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

Summary

The full episode delves into the financial challenges faced by Millennials and Gen Z in Singapore, focusing on the increasing debt levels among young adults. Rising living costs, inflation, and easily accessible credit methods, like buy now pay later (BNPL) services, are explored as contributing factors. Personal stories highlight how young adults manage their finances amidst economic pressures, often resulting in living paycheck to paycheck and relying on credit to bridge gaps. Experts weigh in on the potential risks of BNPL and its effect on spending habits, emphasizing the need for financial literacy. The episode concludes by addressing the broader implications of youth debt on future financial stability.

Highlights

• Millennials and Gen Z face rising costs and debt in Singapore. 💸
• BNPL services, while convenient, often increase spending and debt risks among young adults. 🚨
• Inflation and slow wage growth push some young adults to move back home for financial relief. 🏠
• Financial literacy is highlighted as key to preventing unsustainable debt levels. 📈
• Young adults' spending patterns reveal a reliance on credit to maintain lifestyles amid economic pressures. ⚖️

Key Takeaways

• Finances are tough for Singaporean Millennials and Gen Z, with many feeling the strain of rising costs. 🙃
• Easy credit access, including BNPL services, can lead young adults into mounting debt. 💳
• Financial literacy among young adults is crucial to navigate modern spending challenges responsibly. 📚
• Despite good intentions, many young adults find saving challenging amid economic pressures. 💰
• Personal stories shed light on spending habits and the need for better financial management. 🏦

Overview

The episode uncovers the reality that young adults in Singapore are grappling with financial strain like never before. With living costs skyrocketing, Millennials and Gen Z are finding themselves increasingly reliant on credit just to make ends meet. The allure of services like 'buy now, pay later' seems tempting, but the long-term consequences on financial health can be severe.

Insights from financial experts paint a sobering picture of a generation at risk. With inflation and wage stagnation, many young adults are unable to save, making them particularly vulnerable to unexpected expenses. The episode showcases personal stories of individuals juggling debts and expenses, further emphasizing the urgent need for financial literacy and better management strategies.

As the prevalence of easy credit continues to grow, its impact on spending habits cannot be overstated. The episode calls for a greater awareness among young people about the pitfalls of overextending credit. Meanwhile, families and educators play a critical role in imparting financial lessons, aiming to equip the next generation with the tools to build a more secure financial future.

