Which generation has it the worst in the cost-of-living crisis?

Power bills, grocery prices, HECS debts and home insurance. School fees, daycare, mortgages and rent increases. How this year’s cost-of-living crisis has hit your bank account will depend on a number of factors.

But, when you add it all up, which generation has had it hardest this year?

We asked people from each of the four largest generations – Generation Z, Millennials, Generation X and Baby Boomers – how their finances have been hit this year.

Generation Z (born 1997 onwards)

Credit: Artwork: Aresna Villanueva

HR consultant Lauren Ottaviano, 24, moved out of home 18 months ago. But with supermarket and takeaway prices – the ABS’s Consumer Price Index suggests the price of food and non-alcoholic beverages is up 7.5 per cent on last year – she is often back there.

“My Uber Eats tends to be my parents’ house or my grandma,” she says.

Ottaviano is also having fewer nights on the town (alcohol prices are up 4.7 per cent). With her two housemates in Sydney’s Surry Hills, she makes a bit of extra cash by taking part in surveys and paid trials, and buying and selling things on Facebook Marketplace, particularly furniture.

But what is not within dreaming distance? A mortgage. Generation Z overwhelmingly rents, particularly in major cities. Ottaviano says buying a house is not on her radar. The median price for a one-bed unit in her area is $748,000, according to Domain, the real estate website owned by Nine (the owner of this masthead).

“My priority is wanting to have the options to do spontaneous things,” she says. “If a Jetstar sale comes up, or if a bottomless brunch comes up, I don’t want to worry about paying the mortgage.”

Associate Professor Andrew Grant, a behavioural finance researcher at the University of Sydney, says Gen Z are living more frugally than they expected to in their first years of a full-time working.

“They’re spending less on going out, even though they are at a prime age for doing so,” he says.

Gen Z’s tech savviness means they use Buy Now, Pay Later services to smooth over expenses between pay dates, and they are turning their attention to other forms of investment, such as shares and ETFs [exchange traded funds], instead of property, Grant says.

Gen Z, along with Millennials, also hold larger HECS or HELP debts compared to older generations. About two-thirds of the 3 million Australians with a student debt at the end of the 2021-22 financial year were aged in their 20s and 30s, ATO data shows.

However, Grant adds, a key influence on Generation Z’s financial situation is whether they live independently of their family.

University student Yan Wu, is one of a growing trend of Gen Zs living at home with their parents.

The 25-year-old, who migrated from China with his family as child, says convenience and saving money have kept him living at the family home in Bundoora, in Melbourne’s north-east.

Soaring rental prices have led to some of his friends moving home with their parents this year.

“There is a lot of uncertainty about the cost of rentals so that’s been a factor in me living at home,” says Wu, who works part-time in retail. “But the No.1 reason is just convenience. Everything is going up in price, the biggest one I have noticed is petrol.”

Wu intends to reassess his living situation once he gets a full-time teaching job next year.

Millennials (born early 1980s to mid-1990s)

Credit: Artwork: Aresna Villanueva

Grattan Institute chief executive Danielle Wood says Millennials – who have recently entered the property market, or are trying to – have been the hardest done by financially this year.

“In the early 1990s it would take the average Australian about seven years to save a 20 per cent deposit for a typical dwelling, now it would take almost 12 years,” she says.

Primary school teacher Alyssa Rule, 30, and her husband, a paramedic, work in northern Sydney and live in the city’s outer north-west in a house they bought in 2021.

Between them, they have four university degrees. After coming off their 1.9 per cent fixed rate in July, they also have a combined four jobs, having each picked up casual work.

After marrying at the end of 2022, the Rules chose house over honeymoon. Their second jobs have also cut entertainment costs, as they have less time to go out.

“We were raised in a system where we all needed a degree to get into an entry-level job. But then the pay was no good, and so now we are lugging around these huge HECS debts,” Alyssa said, calling this year’s 7.1 per cent indexation “really disheartening”.

