Half of all people under 40 could not find $5000 for an emergency without going into debt, according to a new report.
That is one of several dramatic revelations in a study showing Millennials and Generation Z were worst affected by the cost of living crisis.
The report is titled "Money and You: Young People and the Cost of Living Crisis," and was published by the Financial Services Council (FSC).
It was based on a survey done for the FSC over three successive years by the research firm CoreData.
It shows that of all age groups, respondents in the Gen Z and Millennial brackets had lower levels of financial wellbeing, literacy and confidence than other groups.
“We know from our annual Financial Resilience Index research that there is a significant correlation between finances and overall health and wellbeing,” says the FSC Chief Executive, Richard Klipin.
“What we’ve found in this latest research is that financial issues are hitting some groups harder than others, and it appears our younger people are facing the full force of the current economic situation.”
The FSC says this must change, since young people are the future of the country. It says the finance sector has to support them in making important financial decisions like choosing an insurance policy, selecting investments and planning for retirement.
The study found some positive factors, such as Millennials and Gen Z's being confident in making decisions about careers, and safeguarding their mental health and wellbeing.
But the difficulty in getting access to a $5000 buffer for an emergency without borrowing was a significant finding.
Only 42% of Gen Z could do this, compared with 51% of millennials and 55% of Gen X. The figure rises to 64% for Baby Boomers and 81% of Pre-boomers.
Other parts of the research showed Millennials and Gen Z far less likely to have credit card debt but more likely to have personal loans or Buy Now Pay Later.
In the survey, respondents were asked a simple question about financial literacy: Could they buy more or less after a year if the interest rate on their savings was 1% per year and inflation was 2%. Less than half of Gen Z and Millennials got this question right, though all other age cohorts passed the 50% mark.
Retirement was also a problem. Only 26% of Gen Z'ers had calculated how much money they would need in retirement, compared with 39% for Millennials, 50% for Gen X, 59% for Boomers and 71% for Pre-boomers.
Gen Z and Millennials were also universally less confident about making a series of financial decisions on several issues: banking, insurance, investing, budgeting and saving for a rainy day.
The research also found that 23% of Gen Z and 58% of Millennials own a home, though neither group had high insurance levels.
40 Comments
Household 'net financial assets' to provide for our savings can only come from government budget deficits and so low levels of government debt must also mean low levels of savings and government debt is purely a measure of the amount of government created currency which the private sector retains as its savings.
https://theconversation.com/how-government-deficits-fund-private-saving…
That's an old worn out argument. Back then the value to income ratio of dwellings was like 3-4, try 10+ now..
I still remember dad told us at dinner time the loan interest rate went up 18%, but then his salary was $25,000/yr and he bought a 4br house in northern suburb of Wellington for $48,500.
This is a story from a past paradigm.
By the time the young get old, there will be NO financial system as we have known it. No putting electronic numbers in, waiting x years and expecting to exchange said numbers for a processed part of the planet. The joke is that those decrying lack of 'financial literacy' in others, are even more illiterate themselves.
Other than that, the incumbents have set it up for themselves, voted for what they want for themselves, and disenfranchised others - including the yet-to-be-born. Angst turns up as Brexit votes, Trump support. Overshoot turn up as non-reproductive couplings. As Cohen said - the signs are there for all to see...
I'm expecting the birth rate to keep dropping and in a couple of years we may be at about 1.4 births per woman. The government will be asking what the problem is and will conclude that the problem is we don't have enough immigrants and there is nothing to see here.
Affordable housing and wholesome food comes to mind - or lack of it.
Combined with a business sector permanently set on keeping wages low, the rising cost of energy and declining social connections paints a rather pessimistic picture.
Don’t deprive humans of basic needs and expect them and society to thrive.
According to this article Australia is facing all of the same problems as us. https://independentaustralia.net/politics/politics-display/governments-…
It's also possible that people simply always feel a bit happier when they are on holiday and the world seems to "smile at them" more because of it. Had you been an Australian going to NZ for a Holiday you'd probably say that you felt so relaxed and everyone seemed to have felt so much happier in NZ:)
A little anecdote: Just completed a 4 week round the world trip visiting Canada, The Netherlands and Singapore. Flew business class only and the dominating agegroup in that class were retired Boomers. In The Netherlands we had a nice AirBnB in the old medieval city of Deventer. Because the Dutch know how to annoy the car owner and charge them entry fees to the city of 25 Euro between 9 am and 9 pm. This meant I had to park my rental car outside the city in those hours every morning. The free parking lot was already filled up by 8 am with hundreds of boomer cars loaded with the latest models of E-bikes. Than a short trip accross the river with ferry and you were in the city. On one of those trips a Dutch boomer started to talk to me, I was wearing my All Black shirt that day, about would I advise a holiday to New Zealand. I told him he should do it. I asked how the Dutch Boomers were able to fund their lifestyles and he told me he had a very good, private and state, pension and, in The Netherlands banks starting to offer reverse mortgages, so he was able to convert some bricks and mortar in hard cash. Conclusion: Boomers are spending their hard earned pensions and their acquired untaxed capital gain wealth and holding the other generations to a sort of economic randsom.
