Suncorp Bank’s 2015 Australian Saving Habits Report has revealed that Generation Y are Australia’s best savers, overtaking Generation X and the Baby Boomers as the most financially fit group.
The report shows that on average, Gen Yers are saving $533 per month, or 12.7% of their personal income. This is $100 more than the national average of $427 (11.5%).
How Gen Y is saving
Gen Y has reached the 25-34 age bracket – an age where they have enough income to save and invest money while still having relatively small financial commitments.
They’ve previously been labelled the “self-entitled” generation, and the report shows 1 in 4 adults aged 20-34 still live at home. But this is part of the key to becoming Australia’s best savers. Staying at home means young adults have time to find a job after graduating, and time to save money towards their goals instead of draining their income into rent or a mortgage.
This is as long as they are responsible with their busy social calendar, of course. The report showed a large percentage of Gen Ys spend much of their money on socialising and new clothes.
They are young, educated, and love to travel. If they continue to save as they are now, the financial future looks bright for Gen Y.
What are we saving for?
The report revealed that Gen Y would rather save their money for a holiday (32%) than a home to live in (24%). However, Gen Y is also heavily focussed on saving to buy investment properties.
Suncorp Regional Manager Monique Reynolds said it seems Gen Y Aussies increasingly prefer experiences over assets when it comes to saving and investment decisions.
How can we save more money?
The report had some interesting things to say about ways that savvy Gen Yers are saving money.
Australians love to eat! Across all generations, food is what devours the biggest part of our budgets – 17.5%. But good savers tend to make a lunch to take to work every day.
Australians who owned shares were able to save 13% more than those who didn’t. Shareholders saved $669 a month compared to $346 for non-shareholders. CANSTAR recently reported that Gen Y has dived into the sharemarket with a big splash.
Fuel and travel
Living in the country is more expensive than the city, largely due to higher incomes in the city and higher fuel and travel expenses in the country. Country dwellers saved $325 a month living outside the capitals, compared to $478 a month saved by city slickers. There’s not much you can do once you’ve chosen somewhere to live, but watching out for cheap fuel and making the most of supermarket fuel discounts is always a good idea.
It might sound odd that the best savers use their credit cards more often than average – but the key is that they pay it off every month without paying interest. Good savers were 34% more likely to agree that “I use my credit card for most purchases.”
The report actually said that men save more of their income (13%) than women (10%). This is a huge difference, $507 per month compared to $346.
But we think this isn’t just about another gender gap. So we examined possible reasons for the trend, and one of them is the fact that women buy clothing more often and spend more on it. Women can combat this trend by deciding which wardrobe pieces will stay as your “uniform” for work, socialising, and formal occasions, and donating the rest to charity.
Drew Barrymore is one notable celebrity who proudly shared how she put her closet on a diet. Harper’s Bazaar Art Director Matilda Kahl wears the same thing to work every day, as does freelance writer Alice Gregory. Jennifer L. Scott speaks and writes about how women in France have little closet space and therefore wear only a few items of clothing in constant rotation – but they love it because it looks good on them and is good quality. Even everyday women bloggers are finding ways to simplify life and save money by wearing only the things you love.
Men can save money on clothes too, of course. President Barack Obama has a suit for every day of the week, and Steve Jobs and Mark Zuckerberg have presented the IT crowd version of this.
The CANSTAR website is packed with our best tips for Budgeting & Saving.