Gen Y switches focus to saving rather than spending: Report

Generation Y is keen to save and baby boomers are concerned about their retirement income, so who’s going to spend at home? That is the question raised by two new surveys which suggest older and younger generations are closing their wallets.

According to a MasterCard survey on consumer purchasing priorities those aged 18-29 want to save more than any other age group.

In good news for some retailers the survey of 647 Australians found that 42% of young Australians were saving for a holiday while a third are saving for white goods or large electrical goods.

But a survey by RaboBank found that almost in one in two baby boomers expected their cash to run out during retirement and the same number said their personal finances had taken a turn for the worse during the past 12 months.

The survey of nearly 2300 people found that more than 60% of boomers expect things to get worse during the next year and 30% expect an improvement.

Nearly 25% said they had no savings.

CommSec chief economist Craig James says consumers are not depressed, just cautious.

“Negative things are happening all around the place. In Europe, in the US, there’s political stability and the carbon tax, you name it,” he says.

“People have decided that the smartest place to put money is in the bank.”

But James says to some extent people have gone over the top.

“There’s certainly the ability to spend, so it’s more choice than compulsion,” he says, adding that consumer sentiment can change quickly.

“If there’s a resolution in Europe and no fresh problems in the US we’re likely to see a recovery in confidence and then in spending.

“Because unemployment is still low wages are still rising and people’s personal balance sheets are strengthened.”

According to the Department of Education, Employment and Workplace Relations there was a 4% annualised wage increase for collective agreements approved in the March quarter across all sectors, which compares with 3.8% for the private sector and 4.4% for the public sector.

A survey by Mortgage Choice showed that mortgage holders, particularly first time buyers, are boosting their cash levels in response to the global turmoil.

The survey of 1009 people showed that 66% of first home buyers were squirrelling away cash for unforeseen circumstances, compared with 63% of investors and 57% of home buyers.

This article first appeared on SmartCompany.