A recent report into the financial lives of Gen Z Australians reveal that their financial decisions do not happen in isolation, which gives a more nuanced view of how they think about and manage their money.

A report by the Monash Centre for Youth Policy and Education Practice (CYPEP) featured interviews with more than 500 Australians aged 18-24 over two years. Researchers discovered that for young Australians, saving, experiencing financial difficulties, and going into debt do not happen in isolation but are in fact linked to family, work, housing, and well-being.

More specifically, job losses during the pandemic, the rapid rise of platforms such as cryptocurrency and “buy now, pay later” schemes, and lack of affordable housing changed the financial landscape for Gen Z Australians, but not in a good way.

The report revealed that more than 25.5 per cent of those surveyed reported experiencing financial difficulties, while only 18.2 per cent said they have never experienced having financial difficulties.

Over half of Gen Z Australians use “buy now, pay later” schemes. Around 50 per cent thought that it has a negative impact on their financial behaviour.

About 76 per cent of those who experienced financial difficulties were more likely to use “buy now, pay later” schemes.

The study also found that young Australians who lived at home with their families were able to save money and were protected from experiencing financial difficulties. More than 51.6 per cent of them saved money compared to 39.5 per cent of those who lived in a share-house, and 47.4 per cent of those who lived on their own.

Gen Z Australians who lived independently experienced financial difficulties more often, compared with 22.6 per cent of young Australians who lived in their family home.

Being employed helped young Australians save money but did not always protect them from experiencing financial difficulties. This was evident in 18.4 per cent of participants who were working for salaries but went through financial difficulties more often.

The report also found that financial difficulties experienced by young Australians were highly linked to their well-being. About 37.9 per cent of respondents who rated their mental health as very poor saved often, compared with 75.1 per cent who rated their mental health as excellent. Only 13.3 per cent of those who went through financial difficulties said they had excellent mental health.

Professor Lucas Welsh, one of the report’s co-authors, said the financial landscape of young Australians’ lives is important because it is deeply linked to other aspects of their lives.

“We need to ensure they have access to better understanding and education around finances and financial wellbeing,” Professor Welsh added.