How young Aussies manage finances is rapidly changing and fintech is having a profound impact, according to research from the Monash Centre for Youth Policy and Education Practice (CYPEP). The Young people’s financial strategies report released, reveals job losses during COVID, lack of affordable housing and the rapid rise of platforms like crypto and BNPL, have changed the financial landscape for young Aussies, and not necessarily in a good way.
What were the findings of the survey?
The comprehensive survey by Youth Policy and Education Practice which examined the views of more than 500 young Australians aged 18-24 over the previous two years found:
- More than a quarter (25.2%) reported experiencing financial difficulties
- Only 18.2% reported never experiencing financial difficulties
- Just over half young Australians now use BNPL services
- Around half thought BNPL has a negative effect on their financial behaviour
- 76% of who experienced financial difficulties were more likely to use BNPL
The study also found living at home helped young people save money and protected them from experiencing financial difficulties with more than half (56.1%) able to save, compared to those who lived in a share-house (39.5%) and those who lived on their own (47.4%) Notably, over a third of young people who lived independently experienced financial difficulties often or very often, compared with 22.6 per cent of those who lived in their family home.
Having a job helped young Australians save money but did not always protect them from experiencing financial difficulties, as noted by 18.4% of the survey respondents who were working for wages or salary but experienced financial difficulties often.
“I just don’t want to live my whole life paying things off. I want to reach a point in my life where I can have a good number of years to just enjoy the money that I have left, the money that I’ve earned, without having to worry about making repayments or things like that,” commented a Survey participant from Victoria, aged 20.
How does the financial situation affect mental health?
This research report, the latest insight from The 2021 Australian Youth Barometer confirms that young people’s financial situation is closely linked to their wellbeing. Professor Lucas Walsh, co-author of the report, and Director of the Monash Centre for Youth Practice and Education Policy says changes to the financial landscape for young people matters because their financial experiences are deeply interconnected with other aspects of their lives.
“A quarter of young people told us they are struggling with debt, and this was before recent inflationary pressures and rises in the cost of living. Our report shows this is has serious effect on their mental health. Saving, going into debt, and having financial difficulties don’t happen in isolation but are linked to family, housing, work and wellbeing,” says Prof Walsh.
“We know that young people have suffered during COVID. They are have major mental ill-health issues and had their education and working lives disrupted. We need to ensure they have access to better understanding and education around finances and financial wellbeing.”
How can young people be helped?
Lead author of the report, Dr Beatriz Gallo Cordoba, says that with young people increasingly navigating an ever-changing world of online financial products, we need to provide better digital financial literacy support to account for these realities of young people’s financial lives
“Schools can play a better role in providing all students access to up-to-date financial education, especially those students who lack family support. This includes basic financial literacy and numeracy and working knowledge of financial products. Improving young people’s financial decisions today will benefit Australians tomorrow,” says Dr Gallo Cordoba.