Young people these days. They have high expectations, yet they are spendthrifts. With all that avocado toast, how can you expect to put down a deposit on a house? You should focus on getting a good job that pays good money.
Griping about young people is an old story. Horace, writing before the common era, was already complaining about the improvidence of youth.
We were all “young people” once. Spending priorities shift over a lifetime. Unsurprisingly, age is a determinant of what proportion of income gets spent and saved. People spend more than they save early and late in life. We put money away during our working years, though savings dip between 30 and 50, when expenses are high.
The question is whether changes to how much we spend, and on what, will be enduring
So, sure. Young people these days are – young? Not very remarkable.
Many of the perceptions about millennials and money are misplaced.
For one, millennials are better at saving than you think. RBA research estimates that a millennial born in the 90s saves around 13% of their income – more than someone born in the early 1970s would have done at the same age. What’s more, young people are more likely to report saving regularly.
As for getting a good job which pays good money? Well, just shy of half of all managers and professionals employed today are between 25 and 34. By comparison, the same age group comprises only 22% of other occupations.
Sure, millennials enjoy some of life’s little pleasures. In the 2015-16 financial year, 25 to 34-year-olds were spending $100 a week on eating out and $33 on alcohol. Yet they are hardly the only ones that can be accused of such excesses. People born in the 1960s were spending $138 on the same two things.
Of course, that was before the great reset.
Yet people have still been indulging in luxuries. We are spending 2.8 times as much on food delivery today than we were in January 2020, according to illion and Accenture.
The question is whether changes to how much we spend, and on what, will be enduring.
Will Covid-19 be the turning point that sets millennials and gen Z on the righteous path, resisting the temptations of avocado toast? Will they become prudent enough to save their dollars? Or as frugal as the children of the Great Depression, re-using tea bags?
There’s certainly been some change. Firstly millennials and gen Z are spending 5-7% less than they were before the pandemic. If anything, young people have reacted more strongly and quickly than older people when it comes to spending during Covid-19. Of course a big determinant of this is changes in income – but it does suggest spending is at least related to means.
Young people are increasingly keen bargain hunters, willing to hold out for the right deal. Almost two-thirds of gen Z and more than half of millennials are now waiting till an item goes on sale before they buy. Far from impulsive buying.
The bargain won’t come at the expense of the brand, though. Almost three quarters of gen Z and millennials have a strong preference over haircare brands, as an example. Gen X is far less fussed.
When they find the right product at the right price, young people are buying – and in bulk. Today, more than half of Australian 18 to 34-year-olds say they’re keeping more at home than they immediately need. Clearly a traumatic response to the great toilet paper wars.
It is true that today’s generations have different purchasing preferences – and different vices – to those that have come before. At 30, a gen-Xer would have splurged on cigarettes. A 30-year-old millennial is more likely to spend big on travel than tobacco. Or at least they were, before Covid-19.
It will be interesting to see whether these appetites have changed. When borders re-open, we’ll no doubt see a great exodus of the itchy-footed.
The better question is what will happen when the dust settles. When they reach middle age, will Australian millennials be doubling down on international travel, having missed the opportunity during Covid-19? Or will the pandemic have made a generation of wanderers turn in to staycation aficionados, carefully counting their pennies? Only time will tell.
Jessica Mizrahi is an economic consultant and commentator. She has taught, researched and applied economics for over a decade