Younger Australians are reeling back on non-essential spending to curb cost-of-living woes, according to recent findings from NAB.
Australians are now increasingly partaking in “loud budgeting”, which NAB personal banking executive Paul Riley said involves “unapologetically prioritising your own financial goals, setting smart boundaries on spending, and feeling comfortable to talk about it openly and authentically”.
“Rather than going out for an expensive dinner with friends, younger Australians are confidently opting to stay in and choose to put that amount into a high interest savings account or pay down debt,” Mr Riley explained.
Speaking to ifa, Fox & Hare co-founder Glen Hare said it’s important for young Australians to understand the impact of cutting back on some of the more leisure expenses.
“I’m all for cutting back on things that don’t really matter to you. Go out for coffee with mates instead of brekkie, plan your clothes shop rather than just buy random stuff you don’t really need, and bring back the pre-drinks,” Mr Hare said.
“However, don’t just cut back for the sake of cutting back. Have a clear, measurable, specific goal and understand what the impact of cutting back will have on it.”
Namely, Australians under 30 are saving an average of $450 each month by skipping out on non-essentials, with 56 per cent redirecting any money saved into high interest savings or offset accounts.
NAB highlighted that younger Australians are most commonly reducing spending on eating out at restaurants ($124), micro treats like coffees, snacks and lunches out ($73), entertainment ($64), car journeys to save on petrol ($70), food delivery services ($96), and streaming services ($30).
Mr Hare assured that while these habits may have largely gained traction with young Australians, many of them might still need the help of a financial adviser despite believing the contrary.
“We’re doing everything we can at Fox & Hare to debunk that myth,” he told ifa. “Most of our members are in their 20s and 30s. They reach out to help them financially plan to start a family, get on the property ladder, or simply make their money work harder.”
He added that for young Aussies living with their parents, most of their income will be discretionary, but noted that those wanting to fast track their goals should seek professional advice.
Just this week, Colonial First State (CFS) released a report based on a survey of 2,200 consumers, which suggested that financial advisers need to work harder to convince Australians of the positive impacts of seeking advice.
According to the report, more than one in three Australians who have never received advice cannot articulate a single benefit of receiving financial advice. As such, it comes as no surprise, CFS explained, that unadvised consumers lack knowledge of how advice would positively impact them.
“Articulating what financial advice is and what it can do for people is a challenge that still needs to be met. Those who have never received advice are largely oblivious to the benefits that advised Australians are experiencing,” CFS said.
Moreover, CFS found that consumers believe financial advice is most needed by those who are struggling financially (52 per cent) or have an average amount of money (22 per cent), while 15 per cent said advice is most needed by the wealthy.
