Friday, 17 July 2015
Posted by Kirsty Timsans
Contrary to the belief that young adults should remain in the family home as long as they can to save up for a mortgage, a new study has revealed that Australians who move out earlier have larger incomes and asset wealth than those who rush or delay the time they move out.
The report by the University of Melbourne titled Household, Income and Labour Dynamics in Australia found that those who move out between the ages of 21 and 24 are likely to be $185,000 richer when they reached the ages of 35-54.
However it also found that those leaving the family nest before 18 years old were putting themselves at increased financial risk with males ending up $184,877 less wealthy, and women $106,977, compared to those who waited until 21-24.
On the flip side, those who left home after turning 25 were likely to have incomes that were about $5,280 lower than Australians who moved out aged 21-24. This, too, impacted wealth over the long run with figures estimating that men end up almost $21,000 worse off compared to women who will accrue $95,676 less wealth.
Study author Associate Professor Roger Wilkins told news.com.au that he was suprised by the adverse financial effects moving out between 18-20 and after 24 could have.
He said the study findings did not mean that young Australians should aim to move out at 21-24 years old, but rather believed it was the types of personalities who moved out at that age that led to a more favourable financial situation.
Social demographer Mark McCrindle also said it was “fascinating” how little decisions can have a big impact.
“It shows over the long term how behaviours and lifestyles can lead to wealth or not and it shows that our idea of offering a parental safety net can lead to someone’s economic downfall,” he said.
“Staying home provides social connections and family unit support, and more young people are able to finish their studies, but it certainly does have that unintended consequence of diminished future wealth.”