Younger gen’ says Y wait?

by Lydia Monka

May 13, 2008

EVA LAW is a typical member of Generation Y- ambitious, confident and materialistic.

These days she’s a successful accountant who boasts two university degrees, but just three years ago Eva was trapped in a deep debt spiral and receiving final warning notices from her bank.

Gen Y - roughly speaking, today’s 18 to 26 year olds - pride themselves on their good looks, smarts and fierce independence. Yet, growing evidence suggests they are far from savvy when it comes to money matters.

As petrol prices and other living costs continue to climb, credit cards have become Generation Y’s golden ticket to having their cake and eating it.

“I was at uni when I got my first credit card which had a $5000 limit,” said 25-year-old Ms Law. “I went on holiday and it got maxed out pretty quickly.

“I was only working casually at the time and that’s when I started to realise I was in trouble.”

Ms Law has since cleared her debts, but says she has friends who have “two, three even four cards at one time, with no sign of cutting down on expenses.”

While baby boomers seemed to have squirreled every cent they earned, and Generation X managed to disprove the ‘slacker’ tag, Gen Y has earned its reputation as the ‘give it to me now’ generation.

Gen Y’s taste for expensive things like laptops, iPods and mobile phones, but failure budget or save for the future, is a dangerous mix, warns Financial Counsellors Association of WA president Marianne Mayer.

“Young people are certainly presenting with more debt than they did even just five years ago”, said Ms Mayer.  “The reason credit cards attract young people is that they’re easier to get than personal loans - they’re easy to get and easy to use.

“It’s a lack of understanding of how credit works that is very detrimental.”

Ms Mayer said failing to pay their debts could have serious implications for Generation Y-ers’ future credit rating, and poor financial education was partially to blame.

 “Kids should be learning about money matters right from Grade 1, because credit is a major part of anyone’s life,” she said. “Yet that’s the one topic that’s never taught.”