According to a survey featured in the Sydney Morning Herald on April 21 2010, more young Australians see themselves as lifelong renters now than ever before, as their prospect of home ownership dims due to soaring debt. In 2009, the current affairs program 60 Minutes reported that those in the “Generation Y” category were sinking into $60 billion worth of debt, with one survey showing 73% of Generation Y affected.
In contrast, the same survey indicated a staggering 82.1% home-ownership rate amongst current retirees. So why is there a stark difference in home-ownership rates between generations?
Clik here to view.
Image by Patrick Doheny
Current retirees had the stability provided by working in the same company until retirement. In addition to this, they worked hard and saved every dollar towards funding a nest egg. It is worth noting that they grew up in an era before modern technological advancements, so consumer choices of goods were limited.
In contrast, current young Australians are living in the short-term, moving from job to job and company to company interspersed with short career breaks and travel. Living in a modern consumerist society, young Australians are more prone to spending impulsively on the latest gadgets and on cars, landing themselves in a heap of car loans, tertiary education bills and credit card debts.
Here are 6 money management tips young Australian can learn from their elders:
1. Start Saving
Money is saved over a long period of time. Start by saving 10% of your income. If you have the capacity to invest, consider low-risk investment for a start. Your main goal in saving and investing is to gradually accumulate money, not to earn quick profits. Most importantly, early investment almost guarantees huge rewards.
2. Avoid unnecessary spending
Consider your needs and wants. Heed our elders’ advice against buying collectibles or junk items. Go for cheaper options instead of expensive things. When money is spent on an item, ensure that it is functional and is used to the full. Replacing things to get the newest, brightest, best items may be fun but it can drain resources.
3. Do It Yourself
If you have the skills to fix or make something, you can save hundreds of dollars. For example, if you can fix a light bulb on your own computer, you not only avoid blowing money on engaging the services of a tradesman, but also on transport.
The same applies to kitchen supplies, such as squeezing your own oranges to make home-made orange juice, making your own pickles or cooking bases, and growing your own vegetables. Cutting costs in various areas of your household needs will help you make significant monthly savings.
4. Apply the three Rs
We constantly hear about the three Rs: Reduce, Reuse, Recycle. But do we actually carry them out? Reusing packaging such as plastic containers or bottles, cardboard boxes and supermarket plastic bags will not only help you save money but also protect the environment in the long run.
5. Avoid debt
It is not a good idea to buy another big-ticket item on loan when you are still struggling to pay for your car loan. Always pay your credit card bills in full and on time before making the next purchase. The bottom line is, if you can’t afford to buy something you desire, don’t buy it. The same applies to gambling. Though it’s OK to gamble or buy the lotto for fun once in a while, getting addicted to it can lead to devastating consequences.
6. Health is wealth
As we grow old, our health deteriorates. When that happens, our private health insurance premiums and medical bills escalate. Being in good shape will contribute towards savings on medical costs in the long run. Start keeping fit and eating well now. Make it a point to exercise twenty minutes every day and cut down on sugar and salt intake as well as alcohol. Eating plenty of fruit and vegetables offers added protection against a number of diseases.
The frugal mindset of our elders is something young Australians should reflect on. Current retires enjoy a high rate of home-ownership because they have learnt to squirrel their money away for emergency and future needs. By exercising discipline in spending and avoiding the lure of consumerism in today’s society, the dream of financial independence will be well within reach by the time young Australians retire.