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Introducing Gen Y

A lot has been said about Gen Y – the term typically used for those born between 976 and 99. They have been described as frivolous, called the “me generation”, labelled as spoilt and overprotected – as an ambitious generation, constantly in search of instant gratification, but not expecting to work hard for it. But is this fair and are they really that different to their Baby Boomer parents, or their predecessors, Gen X? What, if any, has been the impact on this generation of a greater emphasis on equality in society and in particular the workplace? The 7th AMP.NATSEM report examines the social, spending and saving habits of Generation whY? – so called because this is the generation the rest of us probably understand the least. The information in this report draws from an extensive range of statistical surveys comparing Gen Y in 2004 to their predecessors, Gen X, at the same age in 989.

Life balance? More study and more work!

Gen Y is a fairly conservative bunch. Half of them are still living at home and are staying there longer compared with Gen X at the same age. They have developed a strong work ethic too, with nearly one half of full-time Gen Y students holding down a job, and seven out of every 0 Gen Y students studying part-time engaged in full-time work. The 50 per cent who opted to move out of home are hesitant about entering the housing market, with significantly more Gen Ys renting than their Gen X counterparts at the same age in 989 – 59 per cent compared to 49 per cent of Gen X – while fewer are home owners or buyers. But the great Australian dream is still alive with most wanting to buy a house by the age of 30. Sixty seven per cent of these, however, are worried about achieving this dream. Forty one per cent in the 25-29 age group are already saving for a deposit, but have a long way to go with only 25 per cent of all Gen Ys managing to save more than $0,000 so far.

Spending and saving? Not so frivolous. In theory, Gen Y is all cashed up with added parental support and less responsibility than their predecessors. Their earning power cannot be ignored with the most affluent 20 per cent of persons living in Gen Y households bringing in close to $20,000 a year, and 40 per cent of persons living in Gen Y households earning more than $75,000 a year on average. However, they are not as frivolous as sometimes thought. When it comes to household expenditure, they are spending less on clothes, food and alcohol than their Gen X counterparts in 989. Gen Ys biggest expenses are housing at 2 per cent and transport at 4 per cent. Even though they are in a good position financially, debt is an issue with households headed by a Gen Y owing about $60 billion in total. Not surprisingly, 55 per cent of Gen Y households have credit card debt, more than any other debt category. Thirty seven per cent have home mortgages, while 23 per cent of Gen Y households have HECS debt. If you look at the wealth and assets Gen Y now hold, even though Gen Ys head 9.6 per cent of households, they only hold 3 per cent of total Australian household net wealth. Even when you factor in age and earnings, Gen Y may still find it difficult to bridge this gap to catch up with the rest of Australia. The average total net worth of households headed by a Gen Y is $80,880. Around 80 per cent of this or $63,670 is held in the home equity and other wealth categories – that is, mainly the mortgage on the house, its contents and vehicles. Given the average Gen Y superannuation balance is $9,770, and taking into account how much they are likely to have earned to date, $80,880 in net worth is impressive.

The gender divide – still alive and well

 According to the statistics, it should be a dream run for Gen Y women. They are better qualified than their male counterparts. Forty-six per cent have post-school qualifications compared to 42 per cent of male Gen Ys and they also enjoy higher employment rates. But, when it comes to work, income and assets, not much has really changed since their mother’s day. It has been estimated that women are still earning around 5 per cent less  on average, in the same occupation and working the same number of hours, as men. For Gen Y, this varies from a difference of $34 a week for professionals to $35 per week average shortfall for women in the clerical, sales and services industries. Single women also have a third less in superannuation than their single male counterparts. While the fact that women have more qualifications, which may mean they enter the full-time workforce later, it still highlights a large asset deficiency for single women. Single Gen Y men have on average 30 per cent, or $25,000, more in assets than single Gen Y women.

Taking their time with the things that matter

Every business wants to know what’s important to this generation – and this report also looks at what matters to them now, and what they think will be important to them when they are 35 years old. What is clear is that major life decisions such as marriage, children, savings and investment are not as important to them today as more immediate goals like sports and hobbies, fitness and a career. However, they do recognise that these areas will be important when they are older – albeit when they are in their mid thirties.

What does it all mean?

This AMP.NATSEM report shows that in many respects, Gen Y is no different to other generations in what they aspire to – although there are some notable exceptions in how they live. They are more responsible than often thought by others, in that they are focused on education and their careers, and are at least thinking about their future. They are, however, delaying decisions on children and home ownership, preferring to focus on accumulating assets such as cars and gaining qualifications. They do plan to have children and buy a home, just later than their predecessors – in their 30s instead of their 20s. But what are the implications of this delay? Financially Gen Y seems to be doing well, but they cannot afford to be complacent and they cannot expect to be automatically guaranteed a comfortable later life. They may be financially reliant on their parents, but this has not made them irresponsible. If we look back at some of the generalisations made about Gen Y, they are indeed ambitious, but they do not seek immediate gratification; in fact they are working and studying harder than previous generations at the same age.

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