Where should Gen Ys actually put their cash?

[brenden]

I buy coffee every single day (7Eleven), but for me it's an investment of sorts. I admittedly didn't drink coffee at all during VCE, but having coffee allows me to focus for longer - not due to the caffeine, but because I have something to do (drink the coffee) in those 5-10 second breaks.

I guess you could replace the coffee with a bunch of other beverages, but it isn't really the same for me. I'm sure there are lots of negative effects of it, too. I probably don't drink as much water as I should, now - and less than I used to. But I honestly don't think my grades etc. would be where they are if I didn't buy the coffee each day.

It's a pretty interesting point tbh. Like, if coffee helps you perform better at your job. You get raises. You get better position. That all compounds. Coffee pays for itself etc. (Speaking from someone who works in the same office as Joseph... definitely smashes his coffee... but definitely focusses a seemingly impossible amount... If coffee is what lets you do that then shit, maybe it's worth!)
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Time for me to actually contribute to this thread. We're about to get debatey!

"While last week's federal budget offered some help for first-home buyers, for many millennials the dream of owning a home won't be a reality anytime soon."

A lot of us probably aren't considering buying a house yet, but this quote probably hits home for our age demographic. It's sourced directly from this article here.

What do you think? Is buying a house even feasible?

Is buying a house feasible? Maybe.

Will it financially cripple you if you try? Potentially.

Is it a reasonable financial investment at the moment? Probably not.

Does that make a difference given the importance placed on it in Australian culture? Definitely not.

I think a lot about this issue. I've been working since I was 15. Started at Macca's for 4 years, did some tutoring towards the end of that. Started working part-time for ATAR Notes in 2014, full-time by the end of 2015 by which point I was 20 years old. Like... Ignoring people born into overwhelmingly wealthy families - assuming we're talking about people who can't get financial help from their parents... I'm probably in a really great position? Right? I still live at home, didn't buy a car until earlier this month so saved like $6,000-$8,000+ on petrol, registration, servicing/maintenance and insurance alone over the past 4 years compared to someone who bought a car at 18. Obviously got a full-time job super early - and not even by skipping out on uni and working in retail. Got my degree etc.

I've been very privileged, worked very hard, got very lucky... and housing is STILL a crazy proposition for me. And if it's that way for me... what about people who didn't have everything almost perfectly fall in to line? If I had the same luck and same work etc but 40 years ago - which isn't that long guys - our parents were running around in the street already - I would probably already be living in my own house. So I really fucking resent the whole "HEY, DON'T BUY AVOCADO!" as if it makes a difference. Like... how about you don't decimate the housing market and we'll call it even.

There's not a single political mind in this country who should be pro negative gearing. If you're a conservative voter - you want small government. That's literally what the Liberal party has historically stood for - and still ostensibly stands for. If you want small government, why the fuck are you giving tax breaks to investors - IMPACTING the market, when you could leave it alone. To reward people who work hard? Well, that's not the government's business is it? People who work hard get natural rewards (i.e., affording one house, let alone 20).

I speak of conservatism because it seems so inherently attached to conservative political belief that government should get their finger out of the market and abolish negative gearing but, this obviously isn't a policy put forward by the current government. Labor has said they want to abolish negative gearing but that's all well and good to say from opposition.

ANYWAY. The housing market is broken. Houses are overvalued, rent is expensive, wages aren't increasing, we have a more educated group of young people than ever before in the history of our country and... what, it's all our fault because we buy coffee? That's like saying if you get bashed after-school, it's your fault for walking to Coles instead of straight home.

Even if it's true that we could save money more by being more frugal - it's not even relevant to the real issue (housing market). Frugality isn't the answer. Would we be wealthier if we were more frugal? Well, yes. Would some proportion of people actually benefit enough from that frugality to get a house? Yes. Is that making any positive impact on Australia's housing market over the next 10-50 years? No. The problem probably repeats!

ANYWAY.

What to do with our money? Funnily enough, I think we should be frugal . I don't think it's an inconsistent position to hold, even after going on that big rant but some level of just, humility with our spending would benefit us. I'm not saying we should do it to fix the issue. I'm just saying that like, if you're earning money (which you should be), you should also save it. Not particularly controversial I would  think.

