New research found that millennials and Gen Z are more likely to take an interest in their finances, thanks in part to the ‘gamification’ of budgeting apps

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  • Research from UBank has found COVID has shifted the way Australians look at budgeting, particularly millennials and Gen Z.
  • It found that 68% of millennials have a budget, compared to 58% of Gen Xers and 55% of Gen Zers.
  • UBank CEO Philippa Watson attributed this budget-savvy attitude to the gamification of budgeting tools.
  • Visit Business Insider Australia’s homepage for more stories.

Millennials and Gen Zers are becoming more budget-savvy.

Research from UBank’s ‘Know Your Numbers’ survey found that COVID has caused a shift in how Australians think about budgeting. UBank CEO Philippa Watson said in a statement that the pandemic has led to positive financial behaviour changes, particularly for younger Australians.

“Despite 45% of the population admitting their finances have been negatively impacted in the last six months, we’re seeing millennials emerge as being quite resilient,” she said.

“They’re taking the opportunity to implement budgeting and saving strategies to keep their financial goals, such as buying a home, on track, with many putting away half their salary each month.”

The research, based on a survey of more than 1000 Australians, found that 68% of millennials have a budget, compared to 59% of Baby Boomers, 58% of Gen Xers and 55% of Gen Zers. It also found that the groups most likely to both take an interest in and manage their finances are Gen Z and millennials – 75% and 62% respectively.

“We know there’s a direct correlation between budgeting behaviours and reaching your financial goals, and it’s really impressive that so many younger Australians are being intentional around their money,” Watson added.

Why millennials and Gen Z are budgeting

Watson told Business Insider Australia that one of the key surprises out of the research was how many millennials and Gen Zer are budgeting. She explained how the pandemic has spurred this move.

“The challenges of COVID have brought home to people the need to really create their own safety net and make sure that they’ve got something in reserve in case things get challenging for them,” she said.

“But the research also shows that among these age brackets, which is essentially people under 40, they’re still really positive about their financial future. They’re still planning to purchase houses over the next five or seven years. They certainly do have a positive and optimistic outlook on their financial future and are taking those practical steps towards that.”

While budgeting in the past may have been seen as an old-school old system associated with pen and paper, Watson highlighted that millennials and Gen Zers are more open to it now because of the number of apps and services available.

There are apps like Pocket Book, Moneytree and Spendee, and some banks even have their own budgeting tools like UBank’s Free2Spend system. On top of that are micro-investing platforms like Raiz and Spaceship Voyager.

“Budgeting is something that people heard about from their grandparents, and perhaps thought of as being an old fashioned thing,” Watson said, adding that UBank’s research unveiled a trend toward apps.

“Firstly, it tells us that through COVID times, people have returned to the idea of needing to be very intentional with their money. And then the second thing is that you can see from those who have recently started budgeting that a great deal of them are using new technology apps, saving tools to help them stay on track.

“There’s been a trend towards gamification of budgeting and a way for it to feel like a more exciting thing to do rather than it being the old pen and paper way.”

Saving for a home loan

According to the research, 44% of Australian millennials listed buying a property as one of their top two savings goals over the next five years – a 3% increase since February 2020. And of those aspiring homeowners, 50% were saving for a deposit.

However, 80% of aspiring homeowners felt under-educated when it comes to saving for and buying a home – 86% for millennials.

But one of the key pieces of advice Watson would give to people thinking of getting a home for the first time is not to be in a rush.

“Make sure that the house that you buy is the house that you can afford, that you’re going to be in for multiple years because the cost of stamp duty and other expenses around buying a house are high so you want to not be in a hurry,” she said.

“Take your time. There are hundreds of thousands of houses at any one point in time and while it might seem that it’s difficult to find the right house, you will never regret taking a little bit of extra time in order to get into the right property.”

UBank also provided tips on what you need when thinking of getting your new home (or refinancing):

Start looking at the numbers early on

Look at how much you can borrow and factor in costs like stamp duty and legal fees. When you find a property know its value.

Watson added that it’s important to know what is sustainable for you over a long period of time.

“Knowing the long term: what it costs to run your life, how much you can save, and how much you need to spend in order to have a good and fulfilling life, is certainly the best way to run into a big financial decision like a mortgage.”

Do your research

Pinpoint whether you’re buying the property to live in or as an investment. This can help you narrow down the type of property you want and the area you want to buy in.

“The sooner you can begin to understand what a mortgage is, what it means, what the features are, the more likely you are to get yourself a mortgage that will stand the test of time,” Watson said.

Create a budget

When you know how much you can borrow and where you want to buy, save for the deposit. Put a budget together by calculating your spend monthly and how much you need to save.

Don’t be afraid to shop around

Look for a lender with the best rate and features you need. Look at the comparison rates and suss out the fees so that you know exactly what you’re paying for. “Make sure you’re not paying for features that you don’t need,” Watson said.

If you already have a home loan, find out whether you’re getting the best rate and don’t be afraid to call your bank and find out.

Be prepared for your application

Have your ID and know your income, living expenses and debts. You should also have three months of bank statements ready.

Know how long it can take

Be aware that it takes an average of five weeks for new loans.

Find out about any support

Look at what processes your bank has in place to support you and what you’ll get if you face any repayment challenges.

And lastly, Watson mentioned the importance of asking as many questions as you can.

“If you don’t get answers that you understand, don’t be afraid to ask the same question four, five, six times until you really understand,” she said. “And if you can’t get the answers you need from that bank, then go to a different bank.”

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