The cost of being a millennial; how well do you know your financial footprint?
Applying for a home loan is serious business. You’re going to need to be fully aware of your finances, which includes your spending and savings habits, not just your income and expenses.
Getting to know your finances
Home loan applicants have to be ready to outline how much money they spend on specific categories like clothing, entertainment and eating out. Having this insight into your finances will give you the best chance of getting your home loan application successfully across the line.
We saw this as an opportunity to take a deep-dive into the spending habits of 18 to 35-year-old Aussies to determine how financially accountable and conscious they are.
The promise is that we have access to more goods and services (both here and overseas) which are available in record time thanks to quick delivery and even quicker internet speeds. The pitfall is that there’s so much more to spend money on than previous generations, and seamless (dare we say invisible) payment systems make it all too easy to spend your dough without really thinking about it.
So, how aware are millennials when it comes to how much they’re spending and what they’re spending on? And what impact will that have when you find yourself ready to apply for your first home loan?
The hard numbers
- $25.95 a month on subscriptions – think Spotify, Netflix, Foxtel, Apple Music and Google Play
- $72 a month on home internet – how else are they going to stream all that content?
- $55 a month on mobile plans – so they can debrief on said content with friends
- $120 a month on Uber, Taxify, and other taxi and ride-sharing services – the $15 rides add up
- $144 on food delivery services like Deliveroo, UberEats, and Menulog – so do those delivery fees.
- We spend more on transport by 10% a month
- We spend more on food by 18% a month
- Recreationally, we spend 29% more a month on things like hobbies, entertainment and holidays.
Given tech advances and the influx of services we’ve listed above, this isn’t a surprise. But what it means is that individually, people need to be much more aware of and accountable for these hard numbers, because you’ll be asked about how much you spend on these categories when you do apply for a home loan. And if you get the estimates wrong, digital records will be cross-checked and your application could be unsuccessful.
What Aussies think they’re spending
- 42% admit to checking their banking apps anytime they make a purchase
- An awesome 75% are confident they can estimate how much they spend a month to the nearest $20.
- 30% of people claimed to know exactly how much they spend each month
- However, 10% of this group didn’t know how much they spent on their monthly mobile bill
- And 20% of this group also didn’t know how much they spent on their monthly home internet bill.
So, it’s clear there’s still a bit of fogginess around what people think they spend and what they actually spend, and it’s really important to have better clarity around this.
Another thing we want millennials to think about is lifestyle creep. Our survey found people who spent more than $90 on food delivery a week were more likely to spend over $60 on taxis and ride-shares each week plus more than $100 on mobile and home internet each month.
This group of people were also more likely to only check their expenses on their monthly statement and are not actively keeping an eye on their finances throughout the week (we’ve got an in-app tool to help with that). While it’s true that higher incomes are likely to mean higher spending across these categories, our data found higher incomes meant less focus on spending habits.
Consciousness is key to securing your future dream home
Stay tuned for part 2 of this series where we break down and explore the level of detail you’ll be required to include when you’re ready to apply for a home loan, as well as tips and tricks to help you master the entire process.
From how spending behaviours will be used to decide eligibility for home loans to how spending data can be used to show how saving-savvy you are, when it comes to helping secure that loan, we’ve got you.