The C Bomb: Credit

The other day, a friend of a friend told me they went on an overseas holiday. When I asked them where they went and what the did, I was amazed, several cities, helicopter rides, shopping and more. I couldn’t believe it. I had to ask, how on earth did you afford it? Their response was simple. Two words. Credit card. This lead me to research Australian youth and our addiction to buying now and paying later.

Undoubtedly you have heard either someone around your parent’s age tell you that you need to stop partying, traveling or having smashed avo on toast at $22 a pop if you ever want to own your home.


Here’s you: Fuck off Auntie Deb, the average income compared to average house price in Australia has dramatically inflated since you bought your first place (you don’t really know this for sure but you’ve heard it on the radio, and it makes you seem like you’ve got a clue).

Yes, Australia’s housing affordability is of concern. Millennials are borrowing more than any previous generation to try for a stable footing on the property ladder. Statistics show that this age group has applied for double the amount of credit cards, mortgages and personal loans compared to their parents. Problem is, they cannot afford it. As a result, Generation Y homeowners are more than twice as likely to miss a repayment on a mortgage compared to the entirety of the market.

If that doesn’t make you want to throw up your Avo on toast, I don’t know what will.


So why is it that Australian youth are finding themselves with financial anxiety when these should be the most liberating years of our lives? Our whole lives we are conditioned to believe that banks are good. Wrong! Banks spend millions for your business. The Commonwealth Bank Dollarmites program is in 4,000 schools across Australia. These money hungry parasites have a cartoon character that walks around with his headphones on (awesome), has spiky hair (wicked) and is pretty much the coolest kid going around. Any guesses on said character’s name? It’s Cred, short for credit.

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From a young age, Australian children are being brainwashed to be comfortable with borrowing money. An Australian wide study isolated the 34 years and under demographic as having the highest debt levels and consequently the most financial stress.

Credit card is getting you down 

Credit card debt is a major problem with millions of young Australians finding themselves in over their head.

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Australia’s credit card debt clock

Personally, I don’t own a credit card… but I have to admit I have thought to myself “do I need a credit card to become a ‘real adult’?” In Australia, once someone turns 18 they qualify for both credit cards and loans. They are expected to understand interest rates, repayments, and debt. The trouble is, two weeks ago these kids were playing beer pong and drinking passion fruit UDL’s at Schoolies. They are not exactly filled with financial experience,  making them prime targets for banks. Although they are eager to begin their adult lives, the card they choose has the possibility to set them up for failure right from the start.

The dishing out of credit cards has lead to the number of bankruptcies in Australia doubling over the past ten years, with Millennials, in particular, being lead to buy now and pay later. 

We want it all

Why? What is driving Australian youth to spend, spend, spend? Research shows that  Gen Y’s have a desire to meet societal and social expectations, unlike any other generation. The trouble is, they are trying to maintain this while striving to enter the property market with escalating prices and stagnant income growth.

A horrible relationship between social pressures and our generation’s lack of financial knowledge has resulted in one ugly love child, the mass adoption of high-interest-rate credit cards. Gen Y’s are repeatedly criticized for prioritizing their lifestyle over their economic futures. One example is the infamous avocado on toast article, which implies that if Australian youth stop spending money at their local cafes, then the issue of entering the housing market would no longer be an issue. Ah…okay. 

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Well, how am I supposed to know?

Who taught you about money? Really think about that. For me, it was my parents. And even then, they didn’t sit down and actually teach me. I learned by following in their footsteps. Luckily for me, my parents have never been in debt and as a result, I have been guided down a steady and safe path. But what about other people, who may not have had a fortunate experience like myself? Research shows that parental secrecy in regards to finance is a contributor to debt issues in their children’s life. It is imperative that parents directly educate and mentor their children around money.

Australian youth are simply not educated about finance. As a result, none of us know how to deal with the significant consequences of high-interest rates, minimum repayments or late repayments. In most cases, we don’t even understand the devastating effect it can have on our future.

In the past few decades, several changes to financial services in Australia like marketing and technological changes, a boost in competition, access to credit cards and more recently the introduction of Afterpay have lead to a market that requires more knowledge if they are to manage their finances effectively. An investigation by ASIC into financial literacy revealed consumers had lost up to $800 million across three years in prospectuses and scams alone.

ANZ also investigated financial literacy and found that those with lower incomes under $20 000, single people, and people aged 18-24 years old maintained a low financial literacy. The most misunderstood topics included superannuation, investment funds (risk and return), planning for retirement and knowledge of fees and charges.

So it is clear there is an absolute need for financial education, but I wonder, who is in charge? Well, improving financial literacy is not a quick fix and according to ASIC, it cannot be the responsibility of any one sector or organisation, rather a whole community response with cross-sectoral support. What we need to remember is financial literacy is a cumulative, lifelong process. Although it is not school’s sole responsibility to educate our children on finance. It should be acknowledged that they have an important role to play.  

Recently, the man who goes by ‘The Barefoot Investor’ has dedicated his time to inspire everyday people to take control of their finances at any age and any income. His down to earth, realistic and passionate approach leaves his latest book The Barefoot Investor sitting number one in bookstores around Australia. If you’re like me and want to learn more this book is a great place to start.

Ok fellow Gen Y’s. After investing myself in this topic there is one clear take home message. It’s time to put down your credit card and kick it old school. Save. Sure, saving money is not the same as a 3-week lemon detox challenge. It requires time (lifelong), perseverance and courage to sometimes say no to things when you down right can’t afford it. SO BORING. But hey, money in the bank is better than money owed to the bank….right?? And remember, if you do this right, your Aunty Deb will have nothing to say except what a great niece or nephew you are. Good Luck!

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