Younger generations are not generally known for being financially responsible but Generation Y or Gen Y might be a generation that is the exception to the rule. During the lifetime of current 18-29 year olds, the world economy has been through a huge recession and although Australia has gotten by unscathed, it has seen housing prices rise dramatically and unemployment start to rise. Most Australians still want to own their own home and the skyrocketing prices are making that a dream that will be harder and harder to realise. Combine rising property prices and rising unemployment levels and it is no surprise that Gen Y has taken the warning signs seriously. The youth group that forms this hard-to-figure-out section of society has a higher savings rate than many of the previous generations, as well as a keen knowledge of how financial markets work.
Gen Y and their Financial Decisions
When polled, Gen Y said that they are willing to buy groceries on specials and wait to upgrade their technology. These are the kind of spending practices that come from learning from the world around them. Certainly this generation’s parents are due some credit since it was likely the parents that taught their children to save sooner rather than later in order to take advantage of compounding interest on savings. Waiting to buy what they want and being patient is a hard lesson to learn but will always pay off in the long run. Making wise choices are hard sometimes but this generation seems to understand that.
Understanding debt is a crucial part of learning financial responsibility. Having necessary debt like a loan on a house is as important as the good kind of debt like a loan against an appreciating asset. The other side of the coin is bad debt like a loan on a depreciating item. Gen Y is socially connected and it is easier for them to find peers with like minded financial goals to surround themselves with. This connectivity also affords this age group the ability to gather mentors who can show the path to financial freedom. For example, this generation has learned from past generations that it is always better to pay off credit card debt at the end of each month instead of letting it build. With Gen Y set to inherit the world, we are all in wiser and more informed hands than any generation before us.