Millennials & Gen Z: Young And In Debt. Why? | Talking Point | Full Episode

Summary

The video script explores the financial struggles of young adults in Singapore amidst rising living costs. It delves into their spending habits, the impact of inflation, and the prevalence of credit and 'buy now pay later' services. The script features interviews with millennials discussing their financial challenges, including increased grocery bills, rent, and social expenses. It also touches on the potential risks of easy credit access and the importance of financial literacy in navigating economic pressures.

Takeaways

• 📈 Inflation has spiked in recent years, with Singapore experiencing its highest rate in nearly 14 years at 7% in 2022.
• 💸 The rising cost of living is causing financial stress among young adults, with 6 in 10 worrying they will not meet their financial goals.
• 🚗 Millennials in Singapore spend around SGD 100 per outing for dinner and drinks, indicating a continued social life despite financial pressures.
• 🏡 Housing costs have significantly increased; what once cost SGD 150,000 now costs SGD 300,000, affecting young adults' ability to save and invest.
• 🚖 The convenience of ride-hailing services like Grab is integrated into millennials' lifestyles, with some spending up to SGD 800 a month on transportation.
• 🛒 The use of buy now pay later (BNPL) services has surged, increasing transactions from SGD 114 million in 2020 to SGD 440 million in 2021.
• 💳 Credit card usage is common among young adults, with 3 in 10 relying on credit to cope with living expenses, potentially leading to unsustainable debt levels.
• 🏦 Many young adults are living paycheck to paycheck, with some spending more than they earn and struggling to save, indicating a lack of financial planning.
• 🛍️ Peer pressure and online marketing are driving unnecessary spending, with some young adults feeling the need to keep up with the latest products and trends.
• 🔄 The accessibility of credit and BNPL services is making it easier for young adults to fall into debt, with experts warning of the risks of overextending credit.
• 🏘️ The cost of necessities like groceries and rent is increasing, forcing young adults to make tough choices between socializing, saving, and meeting basic needs.

Q & A

What is the impact of rising costs on the daily life of young adults in Singapore?

The rising costs have led to an increase in the cost of living, with young adults experiencing higher expenses on groceries, transportation, and dining out. Some have to adjust their lifestyle, such as eating at home more often or looking for discounts when dining out.

How much has the grocery bill increased for the interviewee?

The interviewee's grocery bill has increased by 20 percent.

What is the approximate increase in rent that the interviewee is expecting?

The interviewee is expecting a rent increase of about 15 percent, which translates to around 300 Singapore dollars.

How often do millennials go out to socialize according to the script?

Millennials mentioned in the script go out to socialize weekly or every other week.

What is the average amount spent by millennials per outing on dinner and drinks?

The average amount spent by millennials per outing on dinner and drinks is about 100 Singapore dollars.

What is the typical monthly expenditure on transportation using private hire cars for the interviewee?

The interviewee used to spend around 700 to 800 Singapore dollars a month on private hire cars, but is trying to cut down.

What percentage of income does Joey try to save?

Joey tries to save about 20 percent of her income.

What was the reason Joey had to dip into her savings?

Joey had to use her savings because her dog fell sick.

How much does Joey spend on groceries and other daily necessities?

Joey spends up to 3,000 Singapore dollars a month on groceries and other daily necessities.

What is the current inflation rate in Singapore as mentioned in the script?

The inflation rate in Singapore hit 7 percent in 2022, the highest in almost 14 years.

What are the factors contributing to inflation in Singapore according to the script?

Factors contributing to inflation in Singapore include the war in Ukraine, supply shocks, and government support measures such as the发放的CDC vouchers.

What percentage of young adults are worried about meeting their financial goals due to rising costs?

Six in ten young adults in the U.S. are worried they will never meet their financial goals due to the rising costs of living.

Outlines

00:00

💰 Financial Struggles of Millennials

The paragraph discusses the financial challenges faced by millennials, including rising costs of living, increased expenses on groceries, rent, and social activities. It highlights how these individuals are trying to adapt by staying at home more often, searching for discounts, and using transportation services like Grab. The paragraph also touches on the lack of fixed income for some, the fluctuation of work projects, and the impact of inflation on daily expenses. It concludes with insights from an economist on the reasons behind the spike in inflation rates.

05:00

📈 Coping with Inflation and Debt

This paragraph delves into how young adults are dealing with the effects of inflation and the rising cost of living. It mentions a survey that shows most respondents are personally affected by these issues, with some spending more than they earn. The narrative follows individuals like Honey, who are struggling with debt from student loans and the pressure to keep up with materialistic expectations. The paragraph also explores the use of credit cards and buy now pay later (BNPL) services as coping mechanisms, raising concerns about the potential for increased debt and financial illiteracy among young adults.

