The research, commissioned by the Commonwealth Bank of Australia (CBA), found that 73 per cent of Millennials admit that they struggle to prioritise their finances, despite 70 per cent saying that being in control of their finances makes them feel most accomplished.
The survey of 1,035 Millennials aged between 24 and 39 years by YouGov Galaxy during August found that 55 per cent felt a sense of accomplishment by paying all bills on time, 44 per cent by knowing how much money is in their bank accounts, and 30 per cent by knowing what bills are upcoming.
Half of the Millennials surveyed said exercising daily was the top stress reliever, along with paying all their bills on time (48 per cent), and knowing how much money is in their bank account (37 per cent).
Millennials who are very confident that they could list all the bills that they pay each month and their approximate amounts are three times as likely to believe it is very likely that they will achieve their long-term savings goals (50 per cent compared to just 16 per cent).
This cohort is likely to rank mental wellbeing (49 per cent), as most important to them, followed by financial wellbeing (29 per cent) and physical wellbeing (22 per cent).
Across Australia, Millennials in Western Australia are significantly more likely to think that they are likely to achieve their long-term financial goals (86 per cent), compared with NSW at 72 per cent and Victoria at 73 per cent.
The survey also found that men are more likely than women to say that the social pressure to have the latest technology and the latest fashion compels them to spend all their money on these (26 per cent compared with 16 per cent).
Commenting on the survey findings, CBA head of behavioural economics, William Mailer, said a third of Australians in this age group acknowledge that they make too many impulses but struggle to set a budget and follow it.
“Managing today’s finances while also preparing for tomorrow is difficult for anyone,” Mr Mailer said.
“It’s no surprise that our recent survey showed that so many young Australians are facing some level of financial anxiety with these decisions.”
Dr Gina Cleo, director of Habit Change Institute, said small victories is linked to confidence for Millennials, which she said was the key to being likely to reach long-term goals.
“When Millennials believe in their ability to set realistic goals, they become motivated to achieve these milestones,” Ms Cleo said.
“It is through creating daily habits that we can seamlessly implement into our routine that we begin to alleviate stress and start to make consistent, impactful strides towards our long-term goals.”
The survey also asked what financial and budgeting tools Millennials use and one-third said they did not use any tools to assist them with their finances. Of those that are using tools, just over 40 per cent are only doing so every fortnight or even less frequently.
Smart digital services that make trade-offs between today and tomorrow clearer can help us to keep control today, and stay on track towards our goals,” Mr Mailer said.
In June, CBA announced the launch of a new feature called Bill Sense, which alerts customers about their upcoming bills and creates bill predictions, categorises debit and credit card transactions, and provides customers with a view of their cash flow, including income, spending and saving habits, and how they are trending month-to-month.
Customers can view how much they will need to cover for bills each month up to 12 months in advance, on a timeline.
The major bank has now announced that the feature is available in its CommBank app.
The launch of the feature within the bank’s app has followed recent discussion around the need for lenders to use borrowers’ actual expense information, in light of the recent “wagyu and shiraz” case.
In 2018, Westpac admitted to breaches of responsible lending obligations under the National Credit Act, agreeing to pay a $35-million civil penalty.
The breaches related to Westpac’s home loan assessment process during the period December 2011 and March 2015, during which approximately 260,000 home loans were approved by Westpac’s automated decision system.
The Australian Securities and Investments Commission (ASIC) had alleged that for approximately 50,000 home loans, Westpac received but did not use consumers’ actual expense information, which exceeded the Household Expenditure Measure benchmark used by the bank.
However, the Federal Court upheld Justice Nye Perram’s dismissal of the responsible lending case against Westpac.
Justice Perram said that a borrower’s living expenses were not necessarily indicative of their future spending behaviour, reasoning that borrowers would tighten their belts after taking out a home loan.
According to some in the industry, the open banking regime, which was launched in July, will automate the process of collecting clients’ living expenses and eliminate the administrative work for brokers.
Clients can log in to their bank and confirm that they are comfortable with brokers receiving their data, at which point brokers will receive a report with clients’ expenses fully categorised, at which point brokers can have conversations with them about their loans and expenses.
[Related: Young mortgagors hit hardest by COVID crisis]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.