The generational wealth gap is big in the news at the moment, with baby boomers being blamed as a burden on younger generations.
Whether this is a fair accusation or not, the fact remains that, despite what some may say were prosperous economic conditions from which boomers benefited, to a degree, they still paid their taxes, dealt with low wages and high loan and interest rates, and a volatile stock and jobs market.
As one YourLifeChoices member wisely stated: “Each era had their own peculiarity, just like the one before baby boomers”. It’s fair to say that there were factors that helped (or help) each generation and those that work (or worked) against them.
However, as the Financial Planners Association (FPA) revealed in its latest report, generosity plays a part in a person’s wealth, and the Millennial and Gen Z cohorts may do well to be a little stingier, just as the boomer bracket seems to be – at least according to the FPA.
Australians spend almost $20 billion on gifts each year, but some generations are more generous than others.
The research also reveals that 73 per cent of the $19.8 billion spent on gifts is unplanned.
“There’s literally billions of dollars of household spend that is simply not budgeted for by nearly three in four Australians (73 per cent) across genders, generations and geographies. That’s an obvious opportunity to increase our nation’s financial literacy and awareness of the benefits of budgeting, financial planning, and giving in a way that brings joy without debt or regret,” says FPA chief Dante De Gori.
On average, boomers and Gen X are more tight-fisted when it comes to gift-giving than their Millennial and Gen Z counterparts.
Millennials spend around $130 on gifts each; with an average spend of $1560 per year – the most of any generation.
Gen Z were the next most generous gift givers, spending around $91 a month on presents, followed by boomers, who spent an average of $89 a month. Gen X is the least generous generation, with an average spend of $87 a month.
Gen Zs and Millennials were also more likely to chip in for a more expensive gift, with four in five taking part in group giving compared to three in five boomers.
The report also revealed that re-gifting – passing on a gift you have received to someone else – was also more prevalent amongst younger people.
Overall, 41 per cent said they’ve have re-gifted a gift, but Millennials are the ‘re-gifting generation’, with 54 per cent saying they’ve re-gifted compared to 44 per cent of Gen X, 37 per cent of Gen Z and 32 per cent of baby boomers.
Gen X pet owners spend the most on their pets – an average of $142 per pet per year – followed by Millennials, who spent an average of $121.
The average amount spent on pets was only just under the amount we shelled out on a wedding gift – an average of $137 – which was more than double the average spend for a significant adult birthday for a friend or family member.
Spouses or partners received around $437 in gifts each year, followed by $361 spent on children and $201 on parents.
The Grattan Institute says that young people are being ‘sold out’ by older generations, with Generation gap: ensuring a fair go for younger Australians revealing that today’s younger generation will be the first since Federation to see their standard of living decline compared to their parents.
Maybe these same young people could do well to follow their parents and be a little less generous when it comes to spending on gifts.
One glaring omission from the report was the ‘gifts’ of money given to younger people by parents and grandparents.
Twenty per cent of first-home buyers rely on some kind of loan from their parents when applying for a mortgage, according to statistics from Digital Finance Analytics, with the average size of that parental contribution being around $70,000.
As of April 2019, parents lent a total of $30 billion to their children, making them the ninth largest home-loan lender in Australia.
Do you consider yourself stingy or frugal when it comes to gift-giving? Do you think younger people could rein it in when it comes to giving gifts?
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