Gen Y has a different approach to saving than we presume: Mark Bouris

Ever since I realised there was a ‘Generation Y’ I’ve been reading how educated, fickle, lazy and entitled they are.

I came to expect that anyone aged 15 to 30 would prefer a laptop to a car and would prefer the flexibility of cool employment to the stability of owning a home.

So it was strange over the past week to find news to the contrary.

A survey from Western Australia – the Financial Fitness Index – found that Generation Y had become more careful with their money than any of the other generations surveyed, with 56% becoming more conservative in the previous year.

In another survey conducted by the Co-Op Bookstore, they found that 94% of 17 – 29 year olds were planning to buy a home in the next five years, with average weekly savings of $150.

This hardly builds an image of complacency. However, watching this big cohort start to chase the Australian dream has made me wonder if the financial system is properly prepared for them.

One of the things we notice about Generation Y is their preparedness to change jobs, with the ABS labour mobility data showing that 20 – 24 year olds are three times more likely to change jobs in a year than 45 – 54 year olds.

Gen Ys also have ready acceptance of contract and project employment, with many of these skills-based projects being conducted with no entitlements.

Earlier generations found it hard to get a mortgage when they were hopping between employers and relying on contracts.

The discrepancy between how Gen Ys want to work and how the financial services industry operates doesn’t stop at mortgages. Our superannuation system is predicated on time spent in pay-as-you-go employment.

How is the generation currently in their twenties going to make this system work for them when their earnings come from contract employment, which usually excludes super?

The solution is not something we can put on the backburner: with an ageing population and with the oldest Gen Ys about to move into their high income years, there are ramifications for our national economy in terms of how financially stable we allow these people to be.

Home ownership is a huge part of financial stability in this country and I believe this generation will, to a certain extent, just have to knuckle down. Simply showing a savings history is not enough – lenders typically look for either full-time employees or long term written contracts.

But as the Gen Ys becomes more conservative, mortgage lenders will have to think about meeting them halfway.

There’s no point in creating an economy filled with contract employment if we then attempt to shut these workers out of the housing market.

So how are we going to make this work? Will Gen Y fake it and go into stable employment long enough to get a mortgage? Or will lenders become realistic about how the labour market works for twenty-somethings?

I’d love to hear what you think. Talk to me on Twitter.

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.