New research from Budget Direct has found that, unsurprisingly, most 18 to 24 year olds are prioritising travel over saving for a house deposit.
Budget Direct’s survey of 2,800 Australians in January 2017 reported that 64% don’t have a savings plan. Of the 18-24 year olds that did identify as having a savings plan, 32.6% said they were prioritising travel while only 16.7% prioritised saving for a house deposit.
The statistics on travelling millennials
But it’s not just Australian millennials with this mindset.
A recent study from Airbnb found that most millennials from the US, the UK and China are also keener on a holiday than they are on owning a home or paying off debt.
Millennials from all three countries ranked travel as higher in importance than buying a home.
But while millennials from China and the UK also prioritised travel as more important than paying off debt, US millennials viewed paying off debt as more important than travel.
However, that’s rather prudent on their part considering the fact that, according to the Wall Street Journal, school debt for US millennials is up more than 100%, having increased from $35 billion in 2007 to $69 billion in 2015. And you thought your HECS/HELP student debt was bad!
Here are some other interesting facts about millennial travel habits revealed by Airbnb’s survey.
Why Australian millennials prioritise travel
While Australian millennials are particularly prone to above-average levels of personal debt, it appears that doesn’t stop them from exploring the world.
We asked some Australian uni-age individuals about their thoughts on travelling vs saving for a home or paying off debt, and their responses were as follows:
“Travelling is the most luxurious thing we can afford right now. We can’t put a $50-$100k deposit on a house for the foreseeable future, but we can buy an all-expenses paid trip to Hawaii for $5k pretty damn easily if you want it bad enough. I think we would rather have little luxuries here and there (like traveling) than suffer for 20 years trying to save up for a house.” – Sebastian J. West, traveller, 19
“I think being able to prioritise travel over other expenses is a privilege. A lot of young people live paycheck to paycheck and literally can’t save money, even for things they need, like dental care and new work shoes. Not travelling is a reality for a lot of people, not a choice.” – Ash Byrne, 20
“Travelling …makes you realize what’s really important in life and the things you actually miss hold much more value. I think saving up and making something of yourself definitely gives you a tangible sense of worth, but knowing you can survive with nothing and having a reservoir of memories of different people and places has given me the greatest sense of self-worth imaginable.” – Elijah Bell, traveller, 20
“I’m basically spending every cent I have on travelling, because I’m motivated by making memories and having new experiences that exist outside of my home country, or city for that matter. I’m not ready to purchase a house as I don’t know where I want to live in a year, let alone five, and I have no desire for other material possessions other than a house (shelter). Travelling has been the highlight of my life and gives me more fulfilment and happiness than anything other than my friends and family.” – Joseph Ogilvie, traveller, 25
“Very few people have the opportunity in their youth to even decide between a holiday and an investment property, and when faced with the choice to invest your savings or go on a holiday, despite one having obvious long-term benefits, the prospect that a teenager should be held to the same fiscal standards of a wizened, post-Depression grandfather is laughable. The reality of a modern economy is that very few young people are in stable, long-term employment contracts, and so long-term debt would be foolish at best for most youth to aspire to. Ultimately there is incredible value in travel and enriching yourself in means other than purely monetary, but if you were to decide to pursue investment (whether it be the beginnings of a stock portfolio or a house deposit) you’ll be ahead of your peers in years to come.” – Lewis Holmes, home owner and traveller, 20
Travel or save for house: Hang on, why not both?
When it comes to fun or financial prudence you might feel like it’s a one-or-the-other situation, but the truth is that if you’re in a financial situation to be able to pursue one, you can probably pursue both. As with most things in life, it’s about balance!
To the travellers: Maybe cut back slightly?
For example, say you’re a seasoned and enthusiastic traveller who takes two or three holidays a year to the tune of $5,000 (excuse the hypothetical figures) – what’s stopping you from taking slightly smaller holidays, or one less trip per year? You could end up with a spare $1,000 per year, which you can invest in shares for a long-term approach (a managed fund or index fund is an effective and easy investment strategy).
If you’re not comfortable with shares just yet, a high-rate (around 3%) savings account is another option. Although you might want to double-check that your savings account of choice hasn’t had its rate cut recently.
To the scrimpers and the savers: Cut loose!
Conversely, if you’re saving/investing every cent you possibly can, why not cut loose and take a holiday, even if it’s a small one? It might initially feel like you’re wasting money, but the physical and mental benefits of treating yourself to a holiday can easily outweigh the hit your savings will take. And besides, not every trip has to cost you thousands of dollars! Nearby Asia offers plenty of (relatively) low-cost options for a vacation such as Thailand or even Japan, as do New Zealand and several of the Pacific Islands such as Fiji or Bali.
If you’re currently considering a home loan, the comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for first home buyers. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest-highest). Products shown are principal and interest home loans available for a loan amount of $350K in NSW with an LVR of 80% of the property value.
Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products.
*Comparison rate based on loan amount of $150,000 and a term of 25 years. Read the Comparison Rate Warning
With all of that being said, we can’t tell you how to live your life. You might have zero interest in saving for a home, or not see any point in travelling at the moment, and both of those mindsets are absolutely fine! It’s just important to recognise that travelling and saving/investing aren’t mutually exclusive as many would have you think, but can be easily pursued simultaneously if you’ve got the discipline necessary to do so.