10:01

🛍️ The Impact of Buy Now Pay Later Services

The focus of this paragraph is on the growing popularity of BNPL services and their potential impact on young adults' financial habits. It discusses how these services are marketed towards younger consumers and can lead to increased spending and debt. The paragraph includes an interview with an expert who explains the risks of BNPL services, such as hidden costs and penalties for missed payments. It also presents statistics on the rapid growth of BNPL transactions and raises questions about the long-term effects of these services on users' financial health.

15:03

🚫 Addressing Concerns of BNPL Services

This paragraph addresses concerns about BNPL services and their potential to encourage excessive spending among young adults. It features an interview with a representative from a BNPL company who defends the industry, arguing that it offers a responsible way to budget and spend. The representative discusses the company's efforts to ensure users can repay their debts and the introduction of a code of conduct for BNPL providers. The paragraph also raises questions about the long-term impact of BNPL services on users' credit history and the potential for users to overextend themselves by using multiple BNPL providers.

20:05

🏡 Generational Financial Perspectives

The final paragraph contrasts the financial perspectives and lifestyles of different generations. It discusses how housing costs have increased significantly over time and how millennials might have different spending priorities compared to their parents. The paragraph also touches on the concerns of parents about their children's financial futures in the face of rising living costs and easy access to credit. It concludes with a call for continued financial education to help young adults avoid overspending and manage their finances responsibly.

Keywords

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. In the video, inflation is discussed as a key factor affecting the cost of living, with examples such as increased grocery bills and higher prices for everyday items like coffee and chicken rice.

💡Cost of Living

The cost of living represents the amount of money needed to sustain a certain standard of living in a particular location. The video script highlights the rising cost of living as a central theme, with millennials expressing concerns over increased expenses such as groceries, rent, and transportation.

💡Millennials

Millennials are the demographic cohort following Generation X and preceding Generation Z, typically those born between the early 1980s and the mid-1990s to early 2000s. The video focuses on how millennials are coping with financial pressures and the rising cost of living, including their spending habits and reliance on credit.

💡Budgeting

Budgeting is the process of planning both personal and organizational spending and forecasting income. The script mentions budgeting in the context of how young adults are trying to manage their expenses amidst inflation and increasing living costs, with varying degrees of success.

💡Credit

Credit refers to the ability to obtain and use goods or services before payment, based on trust that payment will be made in the future. The video discusses how easy access to credit, including credit cards and buy now pay later services, may contribute to financial stress for young adults.

💡Buy Now Pay Later (BNPL)

Buy Now Pay Later is a payment method that allows consumers to purchase goods or services and pay for them later in installments. The video explores the popularity of BNPL services among young adults and raises questions about their potential impact on financial literacy and debt levels.

💡Financial Goals

Financial goals are objectives related to personal or business finances, such as saving for a house or retirement. The script touches on how the rising cost of living and inflation make it more challenging for young adults to meet their financial goals.

💡Debt

Debt is an obligation that requires one entity to pay another entity, usually at a specified future point in time. The video discusses the concerns of young adults accumulating debt, particularly through the use of credit and BNPL services.

💡Spending Habits

Spending habits refer to the regular practices or tendencies of an individual or group regarding the purchase of goods and services. The script examines the spending habits of millennials, including their use of credit and BNPL services, and how these habits are influenced by marketing and societal pressures.

💡Financial Literacy

Financial literacy is the knowledge and understanding of financial concepts. The video suggests that a lack of financial literacy among young adults may contribute to their susceptibility to debt and poor financial decision-making.

💡Disposable Income

Disposable income is the income that is left after taxes and the mandatory payments, such as rent or mortgage, have been paid. The script discusses how the rising cost of living impacts the disposable income of young adults, affecting their ability to save and invest.

Highlights

The rising cost of living is affecting young adults' daily expenses, including groceries and rent.

Inflation in Singapore hit 7% in 2022, the highest in almost 14 years.

Young adults are using credit and buy now pay later (BNPL) services to cope with the increased cost of living.

The use of BNPL services increased almost four times from 2020 to 2021 in Singapore.

Financial experts express concern that young adults may not be financially literate enough to handle BNPL services.

A survey found that 9 in 10 young Singaporeans feel personally affected by rising costs.

Some young adults are resorting to borrowing due to the pressure of increasing living expenses.

The transcript discusses how lifestyle choices and peer pressure contribute to spending habits.

One young adult saved an estimated 4,000 Singapore dollars by buying second-hand furniture.

A significant portion of young adults' income is spent on non-essential items like dining out and shopping.