“We were made really big promises, and I feel like nobody followed through on them.”

Grattan modelling has shown borrowers in the 1990s who started spending 30 per cent of their income to mortgage repayments needed just 12 per cent at the halfway mark. With stagnating wages, Wood says Millennials cannot be as optimistic.

For others, particularly those without a spouse, a mortgage is out of the question: renting leaves little left over for saving a deposit.

For the first time since moving to Melbourne more than a decade ago, renter Nick Leslie is considering moving back home with his parents in country Victoria.

“The rental market is currently, in no uncertain terms, an unattainable, unbelievable minefield,” says the 31-year-old, who rents alone in te Melbourne suburb of Abbotsford.

Leslie had hoped to fly to Mexico to celebrate his birthday next year, but rising living expenses have almost killed that idea.

“My savings account has been all but decimated,” he says.

With large chunks of their pay going towards rent or repayments, or trying to save for a deposit, Wood says Millennials’ reduced spending habits was part of a longer-term trend of younger people spending less.

Spending on eating out has increased among all age groups since the COVID-19 lockdowns, but Commonwealth Bank data released in May showed that among under-35s, there was only a 7.1 per cent uptick in spending on eating out in the 12 months before March. That compared to an 18 per cent increase among over-55s.

The bank’s data showed that despite inflation, spending by its customers between the ages of 25 and 29 had barely risen, which suggests belts were being significantly tightened.

Meanwhile, Leslie obtained an apartment through the National Rental Affordability Scheme in 2021 when he was on a low-income job.

“I’m terrified to my core of losing my apartment and having to dive into the piranha tank that is the city’s rental market,” Leslie says.

Generation X (born mid-1960s to early 1980s)

Credit: Artwork: Aresna Villanueva

With fewer Australians under 35 having children, the Generation X and Xennial – or “Elder Millennial” – age groups are dealing with the financial pressures of larger households with children, recent upgrades to larger homes, car purchases, and daycare and school fees.

“This is where you start to see a large divergence in financial outcomes for people,” says Grant. “By the time people hit their mid-40s they are either going to be well-off or less well-off.”

Jeremy Grey is having to find a way to cut back. The 48-year-old single father of three, who lives in a modest, orange brick rental home in Reservoir, in Melbourne’s northern suburbs, can no longer afford groceries, such as cheese and yoghurt, during his weekly shop.

Increasingly, frozen meals are creeping into the family’s dinners as Grey, who works in administration for the Community and Public Sector Union, finds himself having to choose between paying a utility bill or buying ingredients needed for a home-cooked meal for his children, aged 16, 17 and 19.

“We have cut everything in our budget back to the absolute bone,” Grey says. “We are on the cheapest phone plans, we have scrutinised and cut back on everything.”

Last month, his gas bill was $280, up from $266 for the same time last year, while his electricity bill has climbed from $168 to $200.

Grey, a lifelong renter, says his goal has always been to one day own a home, but feels even saving enough for a 10 per cent deposit is impossible.

An older Millennial, Robyn Cantali, from Concord in Sydney’s inner west, is 39 and has three children under the age of five. They attend a mix of council-run and private daycare so she can work full-time. Her mother, who also works, takes the youngest child two days a week.

Robyn and husband Alexander receive the childcare subsidy, after the federal government expanded access to families earning north of $350,000. But their childcare centre followed by increasing fees. Still, Robyn says things are better than before, when the fees almost equalled her take-home pay. Starting her eldest at a Catholic primary school next year will be cheaper than daycare.

The Cantalis describe themselves as fortunate and comfortable: Robyn is a deputy principal at an independent school and Alexander works as an engineer. But the current economic situation means they are further behind on financial goals than they would like.

While they save for a place of their own, they rent a house owned by a family member. Robyn also has a mortgage on an investment property in Canberra (she has not increased rent in line with interest rates because she knows the tenant can’t pay).

