More than 1 in 3 (34%) registered debt agreements belong to 25-34 year olds, making Gen Y the
most likely generation to be in debt, compared to Gen X and their Baby Boomer parents.
Much of the blame is placed on easily accessible personal loans, credit card debt and a generation focused on lifestyle pursuits.
However there is more to it than this and it misunderstands the current realities to put all the blame on Generation Y. The fact is that the traditional expense categories such as food, transport, health and housing costs are higher for younger people today compared to that experienced by their parents at the same age. A generation ago the average house price was 5 times annual average earnings while today the average house price is more than 10 times the average annual full time earnings of $72, 000.
Additionally, Generation Y have new categories of expenses that their parents didn’t have such as education debt, mobile phone costs, internet expenses, tablet devices and online subscriptions. Not only are the costs of living higher, but the earnings have not kept pace. For example, when Baby Boomers graduated from university the average graduate starting salary was equal to the average full time adult wage, while today the average graduate starting salary of $52,000 is $20,000 less than average full time earnings.
But the good news is that their parents’ generation, the Baby Boomers, are the highest net worth generation in Australia’s history and over the next two decades almost 3 trillion dollars of private wealth will be transferred (if it’s not spent!) to the emerging generations.