Seniors spend while younger people...

Recreation, including travelling and dining out, are top spending priorities of many older working Australians. That’s not to say they don’t face challenging home mortgage repayments and other cost-of-living pressures.

However, a recent KPMG analysis of average household spending found younger people are spending less on recreation so they can cover mortgage repayments, rent, and other essential expenses. 

According to the study, the top five categories as a percentage of household spending for each age group in 2023-24 were: 

25-34 

• Home loan repayments: 18.0% 

• Food: 9.0% 

• Rent for housing: 8.9% 

• Dining out and takeaway: 8.0 % 

• Household goods: 5.6% 

35-44 

• Home loan repayments: 22.3% 

• Food: 9.7% 

• Other financial services: 6.6% 

• Dining out and takeaway: 5.7 % 

• Recreation and cultural services: 5.2% 

45-54 

• Home loan repayments: 18.6% 

• Food: 9.8% 

• Dining out and takeaway: 6.1% 

• Other financial services: 5.5% 

• Recreation and culture goods: 5.4% 

55-64 

• Home loan repayments: 13.4% 

• Food: 10.0% 

• Insurance: 7.5% 

• Other goods & services: 7.4% 

• Recreation and culture goods: 6.9%  

For all Australian households, the top expenses continue to be home loan repayments and food, but 25–34-year-olds are spending more on rent than any other age group, highlighting the declining homeownership rates of this generation. 

KPMG urban economist, Terry Rawnsley, said, “We are witnessing the rise of ‘generation rent’, with saving for a deposit and servicing a home loan increasingly challenging, especially in our capital cities.

“The data really shows some clear lifecycle trends, as priorities change, but unsurprisingly housing and food related costs are the common theme across the age groups, with Australians increasingly being forced to rein-in non-essential spending as cost-of-living pressures continue to hit hard.”

Comparing inflation-adjusted spending patterns from 2013-14 to 2023-24 highlights shifts in real household spending across age groups over the past decade. 

While household spending is up, many households are experiencing reduced purchasing power compared to a decade ago. 

“We are getting less bang for our buck, forcing us to rein-in non-essential spending and prioritise the essentials,” Mr Rawnsley said. 

The study shows that more younger people are living alone and prioritising health and furniture. 

The 25-34 age group experienced the most significant changes in household structure compared to any other age group over the past decade, with the number of people living alone increasing from 15% to 21%. This indicates a move from larger shared homes to small apartments. 

Terry Rawnsley explains, “Ten years ago young people were more likely to be living in a share house and so would be sharing a fridge between three or four people. Now those three to four young people each have their own place which requires them to each have their own appliances.” 

The KPMG study has led Firstlinks editor, James Gruber, to suggest younger Australians could be the first generation in recent times to be worse off than their parents. 

“On the surface, the angst seems hard to fathom,” he wrote. “After all, Australia is wealthier than ever. According to UBS, our wealth grew 11% in 2024, and we rank second for median wealth per adult in the world.” 

Some $5.4 trillion of this wealth will be transferred to younger generations over the next two decades. So, what’s the problem? 

Mr Gruber says, if we dig a little deeper, the prospects for our young may be more tenuous. 

“First, living standards have stagnated in Australia over the past decade. While economic growth has risen, it’s mostly been driven by increased immigration. On a per capita basis, GDP is barely above 2015 levels.” 

However, a new report from thinktank, E61, is more optimistic. 

Despite these challenges, it says young Australians have access to opportunities that weren’t available to their parents and grandparents. 

“Today, they’re better educated, earn more in the early stages of their careers, and have more diverse and flexible job paths,” the report says, listing these advantages: 

• Young people are benefiting from technological advances in artificial intelligence, robotics, and the like, which is giving them greater access to information through the internet, improvements in the availability of digital goods, and cheaper consumer goods. 

• Younger people are building superannuation balances over longer careers at higher rates, and many of them will inherit a slice of the $5.4 trillion intergenerational wealth transfer over the next 20 years. 

• Changing patterns in consumption and wealth-building mean economic achievements, like moving out of home, buying a house, and starting a family – are still happening, but they’re often occurring later in life than with previous generations.