this cohort tends to be highly educated, live for today and delay marriage, children or a traditional career, until later in life. And, generally speaking, they are not good money managers.
Who’s to blame? The Baby Boomer generation (born between 1946 and 1964) consisted of children born into families recovering from WWII. This generation was the first to create two-income families and with this extra income these parents tended to indulge their children.
“Gen Y-ers” (born between 1980 and 1994) have been referred to as ‘KIPPERS’ (Kids in Parents’ Pockets Eroding Retirement Savings), with the latest Australian census data available showing that nearly a third of young adults are still living with their parents.
Extended education and housing affordability are contributing factors, but it usually comes down to the fact that it’s far cheaper to stay at home with parents covering most of the costs, such as utilities, food and other essentials.
Some members of the Y Generation are happy for “Bank Boomer” or “Bank Mum and Dad” to prop up their lifestyles and supplement their income. But this is proving to be the downfall in their becoming successful money managers. Many are heavily in debt, with research indicating that 42% of those under 24 have personal debts of between $10,000 and $30,000 and more than a third of all registered debt agreements belonging to 25-34 year olds.
Having grown up in a largely thriving economy, Gen Y is often unrealistically optimistic but it’s getting close to crunch time for this generation. Overly generous Baby Boomer parents are closer to retirement age and are becoming more focused on their own future needs. They either won’t or can’t afford to continue supporting their children’s lifestyles. It’s essential that their offspring need to develop budgeting and debt management skills, build their savings and turn their attention to their own future.
If you’re the parent or the child and the time is looming to make some hard decisions, arrange a time to sit down with us to help you prepare for a different future that works for everyone.
