How is COVID-19 affecting young people?
Here's what the stats show and what you can do to minimise the impact.
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They've had their income impacted more than any other generation. Their superannuation has taken a huge hit, leaving their retirement funds up in the air. They've needed to ask for financial relief more than any other age, with some being forced to move back in with their parents as they can no longer afford the cost of living.
We take a look at where the pain points are and more importantly what you can do to change things for the better.
Note: Whilst we firmly believe that everyone is forever young, we've defined a young person as those in Gen Y and Gen Z. Our data comes from Finder's Consumer Sentiment Tracker and our April and May 2020 surveys of 1,000+ Aussie's.
1. Younger people's income has been impacted more than any other generation
If you're young and you've lost work due to the outbreak, you're not the only one.
Finder data has revealed that younger people have had their primary income source affected the most by the outbreak. Almost half (48%) of Gen Z's and 38% of Gen Y's are now working less or not at all.
When you consider that comparatively, 31% of the general Australian population have had their income impacted, this disparity becomes even more obvious.
So how has this impacted their job optimism?
When asked about how they felt in their current jobs, only half of Gen Y's answered 'Very secure' or 'Somewhat secure' in May. This has dropped 16% since the start of the year.
To top it off, many young people don't feel financially prepared to battle this new world order.
Over half of Gen Z's (53%) admitted to not feeling financially prepared in today's climate.
Our tip: Get a leg up on your finances through apps
We're not going to tell you that you can suddenly become financially stable through sacrificing your morning coffee - you get that caffeine hit!
When it comes to saving, any progress is good progress. Set yourself some realistic goals to stick to, be easy on yourself, and remember that you're doing some hard work now so future-you is better off.
It could be a good idea to look into some budgeting apps to help you keep track of your cash. If you've got less income coming in or are relying on government payments, it's even more important to track every cent that's coming in and going out.
The Finder App tracks your spending, and automatically hunts down savings and sends you alerts so you can save cash on your insurance, loans, super, savings accounts, plus more.
Another option is to open up a savings account with a digital bank, as these often have cool apps with excellent savings tools.
Up Bank tracks your daily spending and makes it easy to set up savings accounts for different money goals you might have.
The ING Orange Everyday account has a handy roundup savings feature where each purchase you make is rounded up to the nearest $1 or $5 and plopped into your savings account. It's a really easy way to give yourself some extra financial security, and you probably won't even realise the money's gone.
UBank also has a Sweep tool that helps move your money between your bank account and savings account.
Check out our full guide on digital banks for more inspiration on how to get excited about saving and compare some digital banks.
2. Their retirement prospects are looking grimmer
To deal with the growing financial instability of many Aussie's, the Australian Government announced that some people would be able to have early access to their superannuation, allowing Australians potential access to up to $20,000 of their retirement funds.
But people who take part in this scheme could be in for another huge financial burden come retirement. Thanks to compound interest, a $10,000 withdrawal now could cost you $100,000 of your retirement fund.
Our data says that young people are at the highest risk.
Our May survey data revealed that 14% of people said that they had taken out money from their super or they were planning to do so.
Younger generations, who are potentially the highest risk category here, were the most keen on the idea.
23% of Gen Y's have already taken out money from their super, or are planning to. 18% of Gen Z's are also following suit.
Alex Vynokur, CEO of ETF provider BetaShares, spoke to Finder about the superannuation withdrawal scheme.
"The data tells us that the vast majority taking up this offer are under the age of 30. They have at least 30 years of compounded earnings they are missing out on by taking money out now."
"Superannuation funds should not be used as an ATM when times get tough", Vynokur told Finder. "I understand that these are unprecedented times and many Australians are facing real financial difficulties. But it is a shortsighted policy that will result in a short-term sugar hit to those affected at the expense of their super balances in 20 or 30-years' time."
Our tip: Research and consolidate your super (it's not as daunting as it sounds!)
Whether or not you've been forced to dip into your super, it's still a really good idea to get your superannuation sorted out while you're younger.
Here are some quick tips on how to make your superannuation work harder in these times.
- Get in the habit of checking your super and staying on top of it. The Finder App can help you track your account activity and lets you know how much money you have in your account and how it's performing.
- Check how many funds you have and if you've got multiple, consolidate them into one. Simply log into your myGov account and go to the 'Super' tab. Here you can get the details on all your super accounts and see what your balance is. Choose the fund you want to transfer the money from (the 'transferring fund') and what fund you want to transfer it to (the 'receiving fund'). Confirm your selection. Your funds should shift over to the one account within 3 days!
- Check what fees you're paying and compare this with other funds. If you're paying too much, switch to a fund with lower fees. This could save you tens of thousands of dollars over your working life.
- While you're at it, check where your super is investing and whether it aligns with your own personal ethics.
- Consider salary sacrificing a small portion of your pay into your super. this will help grow your super balance, and also reduce your taxable income at the same time.
3. They're struggling to pay their bills, and some are moving out
Younger people are needing to ask for financial relief more than any other generation.
9% of renters have asked for a reduction in their rent, whilst 6% of mortgage holders have asked for a mortgage holiday.
But the figures are far higher for young people.
25% of Gen Y's and 26% of Gen Z - or 1 in 4 young people - have asked for financial relief during this time.
If they're unable to pay the bills, some have no choice but to move back in with the parents.
As the economic fallout of the pandemic unfolds, over 300,000 adult kids have had to move back into their parents home.
Our research shows that 26% of households have an adult kid living at home.
1 in 5 of those said that the return home was brought on by the outbreak.
Our tip: Ask for financial relief if you need it, and don't be afraid to switch providers
If you're finding it hard to pay your bills due to losing work, explore and see if your energy provider, telco provider, bank or insurer offer financial relief options. We have a guide on getting financial help in Australia with information from specific companies on what they're doing to help ease your burden.
While you're at it, now could be a great time to look at your regular expenses and see if you could switch and save.
Here are a few areas where you could potentially save:
- Explore other energy providers. Our energy engine gives you ways you can potentially save on your energy bill in seconds.
- Looking for more out of your internet? You could try switching to a provider with a good typical evening speed, and one with lower prices to really boost your bank account.
- Compare insurance providers. Whether it's car insurance or health insurance, chances are that you could save on what you're paying. Check out your cover and see what you're paying for. If you haven't compared policies in a while, there could be savings to be had.
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