How to go on a financial diet

How to go on a financial diet

YOUNG Australians have copped a lot of flak recently for their flippant spending habits, but new research shows this may be an unfair generalisation.

The annual Christmas Spending Survey by Homeloans.com.au revealed young Australians were the most committed to saving money in 2018.

Of the 800 respondents, 52 per cent aged 18-24 planned to save more in 2018, compared to just 16 per cent of those aged 45-64.

Meanwhile, 68 per cent of those aged 18-34 saved money regularly throughout the year to offset Christmas spending, compared to 24 per cent of 35-44 year-olds and 19 per cent of those aged 45 to 65.

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Younger people knew they faced a tough challenge to get ahead, said Will Keall, National marketing manager, Homeloans.com.au.

“The smashed avocado segment, as they’re referred to … that’s an unfair generalisation because they are focused on saving,” Mr Keall said.

“From last year’s survey to this year, wherever there’s a change, it’s to do with people saving more and spending less.”

Rising energy prices and household bills, along with the expectation that interest rates will rise in 2018 are all factors influencing the saving trend.

“There has been inflation across the board, the costs of living have increased and property prices are off the scale,” Mr Keall said.

“People have bigger commitments to mortgage repayments and something’s got to give. When interest rates go up it will change the goalposts even further.”

McCrindle social researcher Eliane Miles said millennials were more financially aware than in the past and feeling the pressure.

Have your avocado and eat it too Have your avocado and eat it too

“One study found the top financial regret for all generations was not saving enough, but millennials topped all with 42 per cent, compared to 38 per cent for Gen X and 28 for Baby Boomers,” Ms Miles said.

“Another showed 36 per cent of millennials considered themselves extremely financially stressed and 87 per cent somewhat financially stressed, compared to just 13 per cent of Baby Boomers.”

ABS figures showed 25-34 year olds were the only 10-year age bracket to have gone backwards in income over two years, while household income has flatlined since 2009.

“House price growth has doubled wages over the last 10 years and young people feel locked out of the market,” Ms Miles said.

“Young Australians are under immense pressure to match previous generations.

“The focus for a lot of young people with things like social media is how your life looks rather than how it actually is … that adds pressure in terms of feeling left behind.”

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Emily Cullin is balancing starting some home businesses with raising a small child. She and her partner bought three properties in 2016, despite working average income jobs and having no help from parents.

She said it was important to leave emotion out of financial decisions.

“Due diligence is more important than feelings,” Ms Cullin said.

She saves money by buying second hand as often as possible and making sacrifices to offset splurges.

“If you want your smashed avocado, find an extra way to make money so you can recoup that expense,” she said. “For example, sell something unwanted on Gumtree, rent your garage space or hop on Airtasker.”