This year could have been the year they bought their own place, but banks have cracked down on lending, testing serviceability against a 3 per cent rate buffer.

So, the family is cutting back. A trip to Europe became one to Fiji; they have health insurance but not extras cover. But there are some costs they have to bear: like many, they were shocked when their electricity bill hit $1000 last quarter.

“We look for cheaper or free events now, for the kids,” Robyn says.

Grant says families with children can find it harder to cut back their spending.

“It’s hard to go backwards; if you have put your kids in a private school, for example, it is a big imposition to withdraw them. You also have increased medical expenses, costs of food and shelter,” he says.

Australians bore the highest quarterly increase in the cost of house, home contents and motor vehicle insurance since 2020 in the June 2023 quarter, according to the ABS’s Consumer Price Index. Premiums cost 14.2 per cent more than they did at the same time last year.

Baby Boomers (born mid-1940s to mid-1960s)

Credit: Artwork: Aresna Villanueva

It is a stereotype: the Boomer who says things were tougher “back in my day”. But, although he worked hard for what he has, retiree and part-pensioner Alex Gerrard says he can’t in good conscience say he had it harder than those now of working age.

“I feel really sorry for the younger ones, the ones who got sucked into the mortgage because they were told it wouldn’t go up,” says the 68-year-old from Bardwell Valley in Sydney’s south.

“It is hitting them hard. You can see that when you go to restaurants, you find that everything is empty.”

Associate Professor Sam Tsiaplias, a macroeconomics research fellow at the Melbourne Institute, says Gerrard’s observations are right: cost-of-living pressures on employees started to exceed that of pensioners and beneficiaries from about August last year.

“And that is largely because of higher mortgage rates,” Tsiaplias says. “Households that have purchased housing, that have mortgages and are paying interest on a large principal, they have really experienced the biggest rise ... People who bought a while ago aren’t feeling that.”

Gerrard put down a deposit on his first home, a house near Penrith in the city’s west, with six years of saving from a customer service job, and he and his then-wife paid it off within five years. This is not an uncommon story: census data shows Baby Boomers were three times more likely than Millennials to own their home without a mortgage when they were aged between 25 and 39.

Twenty years ago, he purchased his current home, which he owns outright, for $575,000. “It would probably go for $2 or $3 million now, it’s astonishing,” he says.

Gerrard travels to England to visit his 88-year-old mother and his sisters every couple of years, but not in peak seasons. He dropped his private health insurance six years ago, and thinks he is still ahead even though he recently visited a private hospital to remove a skin cancer, which he paid – “a lot” – for outright.

“Probably my biggest financial achievement was being able to send my son and daughters to private schools,” Gerrard says, adding that this took about half his wages at the time.

Eesa Witt, 71, from Erskineville in Sydney’s inner west, also feels fortunate to have helped her children when they needed it: the former nurse and her then-husband remortgaged their house 15 years ago to help their son purchase his.

Retiring 10 years ago, Witt says she feels lucky her apartment – in a part of Sydney which has rapidly gentrified since the 2000s – was not included in the assets test for her pension.

She’s considered switching power providers, and tries to be more mindful at the supermarket. But she still wants to enjoy what she is passionate about.

“I subscribe to two theatre companies. I know we are all struggling, but the arts always struggles, so that is important to me,” she says.

Measuring cost-of-living pressures on people who have finished their working life and own their home outright can be difficult: they may have reduced working hours, or are in retirement, so their ability to earn additional income is limited. But, that extra personal time is also a resource.

“Older households have a lower opportunity cost of time,” Tsiaplias says. “They can cook at home, they can do things that reduce their spending on services.”

Associate Professor Ben Phillips from ANU’s Centre for Social Research and Methods, says Boomers have actually experienced the greatest increase to their cost of living: rising prices are more heavily experienced by those with higher disposable income.

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