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Financial Planning Financial Fitness

Generation Y Become Cautious Investors

Generation Y has never seen a recession. A survey has found that they are taking notice of the current global financial crisis, which has weakened their appetite for investing.

Once known as being among the most adventurous and carefree of all investors, those born in and after 1980 have suddenly become more conservative than their baby boomer parents. The portion of Generation Y who treat investing as a hobby has dropped from 30% in 2008 to just 7% in 2009.

This collapse in interest in investment marks a significant shift for a generation that until recently had only known a rising share market, a strong economy and low unemployment.

For Generation X (those born in the decade or so before 1980) the proportion of those investing for a hobby had a gentler decline, from 18% in 2008 to 14% in 2009.  The Baby Boomers (the generation before X) remain a powerful force in investment as they have been less deterred by the market turmoil.

The experience of a falling share market, collapsing companies, an uncertain economy and high unemployment have contributed to generation Y developing into cautious and conservative spenders when it comes to investment.

On the other hand, Generation Y has actually increased the money that they spend on going out, by 31% compared to the same time last year. They are spending more on smaller purchases such as iPhones, GPS navigators and electronic games.

The comfort of still living at home with their parents contributes to their ability to spend more frivolously. The amount of twenty-somethings still living at home has grown by around 300% in the past 20 years.

In saying this, Generation Y’s are still striving to save that ‘housing’ deposit as they follow in their parent’s footsteps by wanting to invest in property.

With the help of Australian Lending Centre, the objective of owning a home may be achieved with competitive interest rates and a variety of tailored home loan options.

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Refinance and Refinancing

Generation Y Expects the Parents to Help Financially

A recent research project has revealed that two-thirds of Generation Y (16 to 29 year olds) expect their parents to help them out by paying their rent, assisting in purchasing a home, paying for their wedding and purchasing a car.

The research uncovered a concerning disconnect between what Gen Y expect from their parents in terms of financial support and what parents are now able and willing to provide.

Unfortunately for Generation Y, it has become evident through another study that 70% of baby-boomers (Gen Ys parents) have suffered financially as a result of the global financial crisis. Baby-boomers themselves are in the midst of amending their own financial problems by refinancing, consolidating debts and using new and innovative methods such as Debt Agreements to assist with their own repayments.

The research shows that 44% of Gen Ys expect their parents to pay for all or at least part of their wedding, 40% expect assistance in purchasing a house and 34% expect financial support for their education.

However with these high expectations it was astounding to see that 65% of Gen Y admitted to having no knowledge of their parents’ financial situation.

With the alarming figures of debt this generation has, it may finally be starting to sink in that they need help with managing their debt and another credit card is not the best solution.

Generation Y has become the latest casualty of the economic crisis. Credit reporting agency Veda Advantage has revealed a large drop in Gen Y applications for personal credit. Veda Advantage’s May figures show a drop in all account credit applications, including hire purchase, credit cards, personal loans and mortgages. Gen Y credit card inquiries fell 26% and mortgage applications declined 5%.

If you are struggling to pay your debts, don’t rely on your parents to assist you, simply call Australian Lending Centre and find a solution that is suited to your needs. Dial 1300 138 188 to speak with one of our experienced consultants today.