Smashed avocado has long been used as short hand for misplaced Gen Z spending priorities but the reality has been very different.
Boomer stereotypes of overspending young Aussies obsessed with smashed avo and lattes have been obliterated by shock new data showing Gen Z are now the most disciplined savers in the country.
Young adults have for years been accused of prioritising lifestyle over frugality, but the new data from NAB has dismantled this narrative.
It showed 18–29 year olds had the strongest saving intent of any age group in Australia.
An incredible 89 per cent of women in this age group and 85 per cent of men were actively putting money aside.
This level of savings intent meant they were the demographic most committed to building a safety net, NAB revealed.
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Gen Z were found to have more savings intent than the older generations who have criticised their spending.
NAB retail executive Belinda Mamet said younger Aussies should be given more credit for the amount of saving they were doing.
“Cutting back and saving can feel boring but our younger customers are managing their savings well,” she said.
But financial analysts have warned younger Aussies’ new-found financial prudence has also come at a cost.
It has exposed them to a cynical banking manoeuvre: while young people hoard cash, major banks are dragging their feet on paying them for it.
As these young savers build up record cash reserves, they are subjected to the whims of banks that are quick to punish borrowers but slow to reward savers.
Following the Reserve Bank’s decision to lift the official cash rate, major lenders almost immediately announced that mortgage rates would rise.
Days later, the interest rates that would actually benefit diligent young savers remained “under review”, with only a few lenders, including some majors, actually passing higher rates on to savers.
Canstar data insights director Sally Tindall said some banks may be employing a’ “wait and see” approach of checking what competitors were doing before lifting their saver interest payments.
“If they’re passing it on to their mortgage customers, they should be passing it on to their savings rates, in full,” Ms Tindall told media.
Canstar.com.au analysis showed banks were highly selective over the last round of rate hikes across 2022 and 2023 with which rates saw a boost and which missed out.
Banks have been slow to act on savings account interest rates since RBA governor Michele Bullock announced a cash rate hike last week. Picture: Martin Ollman
Banks also typically offered attractive “headline” rates with heavy strings attached.
This included being required to make frequent payments to grow the balance, without making withdrawals. Those who failed to meet these conditions were often given a measly 0.1 per cent rate.
Canstar noted that during the 2022 and 2022 rate hikes, the total average interest rate on bonus saver accounts increased by 4.05 percentage points, while the base rate – the rate earned if savers didn’t meet their bonus conditions – rose by an average of just 0.42 percentage points.
The Australian Competition and Consumer Commission (ACCC) has found that approximately two-in-three customers with “bonus” accounts failed to qualify for the headline rate, meaning the bank effectively got access to Gen Z’s hard-saved money for little expense.
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