April 17, 2019
Mortgage Choice and CoreData’s Financial Fitness whitepaper, has revealed that Millennials are pessimistic about their financial future, despite having better financial habits than the overall population.
The Financial Fitness whitepaper explores Australians’ attitudes and behaviours towards their finances.
“The research presents compelling evidence to suggest that Millennials are creating sound financial habits. Despite this, there is concerning data about their state of mind,” said Mortgage Choice Chief Financial Officer Susan Mitchell.
The research has revealed that Millennials are disciplined. 23% say they monitor their finances at least once a month, and 56% say they monitor their finances at least once a week - higher than the national average of 52%.
Ms Mitchell said, “It’s a good idea to take time to review your bank account and credit card transactions regularly. This will allow you to be more conscious of your spending so you know where to cut back on discretionary spending and build your savings.
The research found that Millennials were better at saving than the overall population. 21% say they save more than 20% of their net income after paying their mortgage rent and other living expenses - versus 16% of Australians.
“The research suggests that the majority of Millennials have the right intentions when it comes to money management. The majority say their greatest priority in life at the moment is saving and budgeting, followed by paying for living expenses and then buying a property. However, despite their positive financial habits, the research suggests that Millennials are apprehensive about their financial future.
“It is normal to feel uncertain about the future when you have your life ahead of you however young people have the luxury of time on their side. The research presents encouraging evidence to suggest that Millennials are making conscious decisions with their money and what might be holding them back from feeling confident about their financial situation is the knowledge that they are on track to achieve success,” said Ms Mitchell.
The research revealed that 45% of Millennials say they are not confident they are on track to achieve financial success and almost 80% are worried about their current financial situation - females more than males - 57% versus 51%.
Meeting cost of living expenses ranked high on the list of worries for most Australians. This sentiment was echoed by 40% of Millennials who said their single greatest concern for the next 12 months was the rising cost of living. Concerns over cost of living ranked higher than job security, and health and wellbeing.
A number of factors may be influencing Millennials’ weak outlook on their financial future and security.
Ms Mitchell said, “We asked Millennials about their debt and found that 17% have personal debt and struggled to cover it, and 48% are embarrassed by their personal debt.
“These concerns may be impacting Millennials’ ability or willingness to purchase property. The research revealed that 8% of Millennials had purchased an investment property, compared to 12% of overall respondents.
“Recent data from the Australian Bureau of Statistics (5601.0) revealed there are fewer first home buyers in the market than there were this time last year. This is unsurprising given the high barrier to entry into the property market such as: stricter lending criteria; home loan deposits; high property prices; and the emergence of the gig economy, which may be affecting Millennials disproportionately.
“Millennials prefer a DIY approach when it comes to administering their finances. Survey data revealed that 39% of Millennials would rather manage their own finances and seek reliable information to help support their decision making, versus 36% of the overall population,” said Ms Mitchell.
The research found there is a lack of understanding of the value of financial advice among Millennials. In fact, many said they did not know where to start when it came to seeking professional financial advice.
“When we asked Millennials what would drive them to seek financial advice they said: they would need to be in financial stress; suddenly come into a substantial amount of money; or generally possessed more wealth. This is a common misconception. The reality is an experienced financial adviser can help you plan for your future, regardless of your level of wealth, and give you peace of mind that you are on track to meet your goals.
“Millennials have access to more information than any generation before them and this can sometimes be overwhelming. A Mortgage Choice financial adviser can help you sort through the noise and help you make financial decisions that align with your values and goals. They know that your needs and values are going to change, which is why they can help you adapt your plan over time. Whether it’s help with cash flow management, reducing debt, investing your hard earned money in a way that matters to you, or managing your Super, there’s a Mortgage Choice financial adviser who can help you create a strategic financial plan to live the life you want to live,” concluded Ms Mitchell.