Diana Clement: Identify the cons of convenience

Online gambling is easy and encourages you to spend. Photo / 123RF

Millennials and Gen Z face financial traps that previous generations never imagined. Buy-now pay-later, Uber Eats and online gambling in particular are some of the sophisticated marketing techniques encouraging excessive consumerism.

Back in the day their parents had to physically front up to buy goods on hire purchase, order takeaways or gamble.

Human nature hasn't changed, says Gavin Earle, chief executive of NZCU Baywide. Smartphones and other technologies just make it way too easy to spend now, and think/lament later.

"What we are now seeing is that millennials are very tech savvy, they can be at home and see a TV ad for a new PC or other consumer device, and they can go to their phone, download an app, apply and get an approval," says Earle. "The convenience and ease to have what is new and shiny is possible right now without saving."

Lenders see out-of-control spending on statements day in, day out, when assessing loan applications. In one recent loan application assessed by NZCU Auckland the 23-year-old borrower had ordered Uber Eats on 20 occasions over three months, spending $619 on the popular food delivery app. During the same period there were just six payments to Countdown totalling $184. The borrower boarded and her living costs were minimal.

There is of course nothing wrong with buying food from Uber Eats. However, this loan applicant was trying to get out of a bad debt spiral and had also spent $4728 in payments on buy-now pay-later purchases and payday advances over the same period. The scary thing is that the credit union sees similar and worse every day.

Both online gambling and buy-now pay-later have exploded. The latter makes buying more stuff you can't afford easier. You don't pay interest, but the providers make a tidy profit from late fees from younger generations in particular.

A millennial herself, Kendall Flutey, chief executive of financial literacy app Banqer.co, says she openly despises buy-now pay-later schemes for what they are doing to her and other generations. NZCU Baywide sees customers with so many buy-now pay-later purchases that their payments are so out of control they can't afford to pay for petrol or basics, says Earle.

You can use apps and the internet to make money as well as spend it. Photo / 123RF

Too many then consolidate their debt, which works until one of their peers buys the latest device, which they then "need", says Earle.

New ways to part man and money come around every year. Flutey did a quick audit of her own bank statement this week and found a raft of expenses that didn't exist in the past or had very different business models. I'm talking Netflix, Spotify, Headspace, cloud storage, Lime Scooters and the occasional Uber Eats bill to name but a few.

One single Uber Eats delivery can destroy Flutey's food budget for the week. "My partner and I spend around $120 on food shopping once a week. If we throw the plan out the window and order Uber Eats that could easily be $50 dropped in one night," she says.

The temptations have exploded for millennials, but it's not all "poor me". Millennials and subsequent generations have financial advantages their parents could never have dreamed of such as: KiwiSaver, money management apps, easier access to share trading through platforms such as Sharesies and InvestNow, much lower interest rates and inflation, the ability to work remotely for high-paying international employers, and half the adult population can buy houses in their own names without needing a husband or father to guarantee the loan.

Flutey's final thought is that it has never been easier to make money thanks to that very same technology that leaves some people poor. "I've used Lime Scooters, but I've also charged them to earn money. My partner and I Airbnb out our spare room and have just listed our camper with Quirky Campers."

Uber, Uber Eats, drop shipping and other internet-based business models allow you to make money as well to stop the financial drain and plump up your wallet.