Generation Debt
The spending habits of younger Australians is something we should be focusing our attention towards.
As more Baby Boomers enter retirement and Generation X hit their peak income-earning years, Millennials generally have high levels of debt and an inability to save money. This is often because they want immediate gratification instead of saving for the future.
We’ll discuss why Generation Debt is so prevalent among millennials (those born 1980-1994), how it affects them and their finances and what you can do about it if you’re worried you may have fallen into the same trap.
What is Generation Debt?
“Generation Debt” is a term coined by author Ron Lieber in his book “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money.” It refers to the tendency of millennials to be more materialistic than other generations.
So, what contributes to Generation Debt?
Consumerism – Millennials have been raised in this modern world where consumption is rampant and encouraged. It is only natural for them to want more things than previous generations did at the same age.
Attitude towards money – Millennials are moving away from using cash. You only have to stand in a checkout line at a café to witness the younger generation tapping their phone or watch to pay for their coffee. There is much less thought and intention that goes into purchases with credit cards being readily available to consumers.
Buy Now, Pay Later – This type of payment option has grown rapidly in recent years. Access to Afterpay and Zippay means people don’t need to save for things they want; these products encourage impulse spending.
How is instant satisfaction linked to Generation Debt?
The first step to overcoming a problem is recognising it. You can’t solve a problem you don’t know exists and this also applies to debt. A common theme with varying levels of debt is the connection to instant satisfaction and delayed gratification.
People who have high levels of credit card debt have likely been using their money on things they want now rather than saving up for something they really need later (a car, for example).
The key difference between Millennials who struggle with finances and those that don’t seems to be whether these individuals were raised with an emphasis on patience and delayed gratification versus instant satisfaction. Of course, there are exceptions. Some Millennials who don’t struggle with finances may have taught themselves about patience and delayed gratification.
I am a Millennial. And I did struggle with my finances. But not anymore. I was paying enough attention and developed the awareness that if I didn’t make changes, my financial future would be bleak.
So, I encourage you to take notice of how excessive consumerism may be impacting you.
Tune into your behaviours.
If you’ve fallen into the trap of Generation Debt, know that you can crawl out.
It takes consciousness and a willingness to change your behaviours to make and sustain a positive change.