Homes give way to holidays for young savers

HOLIDAYS are replacing houses as the savings target of choice for younger Australians as life experiences trump bricks and mortar as their life goals.

Three young women smiling on beach, portrait, close-up

HOLIDAYS are replacing houses as the savings target of choice for younger Australians.

A new report by Suncorp Bank says 25-to-34-year-olds are in a “savings sweet spot” with few financial commitments and are putting away more money than the national average.

However, just 24 per cent are saving for their first home, while 32 per cent are saving for travel, choosing intangible experiences ahead of the tangible assets their parents did.

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Planning ... On average, Australians aged 25 to 34 are saving $533 per month.

“They are keen to gain life experiences, take overseas holidays, while they are financially able. You are only young once,” said Suncorp regional manager retail customers Monique Reynolds.

“Maybe some of us from the older generations find it hard to believe, but young Australians are very responsible with their money and they know what they want.

“On average, Australians aged 25 to 34 are saving $533 per month — 12.7 per cent of their personal income. This is $100 more than the national average of $427.”

Wise Owl Financial adviser Allan Ward said most people would feel a happier saving for a holiday for a year or two rather than spending five years building a home deposit, but they should try to understand the implications.

Carefree ... Most young people feel a happier saving for a holiday for a year or two rather than spending five years building a home deposit.

“In 10 years’ time if you still haven’t got a home, you might regret your decision,” he said.

“Saving money is a good thing, but if you are spending it all in a couple of years and starting from scratch again, it’s not really saving.”

Mr Ward said renting did not have the stigma it did 10 or 20 years ago. “It’s a generational thing — younger generations are a lot more mobile and often don’t want to be bogged down with one house,” he said.

Ms Reynolds said renting was being viewed as an investment in lifestyle. “It has never been a more cost-effective time to rent, with historically low rents in our capital cities,” she said.

“Houses can be purchased later if that is the life path they choose. But many experiences are viewed as once-in-a-lifetime opportunities.”

Suncorp, which surveyed more than 3000 people, also found that the best savers used their credit cards more often. “Responsible use of a credit card offers many advantages: convenience, reward points and other incentives such as extended warranties and insurance on purchases,” Ms Reynolds said.

“If you fully pay your credit card each month, you should not pay any interest in return for these advantages.”