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Gen Y must adopt long-term saving habits: REST
Contrary to accepted wisdom, members of Generation Y have good short-term saving habits - something that super funds can leverage off to improve member engagement, according to REST chief executive Damian Hill.
A white paper commissioned by REST that surveyed 752 18-35 year olds found that younger people were accruing debt earlier in their lives than previous generations, and were accumulating assets (such as property) later in life.
However, over one-third (36 per cent) of Gen Y do not own a credit card or a store card, and almost 80 per cent report that they are saving some money each month. In addition, 32 per cent of 18-35 year olds are living at home with their parents, leading to a greater ability to save money.
But the good saving habits are usually for a short-term goal such as travel, according to Hill.
"Generation Y could be using the savings they are putting away to make their money work harder for them … they could benefit from taking a longer term attitude to savings, particularly retirement savings," Hill said.
With over 50 per cent of REST's member demographic represented by the people surveyed, Hill said the white paper would allow his fund to "understand our members better so we can serve them well".
Since Generation Y have the basics of saving "down pat", super funds can leverage off that knowledge by looking at more innovative mediums and channels (such as social media and videos) to engage 18-35 year olds, Hill said.
It is also important to increase the financial literacy of Generation Y, he added.
"Education should cover a range of areas, from short-term goals - such as travel - through to how to repay debt as quickly as possible, plan a budget or select a super fund," Hill said.
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