Millennials & Gen Z: Young And In Debt. Why? | Talking Point | Full Episode
Summary
TLDRThe 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
- π Inflation has spiked in recent years, with Singapore experiencing its highest rate in nearly 14 years at 7% in 2022.
- πΈ The rising cost of living is causing financial stress among young adults, with 6 in 10 worrying they will not meet their financial goals.
- π Millennials in Singapore spend around SGD 100 per outing for dinner and drinks, indicating a continued social life despite financial pressures.
- π‘ Housing costs have significantly increased; what once cost SGD 150,000 now costs SGD 300,000, affecting young adults' ability to save and invest.
- π The convenience of ride-hailing services like Grab is integrated into millennials' lifestyles, with some spending up to SGD 800 a month on transportation.
- π 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.
- π³ 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.
- π¦ 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.
- ποΈ 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.
- π 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.
- ποΈ 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 theεζΎηCDC 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
π° 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.
π 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.
ποΈ 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.
π« 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.
π‘ 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.
Mindmap
Keywords
π‘Inflation
π‘Cost of Living
π‘Millennials
π‘Budgeting
π‘Credit
π‘Buy Now Pay Later (BNPL)
π‘Financial Goals
π‘Debt
π‘Spending Habits
π‘Financial Literacy
π‘Disposable Income
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
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