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Bridging the Generation Y Gap

Gen Y is all about “living in the moment”, but will this “spend now, save later” way of life hinder their financial future? Who is Generation Y? Also known as the Internet Generation, Echo Boomers, MyPod Generation and Millennials, Gen Y is those who were born between the very late 1970s/early ‘80s and the early 2000s. Stereotypically, these youngsters are known to be confident, opinionated, fashionable, brash and open to change – they certainly don’t suffer from low self-esteem. And they don't like waiting around, either - Gen Y knows it has options. If not satisfied with the way they’re being treated, they'll shift to a new workplace, a new service provider, a new brand... It’s an age group that seeks — even demands — instant gratification. The Internet, which they grew up with, is the primary source of information for young people. Tech-savvy and cynical of marketing spin, Generation Y is leading the way in online spending. Gen Y and Their Spending Habits According to The Leading Edge Trends survey of 1230 young Australians aged 18 to 24 years:
  • 31% of Gen Y is spending more on ‘going out’;
  • 33% is spending more on personal technology gadgets such as smartphones and GPS navigators;
  • 29% is spending more on takeaway food.
Karen Phillips, Sydney CEO of the abovementioned insight consultancy, said: “With so many Gen-Yers still living at home with mum and dad (most likely Baby Boomers), it’s not surprising they are less affected by an economic downturn in comparison to home owners and young families”. This doesn’t mean they won’t be impacted in the future, though. The “buy now, pay later” mentality means young people are less likely to save before they spend. The majority of Gen Y believes that retirement is too far away to think about, but if they continue this thinking, they’ll be forced to forfeit the material benefits earlier generations enjoy in retirement, such as houses, cars and holidays. Setting Gen Y on the Path to Financial Success To change those free-spending habits, Generation Y needs to first be taught how to manage daily finances. Understandably, reflecting their relative lack of life experience, youths are less confident than adults when it comes to managing money. However, they’re reasonably well informed about good money practices — even if they don’t always put them to use — and they’re keen to learn more from family, friends, schools, financial advisors.