The transcript highlights the psychological impact of inflation on young adults' financial well-being.

Some young adults are trying to save by cutting back on non-essential expenses.

The transcript explores the potential long-term effects of relying on credit for everyday expenses.

Experts warn that early debt could lead to a habit of taking on more debt in the future.

The transcript discusses the role of government support in contributing to inflation.

The impact of the war in Ukraine and supply chain issues on global inflation is mentioned.

The transcript examines the potential risks of BNPL services, including hidden costs and penalties.

A code of conduct for BNPL providers in Singapore aims to protect consumers and build confidence.

The transcript concludes with a discussion on the importance of financial education for young adults.

Transcripts

foreign

you might have bumped into them it was

really good money I have to carry up

this button interacted with them they

might be uncomfortable I feel a lot like

loneliness are or even worked with them

I honestly don't think that we have it

easy the rising of course it's just

something that we couldn't expect but do

we really see them what are they hiding

this is beyond Plain Sight

right now a simple type of really costs

close to four dollars I'll get like two

veggie one meat my grocery bill has

increased by 20 percent

my rent is going to increase by about 15

percent which

um translates to around 300 so date

nights we should try to stay at home of

course I can't do that all the time

really like a normal girlfriend so

whenever I take my girlfriend out for

meals right I'll try to search for views

like one for one or even like 20 to 30

discounts

thank you

okay I got a car let's go

it's a Friday hello hello

and I'm hanging out with a different

crowd millennials

how often do you go out to socialize

weekly or every other week we will check

out like what new restaurants and bars

we spent about 100 ish per packs for for

dinner and drinks when we go out yeah

and to be honest that amount is quite

okay for me because it includes drinks

we came by private hire car just now and

you told me the car that that's actually

your preferred mode of Transport how

much do you spend a month I actually

take grab like 99 of the time when I

have to leave my house it used to be

like closer to 7 800 a month I'm trying

to cut down I just got used to

convenience like I cannot imagine having

to wake up two and a half hours earlier

now anymore so it's become part of your

lifestyle yes

yes what about savings do you put money

aside yeah I try to put like the

recommended amount which is about 20 of

the income

um I feel like I've done pretty well

like ever since I graduated but recently

my dog felt sick so he basically wiped

out like most of my savings

I spent an entire day with Joey to look

at where her money goes apart from

whining and dining and private hire cars

so what's next

class so

it helps me to stay consistent with like

my fingers

throw in her groceries and other daily

Necessities Joey spends up to 3 000

Singapore dollars a month

but you see her monthly pay isn't fixed

like many her age Joey has chosen to be

a gate worker which means while she's

her own boss her pain fluctuates

according to the projects she gets

so what's really beyond the surface in

the U.S 6 in 10 young adults are worried

they will never meet their financial

goals due to the rising costs of living

in the UK inflation and slow wage growth

are forcing some young adults to move

back home so how are our young adults

ferry in Singapore

my morning coffee with milk at the

Hawker Center is up about 10 cents

groceries for my family of five is 53

dollars more a month now

if I choose to eat out my plate of

chicken rice is up 30 cents

FS within Asia are projected to increase

by 5.4 percent this year

and a full tank of petrol costs me at

least 22 dollars more today

inflation in Singapore hit 7 in 2022 the

highest in almost 14 years

Christopher gee is a keen Observer of

Singapore's economy inflation has spiked

in the last few years why is that so

historically Singapore's inflation rate

has ranged around about two to three

percent in 2021 when the coveted

measures will start to be lifted

inflation picked up a little bit and

when the economy started to open up

completely of course inflation has risen

even further from there and we're

running around about five six and we've

seen the print of even seven percent

these source of that inflation is

complex we've had the war in Ukraine

lots of Supply shocks from around the

region Singapore of course Imports all

of its food another contributing factor

to inflation over the last few years is

the amount of government support So in

Singapore there was a big package in

2020 and that was followed up in 2020 uh

one 2022 and in fact you can think about

this very simply as those CDC vouchers

that we all got that all contributes to

an increase in the money supply and with

that additional money in people's

pockets they're able to pay for that

limited pool of goods and services and

therefore prices rise which hopes up

worse off when it comes to inflation the

young generally don't have that much

income and today a lot of young people

have aspirations we are concerned about

