Generational spend divide: Gen Z pinch pennies as Boomers indulge
Spending patterns reveal a stark divide between generations as cash-strapped Gen Z and Millennials cut back on essentials while Boomers splurge.
Economy
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A new report has revealed that Baby Boomers are on a spending spree, with travel and dining out leading their indulgences, while younger Australians are cutting back on essentials as rent and mortgage costs soar.
The latest Commbank IQ data paints a grim picture for Australia’s Gen Zs and Millennials, revealing a significant cutback in spending on essentials among those aged 25 to 29, starkly contrasting the splurging habits of older generations.
“Those under 30 are feeling the brunt from the cost of housing with many having been impacted by higher rents or they are likely to be first home buyers,” head of innovation and analytics at Commbank IQ Wade Tubman told The Australian.
These Gen Zs and Millennials have slashed their spending by 5.1 per cent, the sole age group to reduce both discretionary and essential expenditures, signalling a severe response to economic pressures.
Amid the growing narrative of intergenerational financial inequity, many young Australians have taken to platforms like TikTok to voice their frustrations and are challenging the stereotype of their generation being “lazy”.
“We’re called lazy by older generations who already have their retirement paid for and their $500,000 houses,” one TikTok user poignantly remarked.
In contrast, the Baby Boomer cohort is flaunting their ability to spend at a higher rate than inflation, with their spending up by 5.4 per cent in the most recent quarter.
This demographic disparity amplifies an intergenerational rift, with spending habits deviating sharply between age groups.
Those over 65 have increased their spending on travel by 17 per cent and upped their dining out expenses by 11 per cent.
“Travel is an experience that people are willing to prioritise for, but even then we are seeing younger Australians even cut back on that now,” Mr Tubman said.
While the younger demographic has notably pared down on clothing and dining, they are still carving out a budget for entertainment, which saw a 13 per cent increase.
“We’re seeing consumers in their twenties cut back spending but still leave room to fund experiences,” Mr Tubman said.
“We’ve also seen younger people redirecting discretionary spending from things like clothes and homewares, to spend on cinemas and ticketed events such as concerts and sport.”
The over-65s, meanwhile, enjoy the benefits of less financial encumbrance and heightened savings, which, in the current interest rate environment, equal more disposable income.
“Those in retirement are less likely to have a mortgage and have a lot of savings, which in the current interest rate environment is earning them a lot more interest and therefore more disposal income to spend,” Mr Tubman said.
This generational economic gap is further broadened by those under 40, who, burdened by mortgage and rental obligations, have also reduced their spending year-on-year in the September quarter.
As Australia emerges from the shadow of the pandemic, and despite a hold on interest rates, the nation’s spending trends are shifting, with many feeling the squeeze from rising living costs.
“Given the most recent rate rise, it will be interesting to continue to monitor these trends, as we expect to see a dampening of the post-covid experience spending preference,” Mr Tubman said.
Originally published as Generational spend divide: Gen Z pinch pennies as Boomers indulge