This article appears in Issue 784 (June 19) of The Edge Singapore
 

SINGAPORE (June 21): It is tough being a millennial these days. This generation — typically defined as those born between the early 1980s and the mid-1990s — stands accused of job-hopping too often, being obsessed with selfies, and splurging on one too many Instagram-worthy brunches.

Last month, Australian millionaire and real estate mogul Tim Gurner suggested in a TV interview that young adults would be more likely to be able to buy a home if they curbed their spending on avocado toast — a popular yet easy-to-prepare dish that has since become synonymous with the perceived laziness and spendthrift nature of young adults in Australia. Last year, Australian columnist Bernard Salt had labelled avocado toast a symbol of millennial decadence.

Gurner’s comments drew an indignant response from millennials who argued that those in his generation had things easier. But some statistics do show that Generation Y tends to spend more money than their parents.

David Goodsell, executive director of the Durable Portfolio Construction Research Centre at Natixis Global Asset Management, says millennials are only saving 11% of their annual income. This compares with 17.5% for their parents, also known as the baby boomers. “This short-term focus may be based on where they are in life: Individuals between the ages of 18 and 35 may be saving less because they are earlier in their careers and have less disposable income,” says Goodsell.

Draws of city life

In a developed city such as Singapore, there are also more things that young people can spend their money on. “Our data reveals that millennials aged 21 to 29 years old spend frequently online, with more than 25% of their monthly spending channelled to online shopping,” says Goh Theng Kiat, chief marketing officer for global consumer financial services at OCBC Bank. Travel and dining also rank highly on millennials’ spending, at more than 20% of monthly expenditure in each category. 

“Millennials shop online an average of seven times a month, and visit F&B establishments like cafe, coffee shops and restaurants 20 times a month.” Meanwhile, spending on ride-hailing apps such as Uber and Grab has increased exponentially in the last year. Both companies are now among the top 10 most frequented merchants by millennials, says Goh.

Such spending habits tend to draw sharp criticism from boomers. Melissa Lee thinks her 25-year-old son, who works in the banking industry, has “a lack of respect and appreciation for the value of money”. Lee says her son travels at least twice a year to exotic locations for holidays and buys branded items on a regular basis. “I have nagged at him many times to control his expenditure. Sometimes, he spends so much that he has to borrow money from me to tide him over till his next pay cheque comes in,” Lee says. “He knows his spending is out of control, but he is struggling to make headway.”

Millennials, however, have a different perspective on their habits. Jasmine Yeo, a 24-year-old financial analyst who goes for café brunches every weekend and spends up to S$60 each time, says it is a well-deserved reward for her hard work during the week. “I don’t spend a lot on weekday lunches, so I don’t mind spending a bit more on the weekends,” she says. “Moreover, with the exception of my study loan, I don’t have any other outstanding financial obligation.”

Millennials investing; want to buy properties

So, are millennials indulging in brunch because they cannot afford to buy a home? Or, do they just have different priorities?

Anurag Mathur, head of retail banking and wealth management at HSBC Bank (Singapore), says more than four in five millennials globally intend to buy a home in the next five years. “This percentage goes even higher — above 90% — for Asian millennials in China and Malaysia.”

Meanwhile, they are setting aside a portion of their disposable income to invest. “A survey of some of our customers aged 24 to 29 years old indicates that 20% of our customers start investing as early as 21 years of age, and at least 40% of customers invest by the age of 25,” says Goh of OCBC.

“We have definitely seen a spike in millennials who are keen to learn about investing. Over the past five years, the number of millennials (those 35 years old and below) among our customers has grown by about 50%,” says Elgin Ting, head of the products group at OCBC Securities. “What we have found is that millennials are eager to start building their wealth portfolios, but may need more guidance at this early stage of their investment journey.”

Jonathon Lim is one such millennial. “I have always been interested in investing, but I have never gotten down to it because I know so little about it. I don’t even know how to open a brokerage account,” Lim admits. “While I am willing to spend on eating good food and travelling to exotic places, my parents have always instilled in me the importance of taking responsibility for my finances.”

Lim shares that he knows of friends who do not plan ahead for their future, but insists they are a minority. “I think the millennial generation has been quite unfairly beaten up in the media in recent years. There will always be black sheep in every generation, but I like to think that my fellow millennials and I are not how we are portrayed in the media. Hopefully, more people will start to recognise that we millennials are a bunch of hardworking individuals with a sense of responsibility and financial prudence.”