Ross Stitt finds young Australians reaching life’s major milestones like taking on major debt commitments at a later stage than earlier generations, and economic satisfaction there is the lowest ever recorded

‘When will there be good news?’ is the title of a crime novel by the English writer Kate Atkinson. If recent economic and social data are any indication, it’s also the question many younger Australians are asking as 2023 draws to a close.

The Australian Unity Wellbeing Index prepared by Australian Unity and Deakin University is an annual survey of the state of Australians’ wellbeing. It recognises the importance of the ‘golden triangle of happiness’ comprising the three areas of life that contribute to life satisfaction – financial wellbeing, good personal relationships, and a sense of purpose.    

Unfortunately, financial wellbeing is not looking too good right now. The latest survey reveals that the economic satisfaction of Australians is the lowest ever recorded in the 22-year history of the wellbeing index. It’s significantly lower even than during the global financial crisis.

Satisfaction with the economic situation

Source: Australian Unity/Deakin University

In the words of the lead researcher Dr Kate Lycett, ‘Australians are feeling worried about the economy and financially stressed’.

But not all Australians are suffering equally. According to this research younger adults were markedly less satisfied with the economic situation than older ones.

The latest Cost of Living Insights Report from CommBank iQ, based on the spending patterns of seven million Australians, paints a similar picture. For the quarter to the end of September the amount spent by Australians on essential goods and services rose, but at a rate below inflation. Discretionary spending was flat.

One of the most telling revelations in the report is the stark differences in spending patterns across the various age brackets. According to CommBank iQ, there was a 5.1% decline in total spending for 25- to 29-year-olds but an 8.1% increase for those over 76. 

Spending per capita growth between age bands

Source: CommBank iQ

The 25 to 29 cohort was the only one that reduced both essential and discretionary spending. This likely reflects a combination of cash flow difficulties and uncertainty about the short-term economic outlook.

Interestingly, in spite of this general contraction, twentysomethings still managed to fund a 13% increase in ‘entertainment expenses’. That will fuel the regrettable view of many smug baby boomers that the ‘smashed avocado’ generation would be fine if they’d just stop splashing out on luxuries.    

The position of younger Australians is likely to have deteriorated further since the September quarter covered by the CommBank iQ report. The intervening period has seen on-going inflation, a continuing rise in rents and house prices, and yet another interest rate hike by the Reserve Bank of Australia.

Further evidence of rising economic anxiety and the emerging generational divide can be found in yet another recent report – Mapping Social Cohesion 2023. This report presents the latest research on ‘social cohesion’ from the Scanlon Foundation Research Institute, Monash University, ANU, and the Australian Multicultural Foundation.

According to the report, ‘financial and cost-of-living pressures have been affecting an increasing number of Australians over the last two years’. In that period, the percentage of people who self-describe as poor, ‘struggling to pay their bills’, or ‘just getting along’ has risen from 31% to 41%.  

Nearly 50% of people now view economic issues as the country’s most important problem.       

And once again, it’s younger Australians who are bearing the brunt of the pain.

Indicators of financial stress for age groups, 2023, Life in Australia TM

Source: Scanlon Foundation

You might expect financial stress to be greatest among the 18-24 and 25-34 cohorts because they’re in the early stages of their financial life, the period when they take on major financial commitments like buying a home and having children. However, a research paper published this week by Accent Research entitled Gen-Z are different undermines this reasoning.

That paper shows that Gen-Z, and to a lesser extent Millennials, are reaching life’s major milestones at a later stage than earlier generations. Therefore, much of their financial stress is not related to those milestones.  

The last four years have been challenging – a global pandemic, the return of inflation, rising interest rates, and now subdued economic growth. Many of those worst affected have been younger Australians.

There have always been generational divides but the one currently emerging may prove to be consequential, both economically and politically.        

Dr Kate Lycett from the Australian Unity Wellbeing Index argues that ‘if we are going to boost Australians’ wellbeing, we have to see a change in the economic situation of the country, and one that prioritises the wellbeing of younger Australians’.    

To date, there’s little sign of such a priority among politicians. But that may change if the predicament of younger voters starts to have an impact at the ballot box.

*Ross Stitt is a freelance writer with a PhD in political science. He is a New Zealander based in Sydney. His articles are part of our 'Understanding Australia' series.