the young spending needs and the impact

of inflation on them some people might

have to resort to borrowing

unfortunately

how are young adults grappling with the

rising cost of living

The Institute of policy studies and

talking point conducted a survey late

last year

we pulled over 850 singaporeans aged

between 21 and 29. to find out how they

are managing their finances for the

purpose of this show we'll turn them

millennials

most respondents 9 in 10 say they are

personally affected by Rising costs

three in ten say they spend more than

they earn

I worry about money constantly honey is

paying off a student loan and a housing

loan her Housing and Development board

flat will be ready in three years that's

also when she plans to get married are

you on track for payments for your large

expenses yes or no no my hdb is around

300 000 and from my school loan I'm left

50 15 000 and it will just cut down

automatically in my credit card you are

paying off your student loan using your

credit card yes okay and do you pay on

time for your credit card yes but there

are some days we have missed do you

manage to save

um if I were to ask you to be honest

with yourself what do you think is the

main reason why you haven't been able to

save as much as you want to there are

some things which I feel like I'm

distracted by and peer pressure like

your friends having the same makeup

product the same bag and you kind of

like feel like you missed out online

doesn't really help because everyone is

promoting everything they're making it

too easy yeah and it's like tempting for

you to shop more and get more

foundations in the same shape you know

what I'm hearing girl the online

shopping yeah it's an addiction I would

say the unnecessary spendings because

there are extra things that I will feel

good after spending it giving an example

of a very expensive unnecessary item

that make you feel good usually higher

end makeup around 300 how often do you

do that to plot down 300 for makeup for

example um I will try not to make it

every month but it's becoming to be an

every month thing I think it's fair to

say that honey spends almost all of her

take-home pay every month she also puts

at least 900 on her credit card on

shopping and eating out

using credit cards is the norm nowadays

but I wonder if honey is unwittingly

getting herself into more debt

foreign

console didn't cost me anything I own

another brand of game console and I

stopped it for friends so that both of

us can try new games without spending

extra money

almost all the furniture in my house is

second hand this mattress is from

Carousel and my bed frame is from

Facebook Marketplace there's this shelf

that I got off on Facebook Marketplace

as well I searched for a really long

time so I wanted this as a divider

between my sort of my bedroom and my

living space

[Music]

and my super huge dining table

some dining chairs plus my fridge and my

washing machine are also moved from

carousel

since I didn't have the money and I had

a lot of time I just spent a lot of time

looking for secondhand items instead

Joey started renting two years ago and

these second-hand deals have saved her

an estimated 4 000 Singapore dollars

I don't really budget religiously but I

pretty much spend about 2.5 k to around

3K on necessities and that includes

eating out buying groceries and like

transport and shopping and I pay about a

thousand for my rent I'm sharing it with

someone else currently and I spend about

300 on insurance and I try to save about

a thousand a month

in a joint survey by The Institute of

policy studies and talking point three

in ten young adults between the ages of

21 and 29 say they rely on credit as a

means to cope

lines of credit include credit cards

almost to anyone can apply for one you

just need to earn at least 2 500

Singapore dollars a month and you can

borrow up to two months of your income

apart from credit cards there is another

line of credit that's even easier to get

[Music]

it's very seamless convenient and very

easy to use and I do need an eyebrow

pencil so let me show you I entered the

app and I started the makeup shop that I

want to find my brow definer and I click

checkout and automatically Auto me

splits my payments by now pay later is

just as its name suggests this payment

method allows honey to pay for a third

of her purchase up front

which is 15 today

another 15 a month later and the last 15

a month after that there are no extra or

hidden costs so I bought this jacket a

month ago using a Tommy my makeup

product this perfume hydrating spray

cleanser mask

I've been using it right now pay later

since two years ago there's other

options instead of just told me I would

say grab pay later but grappy little is

more for my rides my favorite thing

about binary is that

um I don't have to pay in one goal

during the month itself so I can really

split my course whereas credit card

payments is a monthly payment and if you

miss the payment it will incur charges

the use of buying our pay later or bnpl

Services has been on the rise

in 2020 there were 114 million Singapore

dollars worth of transactions recorded

in 2021 that went up to a whopping 440

million Singapore dollars that's an

almost four times increase in just one

year

[Music]

