Meet Gen O – millennials who have “come of age during a time of technological change, globalisation and economic disruption.”1 Born around the early 1980s to 2000 (16-34 year olds), their spending and saving behaviours have been significantly influenced by the evolving world they’ve grown up in.
We recently carried out a survey in conjunction with Future Foundations2, which confirms that this generation has very particular attitudes towards their finances. Not only are social and cultural pressures resulting in them spending more money, but they also have a negative view of the current economic climate. Short term thinking, combined with their avoidance of investing for the future, has had a knock-on effect on their savings pots.
Speaking to Professor Darren Duxbury from the Newcastle University Business School, and the Behavioural Research in Finance (BRiF) group, we found that they aren’t thinking about their finances. Duxbury explains that “when it comes to saving, shortsightedness and apathy can cause Gen O to direct insufficient attention and resources to the issue.” They seem to ignore risky financial situations, and have adopted a head-in-the-sand attitude – referred to as ‘the ostrich effect’. We’ve therefore named this group Generation Ostrich or ‘Gen O’: the millennials who avoid thinking about saving for the future.
When asked how their finances make them feel, our survey reveals that Gen O experience a range of negative emotions – significantly more than older generations. Duxbury explains that this may be because “older individuals have been shown to suffer less from negative emotions and to exert greater emotional control than younger individuals.”
“We know that emotions influence financial decisions”3 and as a result, to avoid these undesirable feelings, it’s easier for them to not think about their savings or finances altogether. Duxbury adds that “by choosing to ignore their finances, perhaps Gen O hope to avoid responsibility, and associated feelings of regret, if things go wrong.”
According to our survey, 64% of Gen O do not save as much money as they’d like to every month, with nearly a third saving nothing at all. So, why is this happening?
A large proportion believe that it’s economic factors out of their control that are having a big impact on the amount they spend and therefore their ability to save – with nearly 70% of Gen O thinking that the cost of living is too high.
The current economic climate undoubtedly brings its challenges. Government data4 suggests that the new state pension system will result in many people who are now in their teens, 20s and 30s actually being worse off when they come to retire. In addition, younger generations now have to pay triple to go to University – entering the world of work already burdened with thousands of pounds of debt.
Statistics from the ONS5 indicate that wage growth has picked up and inflation has fallen since 2014. However, Alistair McQueen, Savings and Retirement Manager at Aviva commented: “Caution should be exercised when assuming that all sections of society are enjoying the same levels of low inflation. Our analysis indicates that those aged under 30 have been experiencing higher than average price rises for the past year” – highlighting Gen O’s cost of living battle.
Although these economic factors can’t be ignored, perhaps it’s also Gen O’s spending habits and outgoings impacting their ability to save. Evidence from our research reveals that Gen O suffer from significantly more social and cultural pressures than the generations before them. They’re living in the moment, and feel the need to keep up with the huge social media revolution, ever-evolving technology and the latest gadgets.
Our survey shows that 35% of Gen O want more control over their appearance – a much higher proportion than the older age groups. A generation evidently obsessed with looks, research suggests that they’ll take over 25,000 selfies during their lifetime6
Constant exposure to the internet might be blamed for this. Continually striving for perfection and to keep up with the latest trends, as well as being influenced by celebrities who are setting the bar unattainably high – this generation is turning to dieting, designer brands and cosmetic procedures. These are expensive habits, and many are living beyond their means in an attempt to keep up appearances.
According to our research, almost half of Gen O who do save, spend their money on buying new home electronics – such as computers or mobile phones. 16% even admit that they consider the latest technological devices a necessity, and would find it hard to live without them. This not only reinforces their heavy use of technology, but also shows that they’re saving to keep up with latest trends and for instant gratification, rather than investing for the longer term.
The rise of contactless payments and online money transfers has also reduced the pain of paying when making purchases. This has encouraged greater spending, as people find it easier to make payments, which is having a direct impact on their ability to save.
Along with the development of technology, it’s clear that the rise of social media has moved at a scary pace. As of 2015, there were over 2bn active social media accounts worldwide, and the average user in the UK spends more than 2 hours on social media every day7. This figure continues to grow.
Our survey shows that 14% of Gen O feel they need more control over their social media profile, compared with only 2% of 55+ year olds – highlighting the pressures that this particular generation feel to keep their online image relevant and likeable. They’re being propelled into adulthood from an early age, and instead of spending time with a group of friends down the road, they’re pressured to keep up with hundreds of ‘friends’ on Facebook.
Our research also revealed that around half of the Gen O respondents feel pressure to spend more money when socialising with friends or family. More than 1 in 10 prefer to live in the moment and spend when they want. They’re spending more today, and saving for the future is not a priority.
These cultural and social influences both on and offline have resulted in Gen O feeling the need to more regularly spend money to keep up with their peers. This is made worse by frequent temptations, reminders from advertisements and information being constantly shared online.
It’s apparent that Gen O are living and spending for today – choosing to ignore what impact this will ultimately have on their future, by having little savings to support them and their families.
Generation Z are those born from early 2000s (aged 16 and under). Although their predecessors Gen O perceive technology as very important, it’s essential for Gen Z; with technology being fulling engrained in their everyday lives from birth, they’ve become dependent on it. Following the trends, it’s understandable that there are concerns about how this generation’s culture will have an even greater impact on their financial decision making and ability to save.
Our research reveals the nature of the younger generations’ behaviours and attitudes towards saving, and highlights the importance of lifting their heads from the sand. Duxbury tells us that “thinking about why, not how, we save may make it easier to resist the temptation of living for today.” This will help Gen O stop spending investments in the short term, and start saving and preparing for their secure financial futures.
 The research was run in consultation with Future Foundation and ICM. The findings are based on 5,000 online interviews among a nationally representative sample of UK adults aged 18 and above, carried out in February 2016 and analysed during February/ March 2016.
 Summers, B., & Duxbury, D. (2012). Decision-dependent emotions and behavioral anomalies. Organizational Behavior and Human Decision Processes, 118(2), 226-238.
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