Gen Y hooked on credit: report
By Sam Holmes
THE post-baby boom generation of consumers accept long-term debt as a lifestyle choice and not just a means of getting a financial leg up, research has found.
And the financial services sector remains behind the eight ball when it comes to meeting the needs of Australia's generations X and Y - those born after 1964.
Social researcher Mark McCrindle said a demographic map divides Australia into three broad generations: "builders" born before the second world war; baby boomers" born between 1946 and 1964 and generations X and Y.
Generation Y in particular - those born in the early 1980s onwards - were likely to be overly dependent on credit for lifestyle.
The builders generation - those pre-war - have quite a structure around spending," Mr McCrindle said.
"They're financially conservative and they like to save and then buy something in force compared with boomers who are a bit more used to credit but at least the boomers are aware of interest rates.
"The generation Y's are credit dependent."
He said in a world of HECS debts, internet purchasing, credit cards and mobile phones, generation Y's financial challenges were vastly different to those of previous generations.
Even buying a home and saving up for the mortgage deposit is a massive commitment compared with the past," he said.
"The Real Estate Institute shows that it used to take 250 weeks of work, today it takes nearly 500 weeks of work."
While much of the credit dependency was a product of a younger generation's tendency towards risk, many of the demographic's financial habits were here to stay, he said.
Mr McCrindle expects life stages such as buying houses and having children to make generation Y slightly more debt averse but he said most of the habits were here to stay.
Most of what we see today has already been formed by their times, eras, social markers and the like," he said.
The concern about this was the financial sectors slow reaction to such trends.
They aren't connecting with gen Y, mainly because gen Y aren't the high net worth individuals - it's the boomers that are," he said.
"But if you extrapolate it out, generation Y will have far more super than any previous generation because they've got super at nine per cent from day one.
"I think financial companies need to start to build some loyalty to Gen Y ... and I think they'll be rewarded in the long term."
Any comments on this article? Is it just a sign of the times?