as bnpl Services become more widespread

I have to wonder if there are too good

to be true

one expert feels that young adults are

not as financially literate as they

should be

would you say that younger singaporeans

are more in-depth today compared to

previous generations they definitely are

more at risk

of getting into more debt compared to

the previous generations part of the

reason is a wide accessibility of

different instruments that they can get

into debt with credit cards have been uh

you know fairly utilized by now pay

later is also coming of age so the issue

is that when we have a scheme like

buying our pay data loan has two parts

one is the principal and the other one

is the interest so by now pay later does

nothing to the principal the challenge

is that there are other hidden costs

that many people might not be aware of

suppose you might not be able to make

the payment for an unfortunate incident

like you know losing your job or some

other medical expenses that might come

in that might actually have an impact on

the penalties that you have to pay in

that penalties act as sort of a pseudo

interest in some sense so even though

you think it's interest-free over a

period of time that might be one of the

things you have to worry about so we did

the survey uh back in 2021 we found out

that many of the young adults from 18 to

30 year olds actually have unsustainable

levels of debt that's more than a a

monthly income so between one and six

month income in debt levels to about one

in three had that levels of debt now if

you look at it from whether they could

pay it off under the current

circumstances it might be a little

challenging how worried should we be

having levels of debt which is high

early on in their life might get them

into a habit of taking more debt

I'll pay later Services become more

widespread are they changing how an

entire generation spends

I ask one of the biggest players in the

market some tough questions every time

the npl is mentioned people say oh it's

a bad thing

[Music]

young adults are at risk of getting into

more debt today compared to previous

generations due to easily accessible

lines of credit an emerging popular

service buy now pay later

[Music]

assistant professor Stephanie Lynn

believes that the marketing of buying

our pay later Services actively targets

young adults

on its face bmpl is kind of a win-win it

can help retailers sell more volume and

it can give consumers access to products

that they weren't able to afford before

sbmpl Services get more popular how do

you think it would impact the spending

habits of young people a lot of the

messaging in the advertisements are

specifically geared towards younger

consumers and trying to change a little

bit the mindset of the consumer so that

they feel that they can engage in

self-indultan spending

if you take a look at this website they

say things like we know what you're

thinking you feel like you've hustled

hard enough for a treat this is textbook

licensing which is basically trying to

tell you it's okay you deserve to spend

a lot of money because you've done this

virtuous Behavior one way they position

themselves is by equating themselves

with responsible spending so saying that

if you use by now pay later you're

spending responsibly or you're budgeting

in a joint survey by The Institute of

policy studies and talking point we

found that for those who use buy now pay

later or bnpl Services 7 in 10 say they

spent more each month now and 6 in 10

are unable to pay their monthly

installments in full

foreign

concerns about bnpl services to atomy

it's one of the larger players in

Singapore's buy now pay later scene

its target market Millennials and gen

Z's the majority of our base is between

21 to 29 that accounts for more than a

quarter of our users we've spoken to a

few experts and every time bmpl is

mentioned people say oh it's a bad thing

do you think your industry deserves this

reputation I don't believe we deserve

that reputation but then again I am part

of the industry right we are working

with the various other organizations

that offer this by you know launching

this code of conduct by being a

regulated organization and that helps us

hopefully to build consumer confidence

in US is your service encouraging people

to spend and spend as an organization

whenever an individual is not able to

pay us back the remaining two-thirds of

the transaction there's no way that we

would make money as a company so it's in

our own best interest to ensure that the

user is able to pay us back

we have to be quite controlled in terms

of who we are giving our credit out to

Tomei has been very successful at that

and we have a default rate this is

meaning individuals who are unable to to

pay us back that is actually very much

below the industry average the

percentage of the users

who have defaulted has actually

decreased over time I'm just wondering

what is the impact of a service like

this on my credit history there is no

current impact but I think that younger

users should be aware that we don't want

to breed that habit of overextending

just because there's no impact to their

credit history at this point in time

you've said that you don't want young

people to over extend themselves but

that really conflicts with the messages

on your on your website that says

indulge today you know live in the

moment how do you reconcile that I don't

necessarily think there's a conflict the

reason being is that you can enjoy and

appreciate what you want now and be well

within your means to do it I don't think

it's necessarily a conflicting message

a code of conduct for bmpl providers

kicked in late last year it's not

mandatory although providers will have

to abide by it to get accredited under

the code all fees including late fees

are kept users cannot owe the bmpl

company more than two thousand dollars

at any one time unless they pass an

additional credit assessment and if they

miss a payment well their account with

that provider will be suspended but

there's nothing to stop them from using

multiple providers at the moment and

it's still unclear how this could affect

their credit history in the long run

[Music]

you see a parent lifestyle and

sustainable honestly no

I do have plans of moving overseas I

will be able to be comfortable there for

a lot less during my parents time their

house costs around 150 000. but housing

my fiance is already doubled 300 000.

talk about the people who say why not

just cut back on your spending but

um that's just not my priority right now

it's just different ways people live so

yeah I'll take cabs but I can eat Hawker

food like most days

as a mother I Am Naturally concerned

about what the lives of my three

children will look like after they enter

the workforce and start making their own

money as things get more expensive and

credit lines more attainable this

generation of youths is possibly at

greater risk of running into debt

compared to previous generations I guess

all I can do now is to continue to

educate my three children about the

risks of spending beyond their means

thank you