Although many baby boomers staked everything to realise the Australian Dream, their Gen Y offspring are less likely to reap the benefits.
According to the RaboDirect National Savings and Debt Barometer, 64 per cent of Gen Ys don’t expect to need help from their parents when it comes to purchasing a property, in contrast to 47 per cent last year ”“ a fact that suggests this oft-maligned generation is enjoying a greater level of financial independence.
However positive this result might be, it also hints at a darker reality, with only 20 per cent of boomers equipped to help their children financially, although 53 per cent express an interest in doing so. If Gen Ys can no longer depend on their parents for financial help, how should they tackle going it alone? Follow this three-step guide to find out:
1. Get creative
If creativity is a poor man’s wealth, then it pays to take an inventive approach to property ownership. More Gen Ys are getting creative about how they buy their first home, splitting deposit costs with siblings or a group of close friends and sharing mortgage repayments. Although this can be a great way to get a foot in the door, make sure the terms of this agreement are stipulated in writing ”“ this will ensure the wealth benefits aren’t undone by a petty conflict.
2. Return to the nest
High rents and the costs of an inner-city lifestyle can seriously hamper chances of saving up a hefty house deposit. This is why more Gen Ys are returning to the family home in a bid to cut down on overheads and ramp up savings. Although this can offer a powerful way to save cash fast, don’t do it without having a fixed period in mind and establishing clear savings goals. It’s a surefire way to prevent overstaying your welcome.
3. Cut out debt
Credit cards are the enemy of saving, and a big credit card debt is a major deterrent when it comes to obtaining a first home loan. Credit card addicts should pay off the plastic, tuck it away in a back drawer and only pull it out in an emergency. This is the fastest path to achieving long-term financial goals.
There’s no denying that Gen Ys face higher obstacles to entry when it comes to buying a property, but it’s nothing that can’t be solved with creativity, discipline and a heavy dose of strategic thinking.