A report conducted by buy-now, pay-later pioneer Afterpay Touch Group finds that Millennials are not the smashed avocado-loving, spendthrift generation they’ve been portrayed to be. In fact, they are responding sensibly to greater financial pressures in the way they spend, use credit and save by using new technologies.
This report shows that whilst Millennials manage their money differently to their parents, that doesn’t mean they are less financially responsible.
Millennials are using technology to help them manage their finances closely. 30% of millennials use online tools to track their spending and 7% use budgeting applications. 72% of millennials use technology to compare prices before they shop compared to just 28% of older Australians.
Millennials are 30% more likely to save regularly than their parents and 80% of them budget. They are spending 16% less on alcohol and 71% less on cigarettes.
And a result of the shift toward new BNPL services like Afterpay, Millennials are using credit cards 70% less and their personal debt balance is falling.
Dr Andrew Charlton, co-owner of economic consultancy AlphaBeta, said the data shows Millennials get less credit than they deserve when it comes to managing money.
“Millennials face greater financial pressures than previous generations,” Dr Charlton said
“Millennials face greater financial pressures than previous generations,” Dr Charlton said.
“For example, Baby Boomers could buy a house for around five times the average household income and enjoyed free education, but for Millennials, houses cost eight times the average household income and the average HECS debt is $19,000.
“In response, Millennials are making different spending decisions to past generations and are actually spending more wisely – including cutting back on discretionary purchases, saving more, and using new technologies to help them budget effectively and spend differently.
“Millennials represent almost half the Australian workforce and spend one in every three dollars – their ability to make smart financial decisions shouldn’t be underestimated.”
Home ownership among millennials is down – in 1980 61% of people aged 25-34 owned a home, in 2016 just 45% of people in that same bracket did – and underemployment has quadrupled over the past 40 years, with 12% of Millennials underemployed in 2018 compared to 3% in 1978.
The report used historical and new data to compare the financial pressures facing people now aged between 18 and 37 (Millennials), to those of that age in previous generations, and the differences in their spending behaviours and preferences.
The data dispels the myth that millennials rely on credit to fund their lavish lifestyles, and instead, describes a financially savvy generation that wants more control over its spending than its predecessors.
Put simply, the Millennial generation has grown up, but institutions that are still run predominantly by their parents’ generation have yet to recognise this.
Millennials are turning to buy now pay later payment methods because it meets their needs better than banks and credit cards. It will be interesting to see how other institutions innovate to meet the expectations of this tech-savvy, financially prudent generation.
Women Love Tech would like to thank Jade Harley for her article. Jade is head of partnerships for the retail app, Sweep.