No amount of smashed avocado jokes peddled by our ol’ boomer mates has stopped Gen Y surpassing them to top the list as Australia’s best savers.
The Suncorp Best Saver Report, released in conjunction with World Savings Day, reveals the average Australian aged between 18 to 34 saves 32% of their monthly income, significantly more than the national average of 23%.
According to Suncorp, Australia’s ‘best saver’ was most likely to be an 18-34-year-old female with no kids, living in New South Wales, working full time, who is focused on a tangible goal (property, shares), frequently entertains at home, uses tap and go or Apple Pay, brings lunch to work and mooches off someone else’s streaming subscription to save money.
Suncorp EGM Consumer Banking Chris Fleming said it’s encouraging to see younger generations setting themselves up financially.
“Many in this age group are likely to be enjoying an increase in their income as they finish university or build their career, while still having the flexibility of fewer big financial commitments – a strength which generally stops as you get older,” Mr Fleming said.
“It was interesting to see the top savers in this younger age group were motivated by tangible goals – buying their first home, investment property or shares, which goes against the common assumption that this generation has given up on the great Australian dream of home ownership.”
Mr Fleming said the results also highlighted the importance of mindful spending.
“Many in this age group admit to regularly making impulse purchases, spending a bulk of their salary when they first get paid and letting their feelings drive their spending habits – more so than any other generation,” Mr Fleming said.
“Getting into the habit of good money behaviours at an early age, like prioritising needs over wants, being mindful about where we spend our money and keeping track of discretional spending, can really help us set up financially for later in life.”
When comparing state vs state, those living in New South Wales are saving the most (25%), closely followed by Victoria (24%) and Queensland (21%).
The average savings for those aged between 35 and 54 was 20% and just 19% for those aged 55 and over.
Suncorp Behavioural Economist, Phil Slade said people should think about saving money based on a percentage value rather than a dollar value.
“People view their money in dollars and cents, and generally as we get older even though the dollar value saved may get larger, as the research showed us the percentage of our income saved gets smaller,” Mr Slade said.
“If we think of our savings as a percentage rather than a number it could trigger a change in behaviour later in life – the 80/20 rule is a great example, With the 80/20 rule, if your earning capacity changes, you will continue to contribute the same percentage of your salary to your savings or investment goal.”
The research also found the biggest perceived barrier to saving money was sudden or unexpected expenses, an income that doesn’t allow for much saving, and needing to pay debts.
The report also found that 25% of Australians are concerned about their finances and 11% don’t save at all.
Young Aussies worried about retirement savings
Despite being crowned as the best savers in Australia, younger Aussies are concerned they won’t be able to fund their retirement.
According to a new report released today by global asset management firm Franklin Templeton, 29% of millennials believe they will never retire, and 62% have less than $50,000 in superannuation.
With slow wages growth and average property prices starting to climb back up, it’s easy to see why millennials are pessimistic about their ability to put aside money for retirement. But Manuel Damianakis, Head of Retail for Franklin Templeton in Australia, said younger generations have an advantage over older generations.
“Younger Australians are often pessimistic about their capacity for home ownership and it appears they are equally perturbed about financing retirement. It is unfortunate younger Australians are feeling this unease when they have one of the greatest advantages for successful retirement planning on their side – time,” Mr Damianakis said.
- COVID-19 sees lowest ever wages growth recorded in June quarter
- 'Fear of the unknown' as consumer confidence collapses
- CBA full-year results: Loan deferrals falling, cash deposits rising
- Athena cuts home loan rates as you pay down your loan
- Baby Boomers drove home renovations prior to HomeBuilder and COVID-19