Kayti Burt is a freelance writer with bylines in 

, and Vulture. She specialises in the rise of non-English-language culture in the West and globally.

In the turbulent economic environment, money is losing its value. Consumers are reevaluating their spending across sectors. With a looming crisis of trust in financial institutions, how are people managing their budgets? And how can brands navigate the complex relationship between value and cost?

Critical Spenders

It’s been a rough few years for Australia. Previously known for its economic stability, 2020 saw the country fall into its first recession in nearly 30 years. 

BBC News

While the economy had recovered by the end of the year, some experts have predicted that Australia is possibly headed for another one driven by an ongoing housing crisis and soaring interest rates. 

SBS News

 This is particularly bad news for Gen Yers who, along with many of their similarly-aged peers in other developed countries, are less likely to have savings, home ownership, or other financial assets compared to their parents’ generation.

“Essentially, the further we go down the age cohorts, the more difficult it is,” says Jonathan Barrett, a senior business reporter at 

. While over-65s are, generally, in good financial shape, this is not the case for younger generations. “When you get down to Millennials, many are trying to get into the [housing] market, and they're facing elevated interest rates and also very, very high property prices,” Barrett adds. Rental prices are also high because of a severe shortfall in housing. “Their spending is decreasing as they're trying to save, but their savings accounts are also decreasing. So, it's the exact opposite of the older cohort in that [young people] feel like they're going backwards.” 

Interview with Jonathan Barrett conducted by the author

In Australia, Gen Yers are coping with economic headwinds in a variety of ways: by thrifting more than their parents, avoiding credit as much as possible, and engaging in more reckless behaviour, such as retail theft and gambling. In the midst of it all, they are still finding budget-conscious ways to spend on special experiences – cutting costs in some areas while saving up for the occasional treat. In this way, they are spending not on ‘forever’ commitments like home-ownership or ‘everyday’ rituals like a pre-work coffee but rather on the experiences and products that fall somewhere in-between.

Australia ended 2023 on the brink of a recession. For the first time in 40 years, its economic growth was only due to population increase, with a 2% rise between 2022 and 2023. (Historically, the country has needed GDP growth of 2.5% to keep unemployment stable.) 

The Guardian

 On the per capita level, this meant everyone received a smaller piece of the pie. “We’re pumping more people in but we’re not producing more stuff per person,” says AMP chief economist Dr Shane Oliver. “We’re inflating our economy by pumping more people in but it’s not giving us growth in living standards per person – we’re actually going backwards and also productivity is going backwards.” Looking forward, according to the government’s 

Intergenerational Report 2023: Australia’s future to 2063

, the economy is projected to grow at a slower pace over the next 40 years than in the past 40 years, with real GDP set to rise by just 2.2% annually on average (0.9 percentage points lower than in the past). 

Defence Connect

As of 2022, one in eight Australians were living in poverty, making less than $489 per week as a single adult or $1,027 as a couple with two children. 

Australian Council of Social Service

Gen Yers, in particular, face considerable financial challenges, owing twice as much in student debt as their parents and having poorer mental health than any previous generation as a result. 

Research published in 2023 highlighted that 76% of Australians who are pessimistic about their future personal financial situation are Gen Yers or Xers, with 49% of these young pessimists saying they expected their income to decline in the following six months. In terms of spending for younger Aussies, this has led to a greater emphasis on day-to-day essentials and the prioritisation of products and services that are affordable, effective, and provide value for money spent. 

An analysis of census data revealed that 25- to 39-year-olds in Australia were three times less likely to own a home outright in 2021 compared to adults of the same age in 1991. 

Australian Bureau of Statistics

 This disparity in access to property is particularly prevalent in Sydney. “Sydney is the most expensive city in Australia by a fair bit, and if you had planned to buy here but you've seen prices increase at a far faster pace than your wage, then at some stage, it just becomes [clear that it is] unfeasible,” says Barrett. 

In 2022, Sydney was the second most expensive city in the world to buy a home, with the median house price being 15 times more than the average household income in 2021. Elsewhere in Australia, Melbourne, Brisbane, Adelaide, and Perth were all named in the top 20 most unaffordable cities globally. 

The Sydney Morning Herald

In this environment, 67% of voters aged 18-34 believe younger Australians who are not already homeowners will never be able to buy a property in their area. 

Similarly, mortgage broker Lendi found in 2023 that six in ten young Australians say they can no longer afford to buy a property where they grew up. 

This has left many young people with renting as their main or only housing option. However, rental fees are at an all-time high, with median rent rising by 8.5% between 2023 and 2024. 

ABC News

According to the IMF, Australia has one of the worst ‘housing cost overburden’ rates in the world (the proportion of people spending more than 40% of their income on housing). 

 In turn, some young people are considering 

 – buying property in affordable postcodes so they can rent in ‘better’ locations.

The one-two punch of financial insecurity and a lack of access to home-ownership has influenced decision-making for Gen Yers in a variety of ways. For one, they’re more inclined to use buy now, pay later services to afford purchases, with 40% of 18- to 39-year-olds holding instalment loans in 2023. 

Bloomberg

Meanwhile, the ‘lipstick effect’ is seeing young Aussies cope with financial insecurity by splurging on special treats like concert tickets or weekend brunches with friends – although they remain somewhat budget-conscious in their day-to-day eating and drinking habits. 