Chapters

• 00:00 - 01:00: Introduction The chapter titled "Introduction" discusses the unseen struggles and feelings of loneliness people may experience despite potentially appearing well-off. It reflects on the unexpected challenges and discomforts of social interactions and prompts readers to consider what people might be hiding beneath the surface.
• 01:00 - 02:00: Socializing and Spending Habits The chapter discusses the impacts of rising costs on socializing and spending habits. It highlights how a basic purchase, such as a simple meal, has become more expensive, citing an increase in grocery bills by 20% and rent by 15%. This financial strain is prompting individuals to reconsider their spending habits, such as opting for more home-based date nights instead of going out, despite the desire to maintain a normal social life.
• 02:00 - 03:00: Rising Costs and Savings Challenges In this chapter, the narrator discusses the challenges of managing finances while trying to enjoy social activities. They highlight the need to search for deals and discounts, such as 'one for one' or 20-30% off, to afford taking their girlfriend out for meals. This reflects a broader trend among millennials who are trying to balance the rising costs of living with their desire to maintain a social life. The chapter sheds light on the creative strategies employed to save money while still enjoying life.
• 03:00 - 04:00: Impact of Inflation in Singapore This chapter discusses the social habits and spending patterns of individuals in Singapore, particularly how often they go out to socialize and the costs associated with dining and transportation. It highlights a conversation where individuals talk about spending approximately 100 SGD per person for dinner and drinks, suggesting this is a reasonable amount for them as it includes drinks. Additionally, the preferred mode of transport discussed is using private hire cars, and typically using Grab for commuting. The chapter indirectly touches on the broader impact of inflation via personal spending choices and their implications on lifestyle.
• 04:00 - 05:00: Government Support and Money Supply The chapter discusses the impact of rising living costs on personal finances, focusing on the difficulty of maintaining savings amid lifestyle changes. The speaker mentions adjusting to increased expenses for convenience and attempts to maintain a savings rate of 20% of their income despite financial pressures.
• 05:00 - 06:00: Young Adults and Financial Management The chapter discusses financial management challenges faced by young adults, using a case study of a person named Joey. Joey's financial situation highlights common spending habits such as dining out, using private hire cars, and buying groceries. These costs, coupled with unexpected expenses like pet healthcare, can significantly impact savings, indicating the importance of budgeting and tracking expenses. Joey's story serves as an educational example for other young adults learning to manage their finances more effectively.
• 06:00 - 07:00: Credit Cards and Debt This chapter explores the financial challenges faced by young adults, particularly focusing on a young woman named Joey who works as a gate worker in Singapore. Unlike traditional employees, Joey's income is not fixed but varies according to the projects she takes on. The discussion highlights the broader concern among young adults, as six out of ten in the U.S. express fear about never achieving financial stability.
• 07:00 - 08:00: Second-hand Furniture Savings The chapter "Second-hand Furniture Savings" deals with the challenges faced by young adults in the UK due to rising living costs, inflation, and slow wage growth. As a result, some are moving back home to cope with financial burdens. The chapter also contrasts these challenges with the experiences of young adults in Singapore, where everyday expenses such as coffee and groceries have increased significantly. This highlights the global nature of economic pressures faced by young people today.
• 08:00 - 09:00: Reliance on Credit The chapter titled 'Reliance on Credit' discusses various economic pressures faced by individuals, such as the rising costs of daily necessities and inflation. The price of chicken rice has increased by 30 cents, and food prices in Asia are expected to rise by 5.4 percent in the current year. Additionally, the cost to fill a tank of petrol has gone up by at least 22 dollars. In Singapore, inflation reached 7% in 2022, indicating a significant economic burden on consumers, potentially leading to an increased reliance on credit to manage expenses.
• 09:00 - 10:00: Buy Now Pay Later (BNPL) Rise The chapter discusses a significant rise in Singapore's inflation rate, noting that it is the highest it has been in almost 14 years. Economist Christopher Gee attributes the spike to recent economic changes, suggesting that as COVID-19 measures began to lift in 2021, inflation climbed from its historical range of two to three percent.
• 10:00 - 11:00: Risks of BNPL The chapter titled 'Risks of BNPL' discusses the escalation of inflation initially due to economic reopening and further exacerbated by complex factors such as the war in Ukraine and supply shocks, particularly in regions like Singapore which heavily relies on imports. Additionally, government support measures over the years have played a significant role in contributing to this inflationary pressure.
• 11:00 - 12:00: Expert Opinions on Debt Risks The chapter discusses the economic measures taken by Singapore, particularly highlighting the stimulus packages introduced in 2020 and 2022, often referred to as CDC vouchers. These measures increased the money supply, enabling people to spend more despite a limited pool of goods and services, which contributed to rising prices and inflation. The impact of such financial policies on different demographic groups, with a focus on the young population, forms a key part of the discussion.
• 12:00 - 13:00: BNPL Industry Insights The chapter titled 'BNPL Industry Insights' delves into the financial behaviors and challenges faced by young adults in the context of Buy Now, Pay Later (BNPL) services. It highlights the aspirations of young individuals in the face of inflation and rising living costs, which sometimes lead them to borrowing. The chapter references a survey conducted by the Institute of Policy Studies and Talking Point that gathered data from over 850 Singaporeans aged 21 to 29 to understand their spending needs and financial management strategies in the current economic climate.
• 13:00 - 14:00: Lifestyle and Future Concerns The chapter discusses the financial challenges faced by millennials, particularly focusing on rising costs and debt management. The majority of respondents feel the impact of increasing expenses, and a significant portion reports spending beyond their means. One example highlighted is of an individual named Honey, who is dealing with both a student and a housing loan while anticipating the completion of a Housing and Development Board flat in three years.
• 14:00 - 15:00: Concluding Thoughts This chapter titled 'Concluding Thoughts' addresses the financial planning and payment strategies of an individual concerning large expenses such as Housing and Development Board (HDB) payments and educational loans. The conversation reveals a balance of 300,000 for HDB and 15,000 for a school loan, with school loans being serviced through a credit card. There are mentions of some missed payments, indicating challenges in financial commitments.

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

• 00:00 - 00:30 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
• 00:30 - 01:00 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
• 01:00 - 01:30 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
• 01:30 - 02:00 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
• 02:00 - 02:30 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
• 02:30 - 03:00 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
• 03:00 - 03:30 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
• 03:30 - 04:00 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
• 04:00 - 04:30 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
• 04:30 - 05:00 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
• 05:00 - 05:30 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
• 05:30 - 06:00 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
• 06:00 - 06:30 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
• 06:30 - 07:00 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
• 07:00 - 07:30 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
• 07:30 - 08:00 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
• 08:00 - 08:30 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
• 08:30 - 09:00 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
• 09:00 - 09:30 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
• 09:30 - 10:00 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
• 10:00 - 10:30 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
• 10:30 - 11:00 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
• 11:00 - 11:30 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
• 11:30 - 12:00 [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
• 12:00 - 12:30 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
• 12:30 - 13:00 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
• 13:00 - 13:30 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]
• 13:30 - 14:00 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
• 14:00 - 14:30 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
• 14:30 - 15:00 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
• 15:00 - 15:30 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
• 15:30 - 16:00 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
• 16:00 - 16:30 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
• 16:30 - 17:00 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
• 17:00 - 17:30 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
• 17:30 - 18:00 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
• 18:00 - 18:30 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
• 18:30 - 19:00 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
• 19:00 - 19:30 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
• 19:30 - 20:00 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
• 20:00 - 20:30 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
• 20:30 - 21:00 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
• 21:00 - 21:30 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
• 21:30 - 22:00 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
• 22:00 - 22:30 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
• 22:30 - 23:00 thank you