1. Get a job ASAP. A few years at Macca's and a 95 ATAR is gonna do you a whole lot better than no work experience and a 98 ATAR. I'm not saying get a job coz you're lazy or get a job because I'm a grumpy old man. I'm saying, why not just have one? No one is too good to fold clothes or make burgers. Seriously. Compare the superannuation accounts of someone who worked from 15, got a degree at 21 after working through uni, then worked full-time until 30, to someone who doesn't start work until they get their first degree at 21. Aside from the financials, it's just such a massive point of self-development to have worked part-time. I don't understand why more 15-18 year olds don't eagerly want to get a job.

2. Save the money you get in that job. Like, 80% of it lol. If you're 15 and earning $100 a week at Macca's, you can deal with only spending $20 a week. That's dinner with your friends at the mall every Friday, or a packet of lollies after school every day + a tub of icecream for the weekend. Just keep those habits as much as possible. If you're living with your parents through uni but working 10-20 hours a week. Same deal. Try to save 60-70% of what's coming in. (This is fkn impossible for people renting and otherwise not with their parents having a super fun time).

3. Graduate, pay for some advice, buy some stocks, work full-time if possible. Move out, keep saving as much as possible, keep trying to grow your money (term deposit at the very least, stocks, etc).

4. Hope.

(DISCLAIMER: What I've just outlined is stupid. It involves no travel, no fun, very little independence... but it's one way to put yourself in a workable position for those who are lucky enough to have parents they don't need to get away from, or fortunate enough to live in a place where they don't need to drive ages just to get to a workable train station for uni. Particularly if you're 15 reading this - start working and saving right now haha).

It's *possible* to get there. But for who, and at what cost to our young adulthood? Should we have to pay (literally and metaphorically) the price? Is it fair on us?

I really don't think so.

[Alter]

No one is too good to fold clothes or make burgers. Seriously.

This is so true. I used to feel like I was above doing vineyard work in a family business because it was a waste of the skills and knowledge that I had accumulated, and that anyone could prune/harvest vines or change irrigation without having succeeded a lot in school. However, the more you do the work, the more you appreciate its difficulty. I can definitely say that I respect people who do manual labour a lot more than I previously did because I've had to work summers without pay at all, doing seemingly boring or easy jobs like repairing broken irrigation taps or lifting foliage wires to make sure vine arms don't hang everywhere. I think the same applies for when you're flipping burgers or hanging out large fries at Macca's. Just because you might want to do something more technical in your life later down the track doesn't exempt you from doing the mundane or 'easy' jobs at some point.

[brenden]

This is so true. I used to feel like I was above doing vineyard work in a family business because it was a waste of the skills and knowledge that I had accumulated, and that anyone could prune/harvest vines or change irrigation without having succeeded a lot in school. However, the more you do the work, the more you appreciate its difficulty. I can definitely say that I respect people who do manual labour a lot more than I previously did because I've had to work summers without pay at all, doing seemingly boring or easy jobs like repairing broken irrigation taps or lifting foliage wires to make sure vine arms don't hang everywhere. I think the same applies for when you're flipping burgers or hanging out large fries at Macca's. Just because you might want to do something more technical in your life later down the track doesn't exempt you from doing the mundane or 'easy' jobs at some point.

For sure. Any student reading this can put fries in a bit of cardboard. But can they deal with the pressure of 20 customers waiting for their fries and adequately keep their work tempo high enough that no one gets grumpy, for hours at a time, without cracking under the pressure? Because the latter doesn't take smarts - it takes character. That's why work experience is worth so much on the resume, even if it's shit work experience.

[Joseph41]

To add the topic of saving money...
I'm currently 17 and the only one in my entire grade who does not hold any form of drivers' licence. I don't really see the point of driving to and from uni/work when your house is literally opposite the train station. The daily commute to the city is usually $5~ for opal fares. It is waaaaaaay cheaper than a car.
Costs of driving
-The car itself: $5000-$10000
-Insurance (a must): $1000/year
-Petrol for 100km to and from the city: ~$20/day with average 10km/L + waiting in traffic.
-Rego: $64 fee + some big tax.
-Toll $5~
Cost of public transport
-Train fare: $5 to the city
-Bus fare: $3~ or none of your uni is MQU.
Driving is kinda overrated if there is always traffic and the train is going to be faster.

