According to a recent survey, over 60 percent of Australian millennials don’t have a savings plan for their future, while a third only save occasionally.
Commbank research surveyed 1,002 Australians aged 24-39 during April and studied millennials’ attitudes and habits towards their personal finances.
It found that only two in five have a regular savings plan that they stick to, while one in ten is still living paycheque to paycheque.
CBA Executive General Manager Everyday Banking Kate Crous said millennial Australians know the importance of having a savings plan but feel they need more tools and strategies to help them.
“We recognise many young Australians want to be more in control of their spending so they can start focusing on longer-term goals, whether that’s saving for a rainy day or buying a home,” Crous said
Speaking about the studies findings, ME Bank Money Expert Matthew Read told Saving.com.au that outside factors could be making it harder for younger people to save.
“Millennials could be finding it harder to budget due to several factors, ” he said. “The cost of living, lower incomes as more are at the start of their careers, and there may be consumer pressures not experienced by other generations too.” However, he also noted that many millennials could be skipping simple steps that could help them.
“According to ME’s latest Household Financial Comfort Report, 59 percent of households don’t consistently follow a budget, and only 38 percent of households keep details about their monthly expenses—information that forms the foundations of a realistic budget,” he said.
But he said that ME banks research had shown millennials have something that can help them; they were very open to discussing ways to develop financial security.
Commbank’s research also showed that around half of those queried were keen to discuss ways to develop better methods of managing and saving money, such as strategies to get financially ahead (54 percent) and spending and savings habits (53 percent).
Buy Now Pay Later
One issue that does seem to be affecting millennials adversely was the rising popularity of ‘buy now pay later (BNPL) services which to some extent was reflective of young adults’ failure to create and stick to a budget plan.
BNPL services, such as AfterPay and Zip Pay, allow consumers to immediately buy and receive goods and services, then repay the BNPL provider over time in instalments. Providers do not charge interest but instead charge a fee for late and missed repayments.
According to a report by the Australian Securities & Investments Commission (ASIC) in November 2020 (pdf), the number of BNPL transactions increased by 90 percent in the 2018-19 financial year compared to the previous.
ASIC found that one in five users of BNPL services missed a repayment, of which 40 percent were millennials.
The report also found that over the 12 months up to Nov. 2020, 20 percent of consumers surveyed said they had taken out additional loans to meet their BNPL payments on time, half of which were aged 18-29.
Additionally, one in five said they had missed other bills to meet their BNPL payments on time, such as household bills and credit card repayments. Half of these consumers were aged 18-29.
“Our review highlights that while buy now pay later arrangements have been embraced as a way to make purchases more affordable, some consumers are missing payments, paying missed payment fees, and struggling to meet other financial commitments,” the report said.