The "generation rent"is not as prepared to weather financial shocks as they could be, industry leader says
Younger Kiwis are bearing the brunt of the current economic climate, according to the Financial Services Council (FSC)’s latest research report.
Read more: Kiwis worried about the rising cost of living – Westpac study
The report titled Money and You – The Lost Generation shines a light on the profound impact the pandemic, rising living costs, inflation and wage stagnation are having on younger generations, aged 18 to 39.
Findings showed that the age group was very or somewhat concerned about the effect of wage stagnation (68%), effect of inflation (81%), effect of rising house prices (79%), and effect of interest rates (67%).
The 18-39 year-old age bracket, which FSC dubbed “generation rent,” was also more concerned about financial issues like housing prices and interest rates and inflation than other generations, and are much more likely to worry about money.
Half of the age group reported receiving support to purchase their first property, which is more than double than that reported by older respondents.
Rainy day savings remain low for this generation, with only half of the respondents saying they could find $5,000 within a week in an emergency.
Read more: NZ consumer confidence takes a hit
“This data is a concern given the current economic environment,” FSC CEO Richard Klipin said. “What this research reveals is that our younger people are not as prepared to weather financial shocks as they could be, and are worrying more about money than older New Zealanders. Inflation and interest rates, while clearly a concern for all age groups, are more of a worry for the 18-39 age bracket. This demographic is also significantly more worried than older generations about house prices and wage stagnation, which is concerning.”
The results come from a survey of 2,000-plus Kiwis that was carried out in January.
“Young people are our future, and yet they are feeling the effects of the current economic climate more than any other age group,” Klipin said. “As borders open up and opportunities beckon overseas, there is a real concern that they will be tempted to try their luck elsewhere.”
Laurence Kubiak, chair of research sponsor Trustees Executors and the former CEO of the New Zealand Institute of Economic Research (NZIER), is concerned for younger generations.
“History tells us that the cure for extended periods of inflation, such as a rapid increase in interest rates, can be blunt and ultimately harmful to employment and increases mortgage stress,” Kubiak said. “I am particularly concerned for Kiwis under the age of 50 who have yet to experience high inflationary environments.”
Kubiak also considers the silver lining, however.
“As challenging as this can be, this period is also just one stage of an investment cycle that can be managed and even taken advantage of,” he said.