I totally agree with this, but as somebody who's almost 23 and has made virtually no progress in the driving stakes, I really recommend getting your licence at some point - even if you seldom drive.

[heids]

I don't know if I came across as angry or unreasonable in this thread, but I apologise for it: I get easily upset about people talking about first world incomes because of the income inequality and poverty across the world, and I know it's unreasonable. I'm always unreasonable

I agree that it's not Gen Y's fault that the prices are what they are, and that the government should aim to change it, not a question about that.

But my discussion of frugality is more saying that if you have to go without some things to get a house - so be it. People have had to go without all through history, 40 years ago included.  And if you do spend over time thousands of dollars on things you don't need (and you don't necessarily need to own a house, of course! it could be the area you choose to cut on), well, that's thousands of dollars less you have for things like housing, or whatever is important to you.

@Brenden, every time you talk about getting a job during HS it makes me wish so much I had been able to hahahaha, I'm agreeing with you on all your points as usual.

EDIT: oh yeah, I was gonna argue the "no fun" thing you said though - I think having fun is about inner state and choices more than what you're able to spend money on, and you can totally have fun and grow at very little or no cost.

[brenden]

I don't know if I came across as angry or unreasonable in this thread, but I apologise for it: I get easily upset about people talking about first world incomes because of the income inequality and poverty across the world, and I know it's unreasonable. I'm always unreasonable

I agree that it's not Gen Y's fault that the prices are what they are, and that the government should aim to change it, not a question about that.

But my discussion of frugality is more saying that if you have to go without some things to get a house - so be it. People have had to go without all through history, 40 years ago included.  And if you do spend over time thousands of dollars on things you don't need (and you don't necessarily need to own a house, of course! it could be the area you choose to cut on), well, that's thousands of dollars less you have for things like housing, or whatever is important to you.

@Brenden, every time you talk about getting a job during HS it makes me wish so much I had been able to hahahaha, I'm agreeing with you on all your points as usual.

EDIT: oh yeah, I was gonna argue the "no fun" thing you said though - I think having fun is about inner state and choices more than what you're able to spend money on, and you can totally have fun and grow at very little or no cost.

I do broadly agree with basically everything you've put here.

[tashhhaaa]

personally I got my first job last year and I think not having any prior work experience didn't make a difference. I think that's largely individual so if you want to work in HS great; otherwise first year uni, TAFE etc is a good time as well

I definitely agree that it's character building -- my job isn't manually laborious but it can be challenging in that I need to deal with customers and make sure they have a great experience so they buy our product or continue to use our services. I wouldn't have learned any of this if I didn't work till my actual job in the future

I've saved up most of what I've made, I only spend 1/3 of my weekly earnings most of the time so I think that's a good way to build some savings (I do live at home though)

Also in regards to frugality, using the smashed avo and coffee examples: you can make both of these/have both of these experiences at home. I know it's not "the same" but you can make instant coffee at uni or work. You can buy an avocado and a crusty loaf, some cherry tomatoes etc and have the same thing in your own kitchen. It's not "instagrammable" but it's basically the same. I think people should only live lives they can afford -- I know people who freeload rides to uni and lunches off their friends so they can buy clothes they can't afford and it's just wrong

you can still have fun and enjoy extra things once a week or whatever. I think people our age just need to realise that we have several years ahead of us to spend $, it's not impressive to fund experiences that aren't within your means :/

[Russ]

i think the future is looking more bright than bleak personally in melbourne at least.

Apartment market aside, which I agree has peaked, do you really think the housing market is about to dramatically improve? There hasn't been any significant change that would make me think that and I believe it's still on the way up.
Banks will increase interest rates which will drive prices a little lower as people sell but I'm not sure what the impetus is over the next 12 months for there to be any real change. I'd be willing to bet that prices will continue to rise over that time period. A lot of the real estate debt is with the people best able to pay it off (middle aged full time employees etc.) and if there isn't an increase in homes being built in your area, I wouldn't expect prices to be cheaper. We have a lot of growth areas and the government is doing some infrastructure work (Monash, trains etc.) that will support that.

