Side Hustles Or Spending Cuts? Survey Reveals How Gen Z, Y, And X Australians Tackle Inflation

Australians are adapting to the growing cost of living in varied ways, with responses differing significantly across generations, a recent survey by Fidelity International has revealed.

The survey polled Australians ranging between the ages of 18 and 59, and found that the Gen Z population and Gen Y were inclined toward taking up a side hustle rather than reducing their expenditure to support an affluent lifestyle.

On the other hand, Gen Xers (ages 44 to 59) were majorly cutting back on their non-essential spending to cope with the high-end living costs, per the report.

The study also found that for Gen Z, the top short-term focus was saving to buy a home or property (18%), followed by growing their investments (14%). Apart from these goals, they also set aside funds for travel and lifestyle (11%) and tackling debt (11%).

Meanwhile, Gen Y was more concerned about paying off debts (22%) and purchasing property (17%). In addition, an emergency fund (12%) and achieving financial independence (10%) were also high on their list of priorities.

Gen X, on the other hand, was primarily focused on clearing their debts (27%) and preparing for retirement (15%).

"Our research shows that younger Australians are financially ambitious and confident and – perhaps contrary to common opinion – more willing to take on additional work to maintain their lifestyle. This might include side hustles, entrepreneurship, or new investment opportunities. By contrast, Gen X Australians are more cautious and more likely to set themselves a budget and cut back on non-essentials to manage the rising cost of living," said Lauren Jackson, head of wholesale, Australia, Fidelity International.

The survey noted that younger Australians, particularly Gen Z and Gen Y, were more financially confident. The economic stability empowered them to handle their daily and more general financial affairs with confidence (about one in five people felt extremely confident and one in two felt relatively secure). Plus, three out of five say they were confident in their ability to assess investing prospects, too.

The study also highlighted the varied investment preferences of different generations. While Gen X liked more conventional choices like superannuation and Australian shares, Gen Y and Gen Z typically preferred investing in cryptocurrency and passive ETFs. Furthermore, one in three Gen Z and Gen Y interviewees admitted to having a high to very high-risk tolerance threshold.

"Younger Australians – particularly Gen Z and Gen Y – are approaching financial management with different expectations and priorities compared to older generations. They have access to a multitude of information sources and often feel empowered to navigate investment opportunities, but this self-assuredness may mask a lack of deeper financial literacy and experience, particularly in areas like portfolio diversification. There is a risk that a 'get rich quick' mindset could push younger investors off track from achieving their financial goals, particularly with cryptocurrencies and finfluencers around every corner. A strong focus on financial education, highlighting the importance of disciplined, long-term investing, will be key to ensuring that their confidence doesn't lead to poor decision-making," Jackson said.

Gen Zers were also found to be more financially responsible and their habit of saving for the future, investing in real estate, and paying off debts were proof.