Although Gen Y has grown up during the transition into the digital age, their traits are somewhat similar: they are quick-witted, stubborn, self-confident, and when they commit to something, they go all out, making them one of the most efficient labor markets. However, Gen Y has a significant vulnerability that is quite concerning: their spending habits.

            On a global scale, Gen Y is considered less fortunate compared to previous generations like Baby Boomers and Gen X, who were born during a time when the global economy was recovering robustly. In contrast, Gen Y navigates a world economy that is volatile and uncertain, influenced by events such as terrorism, 9/11, and Brexit. This has resulted in a financial and investment landscape for Gen Y that appears much rougher than that of older generations. Besides a lack of confidence in high-risk investments, Gen Y also faces intense competition in the job market. Even though the average educational attainment for Gen Y is a bachelor's degree, more than half of them aim to enter the job market to start their own businesses.

Luxury Lifestyle, but Empty Bank Accounts

            Surveys indicate that most Gen Y individuals in America have less than $1,000 in savings. Digging deeper, it becomes clear that their short-term spending is primarily on daily living expenses and self-indulgence, including attending concerts, events, dining in malls, buying clothes, electronics, coffee, and using non-public transport services like taxis or Uber. This has led to the saying that the reason young people can't buy homes is due to their overly expensive lifestyles.

In Thailand, in 2017, there were 2.2 million new credit card accounts opened, with over 50% going to Gen Y. This is corroborated by research from another banking institute showing that Gen Y holds an average of three credit cards each. According to a survey by NIDA Poll, which examined the saving behaviors and debt situation of the population in the first half of 2017 with a sample size of 2,000 people, it was found that 45.15% had income and expenses that were roughly equal, with an average monthly income of about 26,459.91 baht and average monthly expenses of 21,606.75 baht.

But that's not all! The average total debt of Gen Y under 30 years old is over 565,302.88 baht, with 59.47% stemming from purchases/installments for goods and consumer services.

INTAGE Academy conducted a survey to determine whether Gen Y is indeed good at traveling, shopping, and spending impulsively. They surveyed a sample of 100 people and found that the majority of spending was 39% on daily living expenses, 21% on household expenses, 15% on debt payments, 14% on savings/investments, and 11% on shopping and socializing. This raises the question: is Gen Y truly extravagant, or are economic constraints forcing them into this behavior? Although incomes have increased compared to previous generations, mandatory expenses have also risen significantly. While parents could afford to pay for a house and a car on a starting salary of around 10,000 baht, today, finding a small condo of just over 20 square meters is a daunting challenge.

No Kids Due to Mounting Debt

         In addition to spending habits making homeownership seem like a distant goal, there is also a shift in attitudes towards life. According to research from the Population and Social Research Institute at Mahidol University (2015), over 34% of Gen Y view having a family as a heavy burden, leading to a lack of interest in family creation. When considering priorities in life, most Gen Y individuals prioritize further education first to secure better jobs, followed by buying a car before a house, and lastly, starting a family, getting married, and having children.

            The concept of remaining single or marrying without children is becoming more prevalent among Gen Y. They have seen from their parents that raising a child requires immense financial and time investment, with the average cost of raising one child estimated at 1.9 million baht. Furthermore, some Gen Y individuals do not view having children as a significant symbolic act of family creation like their parents did, leading them to believe that finding happiness and stability through homeownership, car purchases, and travel is more appealing than having children. This attitude could lead to demographic changes, as in the near future, the aging population may become more pronounced, necessitating greater government support compared to previous generations due to the declining birth rate.

Upon reflection, it is not entirely accurate to say that Gen Y is merely reckless with their spending. Beyond their behaviors, there are social and economic factors that financially constrain Gen Y. In the past, when their parents started working, a starting salary of 3,000 baht could buy 300 plates of rice at 10 baht each. Today, a bachelor's degree holder starts at 15,000 baht (in Bangkok), with rice costing 40-50 baht per plate, allowing for only 300-375 plates. Additionally, they face exorbitant transportation costs, rent, and various expenses that urban dwellers must bear. Thus, Gen Y is indeed a population that faces significant challenges. - เทอร์ร่า บีเคเค

Article by: TerraBKK Investment Tips

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