Generation Y – financially reckless or astute? According to a recent survey commissioned by RaboDirect, this generation’s financial know-how is often better than that of Gen X and even of their Baby Boomer parents.
The 2012 National Savings and Debt Barometer, shows that Gen Y are not as financially irresponsible as is often touted by media and older generations. In fact, while others may slam this generation for being fickle, the research shows that this quality works in their favour as they search and find the best rates and deals on financial products online.
The survey revealed that, of all the generations, Gen Y is making the most of their savings with 44% using a high interest savings account, compared to 37% of Gen X and 38% of Boomers – which means they can grow their savings faster. This generation is also better at managing their money with 69% having a preference for budgeting (compared to 64% of Gen X and 62% of Boomers). Forty one per cent say they have a long term financial plan (vs 37% of Gen X, and close behind Boomers at 46%).
RaboDirect spokesperson, Renee Amor, said the online savings bank wants to congratulate Gen Y and encourage them to continue on this positive path.
“We want to stand up on behalf of Gen Y and challenge the negative stereotype often linked to this younger age group. Gen Ys are too often beaten-up over their financial outlook and actions, yet our survey findings contradict these unfavourable perceptions. Gen Ys are taking control of their finances and have a prudent approach to managing spending and saving. Not coincidentally, Gen Y also report higher level of health and happiness,” Ms Amor said.
“Perhaps Gen Y could teach the older generations a thing or two about saving – as our research shows, they saved more this year than the other generations – and importantly they are saving into the right products. While Gen X and Baby Boomers still appear to be married to transaction accounts with zero-to-low interest, the younger generation understand that by using true high interest savings accounts, they are able to grow their savings quicker and enjoy the benefits of compound interest.
“As in most situations, there is still room for improvement and we encourage Gen Y to look for other positive ways to progress their financial situation. One area we would mark as one for Gen Y to keep an eye on is their debt levels. This generation said they feel in control of their debt and are able to manage it, which is great news; however their debt levels are increasing. Being too comfortable with debt can lead to problems, so where possible, pay down debt and resist using that credit card.”
