Is the 'bank of mum and dad' just a myth?

Despite the stereotypes of young people as a generation focused on spending with no consequences, young people actually see their money decisions (as well as their mistakes) as their responsibility, our research shows.

They aren't reliant on the "bank of mum and dad".

We spoke to 123 Australians aged between 16-26 across a variety of socioeconomic groups. We asked them about their beliefs, perceptions when it comes to finance and how they made, spent and saved money.

Although parents "helping out" was mentioned - whether through direct money allowances or indirect support such as staying at home and paying marginal rent - it was clear young people saw their financial security as their responsibility.

However, many spoke of the desire to help out their families, particularly if their parents were struggling financially themselves.

As a result, some young people chose to forego opportunities such as further study or training in favour of earning money in the present.

This has longer term consequences for their earning power. For example, they may be stuck in occupations characterised by precarious working conditions, low superannuation contributions and limited opportunities for promotion.

Many participants picked up on the gloomy sentiments around their generations' prospects of home ownership, increasing precariousness of the labour market and the inevitability of working into their older age.

Young people faced a range of challenges, including lower wages in line with their age, unpaid overtime, delayed wages as casual part-time workers and exposure to exploitation and the cash economy.

These all could undermine their attempts to save money and control their cash flow.

However, while focused on youthful consumption, many realise the need to balance this with achieving other medium and longer-term objectives - such as buying a car, or home ownership - and were optimistic of their ability to increase their earning power.

Our research also shows our squeamishness at talking about money has significant consequences for young people. The way we undertake financial literacy education often misses the mark.

Why we need to talk about money

In Australia we often think about money-talk as uncomfortable, boastful or even vulgar, even with intimate partners or close friends. Our study suggests this has significant consequences for future generations' financial practices.

Although we may like to think our own positive money practices transmit to our children through a process of osmosis where they automatically model good financial practices, this was not the case for our participants.

Many found it difficult to articulate how their parents had been successful in saving, planning and spending beyond very general impressions.

However, others did describe how witnessing their parents deal with financial struggles influenced their own behaviours, particularly if they had made significant money mistakes.

For these young people, early experiences of their family having no money for food, or memories of the electricity cut off due to late payment of bills influenced them in the long run. They had thought about strategies for budgeting and were clear about prioritising essentials such as rent.

But the cultural hangover of a hesitance to talk about money meant young people rarely reported discussing salaries, savings or longer term financial goals with their friends.

Although they felt pressure to conform or keep up with activities or new products, many were perplexed that friends could afford something and they couldn't, despite perceiving themselves to be in similar financial positions.

This may of course have dangerous consequences in terms of setting expectations about lifestyle or consumption choices that do not correlate with their financial practices.

Turning financial literacy into action

Our research suggests the current focus on financial literacy, which favours intervention and education at the individual level, only partially helps to support young people.

Unlike previous generations, they face a complex terrain of financial decisions around superannuation, predatory lending practices (such as payday loans) and new, poorly regulated financial products on the market.

Among financial literacy initiatives, clear information is needed about the medium to long-term management of investments, the implications of debt and the importance of discussing their money decisions with others.

Most importantly, more needs to be done to ensure systems and practices around spending and financial commitments are accessible and transparent.

This includes making it easy for people to "read the fine print" in agreements, and being clear about the longer-term consequences of financial decisions.

Young people have a clear idea what they want their futures to look like and they know it requires significant financial compromises and sacrifices in the short and medium term. The least we can do is provide enabling structures to support this.

Kathleen Riach is an Associate Professor in Management, Monash University

This article first appeared here at The Conversation

Topics:  buying a car finances home ownership lifestyle renting young people

Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Motoring show to rev up support for hospital

FAMILY FUN: Three of the sensational cars that will be on display at the Gatton Auxiliary Show and Shine.

Car, Ute and Bike Show and Shine is coming to town for a good cause.

Student wins half price fees

FUTURE VET: Brook Cridland, winner of the Country Challenge on Campus.

Year 11 runner wins $4500 university prize.

Gatton and Forest Hill make it two from two

PACE: Gatton Fordsdale bowler Chris O'Brien sends a speedy delivery to Southern Lockyer's Shaun Ashley during the A-grade fixture at Ropehill on Saturday.

Gatton and Forest Hill both won their round two fixtures.

Local Partners

Do you recognise this distinctive blue and white ute?

IF you've seen a distinctive white tray-back ute with a blue bonnet around the region, the Gatton Police want you to contact them.

Barry Gibb is coming to Bluesfest 2017

FANS: Barry Gibb talks to a fan next to a cardboard cutout of his young self.

Aged 70, Gibb has re-launched his solo music career with a new album

Tim Finn headlining at Airlie Beach Music Festival

Music veteran Tim Finn from New Zealand will headline the Airlie Beach Music Festival.

Tim Finn: "It's the kind of festival that artists love"

CMC organisers: No more pre-sale tickets will be sold

US country music group The Dixie Chicks. Supplied by Chugg Entertainment.

UPDATE: Plenty of people unhappy with process

Azealia Banks won't take legal action against Russell Crowe

Rapper Azealia Banks

Rapper drops legal action against Russell Crowe

Brad Pitt meets with his kids amid divorce proceedings

Actor Brad Pitt

Brad Pitt has met up with his oldest son Maddox

Pictures of Taylor Swift allegedly being groped are sealed

They could "complicate jury selection".

Bruce Springsteen finds therapy useful

Singer Bruce Springsteen

Singer encourages others to seek help

Kerry Washington wants one more child

Kerry Washington recently gave birth to her second child

Kerry has only just become a new mum again

TRAVEL: Musicals light up Sydney

David Campbell performs in Dream Lover.

We take a trip through one of Sydney's finer scenes

Hit songwriter's Noosa mansion on market

SPECIAL PLACE: The Cintamani estate is going to tender, marketed by Tom Offermann Real Estate.

Is this Queensland's best property?

Kiwi siblings snap up Dotcom mansion for $32.5m

The new toy company owners of the Coatesville mansion want replace any controversy with positivity and fun. Photo / Barfoot and Thompson

The trio paid $32.5 million for the property in June

New $200 million development will create 580 jobs

Cassie And Josh with baby Alfie and daughter Andee. They have bought at new Lennox Head development Epiq.

Majority of new positions will be given to Northern Rivers locals

Cherrabah's mega resort plans axed

PLANS for a massive development at Cherrabah have been scrapped.

What our mayor thinks of the new draft SEQPlan

The plan to use the innovative technology as part of the new Maroochydore CBD was cemented on site today when Mayor Mark Jamieson and Envac Asia Region president Chun Yong Ha formally signed the contract for the $20 million underground waste collection system.

New plan accommodates Sunshine Coast Council's vision for growth.

Dusit Thani finance crisis 'just a small hiccup'

ON TRACK: Springfield Land Chairman, Maha Sinnathamby, Ipswich Mayor Paul Pisasale, Developer Richard Turner and Springfield Land Deputy Chairman, Bob Sharpless, at the recent resort sod turning ceremony.

Property developer says project remains firmly on track