Ironically, I think one of the major threats is poor confidence in the market, but this seems to be concentrated amongst young Australians who aren't buying in the near future regardless (haven't seen any data on that though).

[elysepopplewell]

1. Get a job ASAP. A few years at Macca's and a 95 ATAR is gonna do you a whole lot better than no work experience and a 98 ATAR. I'm not saying get a job coz you're lazy or get a job because I'm a grumpy old man. I'm saying, why not just have one? No one is too good to fold clothes or make burgers. Seriously. Compare the superannuation accounts of someone who worked from 15, got a degree at 21 after working through uni, then worked full-time until 30, to someone who doesn't start work until they get their first degree at 21. Aside from the financials, it's just such a massive point of self-development to have worked part-time. I don't understand why more 15-18 year olds don't eagerly want to get a job.

Even on a non-financial note, having a part time job has been humbling as well as character building in a lot of ways. Yeah, I'm packing groceries even when I'm about to turn 20 years, old, just like I was doing when I was 14, but it's a job, it gives me something to do, I get to meet people, I get to make money, I get to feel like I'm amongst a new community.

[strawberries]

Not exactly relevant, but personally, I found working in fast food extremely difficult and stressful ??
I don't know how people do it haha
Like, working quickly, being under pressure, cleaning etc. - it's shown me there's a lot more that i can't do?

but yeah, I respect fast food workers much more now

[brenden]

Not exactly relevant, but personally, I found working in fast food extremely difficult and stressful ??
I don't know how people do it haha
Like, working quickly, being under pressure, cleaning etc. - it's shown me there's a lot more that i can't do?

but yeah, I respect fast food workers much more now

Hahahaha, it bloody can be! When people our age (young people, 16-22 kinda thing) say that oh fast food would be so easy yada yada yada, I just sit back and laugh at the knowledge that they'd be in tears for some reason or another within their first 2 months. It's like Gordon Ramsay's Kitchen Nightmares except when you fuck up, it's not Gordon yelling at you. It's the drunk guy who just got knocked back by Centrelink threatening to come around the counter and knock your fkn block off 😂

[_____]

An interesting take on this housing affordability debate is the unwillingness of people to move cross country. Post-graduation, if you had a good job with reasonable pay lined up, would you consider moving to Darwin? Personally, I would. Much prefer to save than spend unnecessary proportions of my income on housing, despite the lack of friends/family. How about if it were Saudi Arabia or Dubai? Again, I still would (for a decade or so while saving). Suppose I'm obsessed with money.

Alternatively, go all in on $BTC on a retest of $1500.

[brenden]

An interesting take on this housing affordability debate is the unwillingness of people to move cross country. Post-graduation, if you had a good job with reasonable pay lined up, would you consider moving to Darwin? Personally, I would. Much prefer to save than spend unnecessary proportions of my income on housing, despite the lack of friends/family. How about if it were Saudi Arabia or Dubai? Again, I still would (for a decade or so while saving). Suppose I'm obsessed with money.

Alternatively, go all in on $BTC on a retest of $1500.

Fair point. Western Australia is so beautiful, and so cheap. I think that I could relocate there, work permitting.

I think it's more culturally common in America (college), and not so much a part of Australian culture. Should it be? Good question.

[_____]

Fair point. Western Australia is so beautiful, and so cheap. I think that I could relocate there, work permitting.

I think it's more culturally common in America (college), and not so much a part of Australian culture. Should it be? Good question.

Yeah it's common in Britain too although it's a tiny country so you can take the weekend to see family. In my experience kids here have the mindset "but I live in Sydney!!1!1" which doesn't make much sense. The market will correct eventually, try live elsewhere for a while.

[Joseph41]

Interesting thoughts relevant to this thread:

Is the Australian dream alive in Darwin?
http://www.abc.net.au/news/2017-05-27/is-the-australian-dream-alive-in-darwin/8536962

Generous blocks, low prices and close proximity to the city — as the housing affordability crisis grips the east coast it would appear the "Australian dream" is still alive and well in Darwin.