By: Mark McCrindle
Younger Australians are building portfolios instead of looking at property as the key to a secure financial future.
In a landscape defined by cost-of-living pressures and housing affordability debates, it would be easy to assume that financial optimism is dampening. Despite the Great Australian Dream of home ownership remaining elusive for many young Australians, they aren’t giving up.
The emerging generation are pivoting their financial aspirations, likely out of necessity as much as preference. Gen Z is an engaged investing generation, balancing current financial anxiety with a belief that their best financial days are ahead of them. This future may just look different from what they imagined. While property is the dominant asset class for older Australians, as the baton passes from Baby Boomers to Gen Z, there is a structural shift from a nation of property owners to a nation of portfolio builders.
From brick and mortar to digital portfolios
For decades, the path to wealth in Australia was clear. Buy a home, pay it off. As the pathway to ownership gets more challenging, the younger generations are carving a new path. Despite facing high entry barriers to housing, Gen Z and Gen Y are not being passive, they’re pivoting to more accessible investment opportunities.
Gen Z and Gen Y are more likely to be active in other investment classes (shares, crypto, managed funds) compared to Baby Boomers.
The younger generations are no longer just a future home buyer in waiting. They are sophisticated, active, diversified investors, who are building wealth through other means.
The optimism paradox
An interesting trend is the disconnect between current anxiety and future hope. Currently half of Gen Z (53%) are worried about their financial future (strongly/somewhat agree). This anxiety is real, driven by the immediate cost of living and inflation pressures.
Despite this, Gen Z are the most optimistic generation. Two in five Gen Z (39%) strongly agree they will be in a better financial position than they are today, compared to just 10% of Baby Boomers. This optimism is largely related to life stage, where many Baby Boomers are likely drawing on their super to fund retirement and considering passing wealth onto the next generation. Many may also feel their wealth creation phase is over, and are therefore less optimistic about their financial future. Younger generations, however, see their current financial struggles as a chapter, not the whole story. For financial services, the opportunity lies in easing financial worries, validating optimism and giving the next generation tools to create their financial future.
While the active investment numbers are encouraging, there is a gap between the genders. Males are twice as likely as females to strongly/somewhat agree they’re actively investing in various asset classes (38% vs 21%).
A nation of financial DIYers
Despite the complexity of the modern financial landscape, crypto, global markets, ETFs, non-traditional retirement funds, prediction markets only 32% of Australians strongly/somewhat agree they seek professional advice before making major financial decisions. This indicates there is a large proportion that may be making financial choices based on self-education, social media, or family advice.
The cost alone is not a barrier to advice, as even among high-income earners, the trend persists (35% earning 156k or more per year strongly/somewhat agree they seek advice before making a major financial decision). The challenge for the financial services industry, therefore, is to demonstrate value in a world where information is free, but wisdom is scarce.
Gen Z re-brands budgeting
Contrary to the stereotype of younger generations engaging in reckless doom spending, Gen Z are the most disciplined budgeters. Half of Gen Z (52%) strongly/somewhat agree they have a monthly budget they stick to, which is the highest of any generation Gen Y (48%), Gen X (44%) and Baby Boomers (45%).
In this budget rebrand, it’s no longer just for the frugal, it’s a primary tool for the ambitious younger generations who are building for the future. When it comes to budgeting, those doing it aren’t just the family CFO or the family financial advisor, it’s the 24-year-old trying to navigate rent, HECS, and a side-hustle simultaneously.
The bottom line
When it comes to financial identity people are resilient. Despite difficult conditions the younger generations are taking agency and a long-term view. For leaders, brands, and institutions the message is clear: don’t mistake anxiety and disappointment for pessimism. The next generation of wealth builders is active, engaged, and looking for ways to create their future.
Article supplied with thanks to McCrindle.
About the Author: McCrindle are a team of researchers and communications specialists who discover insights, and tell the story of Australians – what we do, and who we are.
Feature image: Canva
