Gen Y better savers than Gen X and babyboomers
According to the RaboDirect annual Savings and Debt Barometer, Gen Y are best generation of savers, with 29 per cent saving a regular amount each month compared with 19 per cent of baby boomers. Gen Y, who usually get a bad rap for credit card debt and irresponsible spending are proving the older generations wrong with their disciplined savings habits.
Contrary to expectation, among those who save nothing at all - or spend more than they earn - 24 per cent were baby boomers compared with just 11 per cent of Gen Y.
"People often give Gen Y a bad rap when it comes to finances but we've been running this survey since 2009 and Gen Y tend to be a lot more savvy than people give them credit for," says RaboDirect Australia executive general manager Greg McAweeney.
"A deposit for a house is something they would be aspiring towards. It's still the great Australian dream to have your own property."
However, Mr McAweeny suggests boomers priorities are more focused on their retirement. "Boomers have a different attitude - they're probably more focused on retirement strategies than making regular savings."
Internet savvy Gen Y are proving better at researching savings strategies and looking for a better deal than the boomers, who are less likely to switch banks for higher interest rates but are the best at budgeting and were prioritising putting money towards retirement rather than savings.
A well kept secret of the internet generations are financial content aggregation websites like Mozo.com.au that allow savers to track down the best interest rates on savings accounts and switch regularly to attain the best interest earning on their savings - this 'rate chasing' attitude and web savvyness, is part of what is getting Gen Y further than the other generations.
By comparison, the older generations loyalty, or apathy towards their bank isn't actually working in their favour, financially speaking.
"Gen Y are better at researching savings strategies and looking for a better deal than the boomers, who are less likely to switch banks for higher interest rates and are putting money towards superannuation rather than savings," he said.
But there's a large gap between the super many boomers have and the amount they need for retirement with 29 per cent who have not yet retired saying they will retire with a mortgage. "Often they'll say 'I'm going to use some of my superannuation to pay it off,' which is actually the worst thing you can do."
With Gen Y leading the pack, overall, Australians have become better at saving since the global financial crisis and are feeling more optimistic about their finances this year than they did the year before. The study also found a correlation between healthy finances and healthier, happier lives.
"We do see a link between savings and happiness." Respondents financial health closely correlated with their perceived physical and mental well being McAweeney said.
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