Sunday, September 25, 2011

Gen Y Staying At Home Longer

Pessimistic Economic Outlook

Aussies are becoming a bunch of misers. We are supposedly saving around 11.5% of our income on average which is the highest in 25 years, according to Nicole Perdersen-McKinnon, the editor of Financial Review Investor. Who can blame us with the poor state of the US/Japanese and European economy? Our mining exporters are heavily reliant on China buying our output while China is reliant on the rest of the world buying their output.

With the economic outlook looking rather pessimistic and housing prices amongst the highest in the world, is it any wonder that Gen Y are not leaving home until their 30s or they're moving back home? There's so much Gen Y bashing around and I'm fed up with it. Did anyone ever think that Gen X & Gen Y are inheriting a shitty economy from their predecessors?

Here's what the older generations left us with:

* Record budget deficits
* Huge student tertiary/university debt - when they went to uni it was free back then
* Unstable financial institutions
* Housing prices that are about 6 to 9 times the average household income
* Some pensioners who didn't save up for their own retirement and are thus, reliant on tax revenues from the blood, sweat and tears of Gen X/Y that could have been used to fund infrastructure that is eroding and deteriorating
* Some baby boomers - see above point

I write 'some' pensioners and 'some' baby boomers because I understand that there are exceptions to the rule and some may not have had the opportunity to save up for their golden days but what's are the excuses for the rest?

Gen X & Y are expected to pay off their tertiary education debts, buy housing that is up to 9 times their household income PLUS save up for their retirement days because there will be way too many older folks draining the budget revenue now which means that there will be no such thing as pensions when we get to that age.

And yet we get scores and scores of articles that bash our generation with derogatory phrases such as 'kippers' (kids in parents' pockets eroding retirement savings), 'boomerang kids', 'parasite singles' and 'slops'(singles living off parents). Gen Y also gets bashed for buying too many iphones, gadgets, wide screen tvs, holidays, ipads and whatnot and then supposedly 'whinging' about being unable to afford housing etc

Mark McCrindle from McCrindle researchers says that about 25% of kids in the 20 to 34 year age bracket are still living in their parents' home. I don't see what is so wrong about that?! Asian/Indian/Greek/Italian kids who are unmarried will usually stay with their parents and when parents are old, they usually assume the main role of carer and pay the bills with contributions from other siblings. They don't leave their elderly parents to fend for themselves, live on the streets or have no money for heating or whatever.

That's what comes with reciprocal responsibility. If a kid is going to live with their parents till they're pretty old, then when the parents are old, the kid is expected to support the parents. That's why a lot of Asian, Italian and Indian parents don't panic much about old age and insufficient pension or savings.

Gen X/Ys Still Living At Home

If you're in that generation and still living at home - don't blow your opportunity to save. It will be the biggest opportunity for you to save. When and if you eventually move out, there will be so much more to pay for- electricity, water, gas, rent/mortgage, phone, internet, insurance for home and contents, repairing things that break, plumbing fees, groceries etc

So if your parents are giving you a leg up by allowing you to live with them - don't take advantage of them and show them how grateful you are by being mature and taking that opportunity to save up for your future.

Critics are nasty because they see that some Gen X/Y living at home just booze away their pay, spend their pay on stupid consumer goods and all that jazz. If you're still living at home and you fit into this category - time to think about contributing to the parental household either financially or through other means such as cleaning, cooking, gardening, laundry and other chores.

But enough of this Gen X and Gen Y bashing.

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