Is this not technically what happens here too to an extent. Boomer owns a 1.1m property. Borrows 100k for a new car or holidays/spending, or investments/deposit on another property.
Ultimately gaining access to unrealized future economic value that will have to be sacrificed in the coming years by younger generations?
COMPLETELY UNACCEPTABLE.
We have seen the largest intergenerational wealth transfer to Boomers from the young.
The young are being completely screwed over - this is true inequality.
a) massive increase in house prices while the young pay insane rents and can hardly afford to save the deposit let alone finance the mortgage.
b) no university fees for the boomers
c) no increase in the superannuation entitlement age for the boomers - whereas it should be indexed to life expectancy
d) massive future carbon cost payments (circa $250/ton real NZD by 2050) for the young to pay while the boomers got to drive around scot-free.
I'll bite, but I feel we've had this conversation before:
Yep house prices are ridiculous because interest rates being much lower allows that. Plus houses today are better and bigger, plus there is a lot of H&S and other enlightened nonsense costs added all the way through.
Relatively few went to university because you actually needed brains then. Now it's a babysitting service between leaving school and taking a gap year.
The super age did go up from 60 to 65.
The fuel cost per mile driven was actually higher relative to wages in the late 70s early 80s. Plus carless day once a week, lowered speed limit to 80k, couldn't buy petrol from lunchtime Saturday until Monday. If you ran out there was no cellphone. And your rust bucket hard to start death trap oil burning always fail a wof car was priced from about 2 months wages. A better car today would cost a week's wages. That's why our generation can fix pretty much anything instead of throwing it away, because we couldn't afford not to.
Relatively few went to university because you actually needed brains then. Now it's a babysitting service between leaving school and taking a gap year
Sure, but it is also the case that there wasn't as much of a need to go to university in order to get a well paying job. It's not just that jobs that don't require a degree paid more, but also that jobs that now effectively require a degree didn't used to. Good luck getting into something like journalism or policy work - or basically anything white collar - without at least a bachelor's, for example.
This is the problem:
Yep, and between the top of the Millennial generation (me) and my sister 9 years later (basically a Zillennial), it went from being told by prospective employers that "you need a degree" to "you need a masters" to get into a white-collar Govt job. So she slogged it out for five years while I only did four, with a much larger student loan as a result. Doing my post-grad was seen at the time by prospective employers as a "nice to have" that would put you above other graduates (at least, that's the feedback I received). For her, Govt departments were demanding that graduates had a masters before they would even be hired.
I was studying towards a Bachelor in ICT when I left school. As were some of my friends. I dropped out after getting the Diploma and went to work in a sales role. Was curious one day quite a few years later, so while chatting I asked the question. 2 out of 3 were earning considerably less than I was in their IT related fields (technician & systems engineer), like roughly 20% less. One scored a decent gig in Government and was earning about 50% more.
Degrees certainly don't necessarily mean better pay these days.
Is there anything really surprising in this research? It says older generations have more money. Would you expect anything else assuming most people will improve their lot as they gain knowledge and experience?
A lot of animosity towards boomers on this forum and the huge wealth transfer from the younger generations.
But what if I could swap my 'old' life for another persons youth. They would get the product of a 50 year working life, my mortgage free house, my pile of accumulated assets and enough ongoing income for a comfortable life for at least the next 20 years.
But you know nothing is free. They would also have to take on my left eye glaucoma, right eye cataracts, 20% hearing loss with tinitus. They would also have to take on my $4k a year and rising health insurance. Manage my melanoma risk (first one removed at 63) and reasonably expect to die in about 10 years.
If I had that choice I would jump at the chance to give up all my wealth and have another crack at this wonderful thing called life. Would a younger person be so keen I wonder.
All the best with the health. Travel more
Re: Med insurance, my parents (84yrs) pay in excess of $1000/month for a good Sx policy. This avoids them using and costing the public health system thus freeing it for others. To date the money spent has been recouped.
Working in healthcare I strongly encourage people to save significant sums to pay for private insurance as the public system is crumbling especially for elective procedures.
Yes well said.
I really dislike all the negative boomer comments, even though I’m not that generation I find it lazy commenting at best. Baby boomers were born between 1946-64. How many politicians in power now fit in there you lazy commenters? How many of them are making the rules?
Conversely, what are the politicians born after this doing? The ones in now are just as lazy as you “blamers”, who haven’t worked their own business, haven’t had to worry where the wages are coming from to pay staff next week, do a tax return, be accountable to others.
Find a real argument and leave those who came before us and gave us these freedoms alone.
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