For the past half century the Great Australian Dream has centred on home ownership; a detached house with a Hills Hoist out the back or, more recently, an inner-city terrace. But, with average house prices in some metro areas circling the $1 million mark, the Great Australian Dream has become more of a fantasy for many millennials and first home buyers.

For this reason, many of the newspapers have dubbed millennials as “Generation Rent”: a moniker that has transformed into something of a mantra, as many millennials effectively give up on saving for a deposit. The problem is this apathy is coming at a critical time, where they need to be doing the exact opposite – that is, saving more not less. Whereas once, saving for a home took a little dedication and hard work, price-to-income ratios are today around 5.8x nationally, and up to 7.0x in Sydney. The trend also isn’t occurring in isolation; it’s combined with high levels of household debt and stagnant wage growth.

In practice, it means that first step – from renter to home owner – is a large and difficult one. The Reserve Bank of Australia (RBA) found the ability to save for a deposit is the primary constraint for one third of potential home buyers – bigger than the ability to continue to service a mortgage on an ongoing basis.

Does this mean the Great Australian Dream is dead? Far from it. But it does mean millennials need to work even harder to reach their goals and take hold of their own financial futures. To do this, they need to adopt a saving mindset.

The challenge is that learning to budget is not necessarily part of everyone’s daily priorities. We’re not taught to manage our money at school or given any sort of formal education on it. Instead, people are expected to learn how to manage their finances from their parents or through a costly process of trial and error. But the trick to it – like anything – is starting small and being persistent.

The first step is always the most difficult one. Moving from spending all of your income to saving $20 a week can be a big leap but once it’s conquered, it gets easier to save more and more because the habit has already been introduced. Further, small savings goals can help reinforce positive behaviour, and make it easier to take bigger steps. Saving enough money to buy a new car could be an initial goal that makes the idea of budgeting for a bigger item – a wedding, a holiday – seem easier. Eventually, with the right type of financial confidence, it’s easier to look at buying a house in a new light.

There also needs to be a discussion about the need for home ownership. Knowing Australia’s culture and the mythology around The Great Australian Dream, it’s hard to imagine our young people adopting the European mindset of renting for life, rather than aspiring to own. But in reality, there is no reason to think everyone should own their own home.

There are many other investment types that can often lead to better financial outcomes. What millennials need is the right financial education, to understand different asset classes and then be able to choose the ones which will work hardest for them. It also means if they decide to buy a house down the track, they’ll be a better position to do so.

Let’s be clear – none of this advice will magically help anyone afford a house overnight. But it will help build a critical change in attitude and provide first step into having a healthier financial balance sheet. It all goes a long way in making the ambition of buying a house seem less like a pipedream!

*This article is provided for informational and educational purposes only. Information on our website is general advice only and does not take into account any person’s individual objectives, financial situation or needs. Before acting on anything on this website you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.