The rise in the cost of living has hit us all in different ways, but a new survey indicates that baby boomers are still happy to spend up on renovations and dining out.
Banking platform Frollo analysed the spending patterns of 35,000 Australians and found that over the past 12 months, spending had gone up across all age groups. It was how money was being spent that differed dramatically.
Comparing spending patterns in different demographics for the May to June periods in 2021 and 2022, Frollo found that the amount boomers spent on renovations had gone through the roof, with 2022 totals up a staggering 164 per cent compared with last year.
By contrast, the equivalent figure for millennials was 33 per cent. For gen X it was 34 per cent and for gen Z 61 per cent.
Read: More Aussies than ever struggling to pay grocery bills
The figures show that boomers appear to be sacrificing groceries for those renovations. While the amount spent on groceries rose by 12 per cent across all demographics, the rise was only 2 per cent in the boomer age group – well short of the inflation rate.
Inflation in the June quarter was 6.1 per cent, with some sources tipping it to peak at 7.75 per cent by year’s end.
Despite a hefty price increase at the petrol pump, boomer spending on petrol rose only 2 per cent, well below the national average of 12 per cent, and way behind the 27 per cent increase among the gen Z demographic.
Read: Apps that can save you hundreds on your grocery bill
Another category in which the increases varied dramatically across different age groups was hospitality. Although spending was up across the board – unsurprisingly, given the continuing easing of COVID-related restrictions – it was again the boomer age group that recorded the biggest increase.
Hospitality spending went up by 22 per cent overall, but on average boomers increased their outlay in that area by 35 per cent – more than triple the increase of 11 per cent recorded in the millennial demographic. For gen X, the increase was 23 per cent and for gen Z 20 per cent.
The higher renovation figure for boomers is not a complete surprise, given that they are the generation most likely to have paid off a home loan, putting them in a good position to fund an upgrade.
Read: Renovations that deliver bang for your buck
However, the increase in that category was high across the board (92 per cent across all groups), which is likely the result of the construction sector still juggling supply chain delays, material shortages and skilled labour shortages.
The Frollo research found that spending on healthcare and medical expenses rose from $197 to $232 per month on average (an 18 per cent increase), while spending on insurance rose by 12 per cent from $282 to $318 per month.
What can you do to reduce your spending?
It’s not easy in the current economic climate, but there are several steps you can take to make a difference. Pay closer attention to grocery specials and regularly compare your energy bills and insurance costs.
Other than that, most of us will need to ride out the ‘storm’ and look forward to a – hopefully – more financially favourable 2023.
Has your spending risen dramatically in the past 12 months? Are renovations and eating out the main reasons? Why not share your experience in the comments section below?
Some of the renovations are smart boomers trading off maintenance versus upgrade. We did this. The upgrade reduces maintenance and operations costs, like reduced energy consumption, reduced heating costs and improved airflow.
Some of the renovations are due to windfalls in cash, which if not spent will push seniors’ assets over that allowed by the asset test, which has diabolical consequences under the current system.
And some are due to us not travelling, so having money that was planned to be sent on other things and deciding to use it in a way that improves our lives.
This probably goes against Canberra’s view that we are all squirrelling it away to leave to our kids, but heck, why would politicians let facts get in the way of their pathetic arguments?