Recreational activities (including cafe and restaurant excursions) have picked up, suggesting that Aussies are spending money to help lift their spirits. “Now, when we're seeing a downturn in sales… we see that women particularly will go and actually spend money on a new lipstick to update their look versus buying a new dress,” said the CEO of the Australian Retailers Association, Paul Zahra, to ABC News. “You're seeing those high levels of compromise in their shopping.” 

Financial precarity has also led to an uptick in shoplifting and a propensity for gambling. One in five Australians reported an increase in their gambling habits between 2022 and 2022 while retail theft was up 23%. 

According to Finder, almost one in five Australians have stolen from supermarkets through self-serve checkouts, either by not scanning items or misrepresenting them. 

Finder

“I don’t shoplift regularly but when I do it’s because I feel the item is overpriced for what it is or I can’t afford it,” one shoplifter told Fashion Journal in 2023. “I also shoplift if I feel the corporation selling the item doesn’t need my money.” 

Fashion Journal

Cater to Gen Y’s desire for affordable luxury

While Australians have less disposable income, many Gen Yers are still saving up to splurge on concerts, hobbies, or activities that feel special. 

 So, one key opportunity for brands is to offer (hopefully guilt-free) products or services that cater to the desire to treat oneself amid economic uncertainty. “For Millennials who have been excluded from home-ownership due to low earnings or just not wanting to enter a lifetime of debt bondage with banks, they can save more of their disposable incomes,” says Alison Pennington, an economist, writer, and media commentator who conducts research on economic issues facing working people. “They’re not on the hook for high interest rate mortgages so can put money away for other activities like travel.” 

Interview with Alison Pennington conducted by the author

 Travel insurance provider InsureandGo reports that 65% of 31- to 50-year-olds would rather travel than buy a house in 2024, spotlighting the appetite for small luxuries over milestone purchases. 

KarryOn

, a cosmetics and skincare company, has become the country’s number one brand at Woolworths and Big W by providing luxury-level products at affordable prices, often at accessible retail spaces. 

Financial Review

 has found success with its first streetwear collection by keeping prices to $20 or below.

Consider cross-demographic appeal that includes Gen Y

Although Gen Yers are financially limited, older generations are looking to spend their wealth – often in the same markets as younger generations. Because of this, Barrett recommends catering to multiple segments of the market when possible. “The business owners I've spoken to will have some cheaper items, mainly for younger people, but they also want to take advantage of the high-spending over-65 group,” he says, using fine dining restaurants as an example. “You have a happy hour or discount meals for traditionally slow periods, potentially getting that younger, cost-saving cohort. But you will also have the nice meals and more expensive items, either for the younger cohort who might be saving up for a special occasion or to take advantage of the over-65s.” 

 As is, Barrett notices that younger people are being priced out of cultural experiences, which not only limits intergenerational camaraderie but is not sustainable in the long run. In January 2024, Meat & Livestock Australia launched a ‘Summer Lamb’ marketing campaign aimed at bridging the generational gap. To ensure that younger Australians were exposed to the campaign, MLA targeted platforms such as TikTok and X, with the shorter edits sparking interest in longer-form content. 

Contagious

According to the survey, 32% of all viewers claimed they were more likely to buy lamb after watching the commercial, with 69% of Gen Yers finding it appealing. 

AdNews

Recognise the uncertainty in Gen Y’s experiences

Australians distrust corporations more than ever, according to a 2023 Roy Morgan report. 

Roy Morgan

 “There's been a lot [of discussion] in Australia about corporate profit-making. When inflation really started to surge, there were some sectors in Australia that did very, very well, and the banking sector was one of them,” says Barrett, noting that the supermarket and travel sectors also saw growth and pushback. “They greatly improved their profit margins… at the same time that people, including Millennials, were really feeling the weight of those inflationary price increases.” 

 Rather than ignoring this level of corporate distrust, brands may recognise the instability at the heart of the Gen Y experience. A 

 found success by letting players build various homes and make money from them, giving young people who cannot access home-ownership themselves the opportunity to experience that stability in the digital world.

 Australians were living in poverty, making less than 

 of voters aged 18-34 believe younger Australians who are not already homeowners will never be able to buy a property in their area

 of 31-50-year-olds would rather travel than buy a house in 2024

Australians are dealing with the worst economy in decades, with younger generations hit particularly hard by the housing crisis and high interest rates

Faced with the possibility they will never own homes or retire, Gen Yers are saving up to treat themselves to experiences like concerts, weekend brunches, and travel

Widespread corporate distrust presents both a challenge and an opportunity for brands that are able to recognise the financial precarity at the heart of the Gen Y experience

Alison Pennington is an economist, writer, and media commentator who conducts research on economic issues facing working people, including the future of jobs, skills and training, and the role of government. Alison is an adjunct senior research fellow in politics, philosophy, and economics at La Trobe University. Her previous roles include senior economist at The Australia Institute's Centre for Future Work and positions in public finance, public sector unions, and music teaching. Her book, 

Jonathan Barrett is a senior business reporter at 

where he has focused on how the inflationary period has impacted households and is fuelling a generational wealth divide. Previously, he worked as the deputy bureau chief for Australia, New Zealand, and the Pacific at Reuters. He is a past winner of Australia’s National Press Club Award for Excellence in Australian Business Journalism.

Gen Y (born 1982-1996)

Australia

Money

A housing crisis, financial precarity, and distrust in corporations have led many Gen Yers in Australia to be more conscious of their spending than ever before. Yet why do many continue to splurge on experiences, products, and services that fall somewhere between the forever and the everyday?