PRITA HAPSARI GHOZIE, LECTURER OF ECONOMICS UI: YOUNG GENERATION IS AT RISK OF NOT OWNING A HOUSE DUE TO THEIR PAYLATER ADDICTION AND CONSUMPTIVE BEHAVIOR
From the results of a survey by Indonesia Property Watch (IPW) released in 2022, it was revealed that more than 50 percent of millennials own a house, apparently thanks to the support of their parents. Only 40.95 percent of them actually own a house using the money they have earned.
Around 39.05 percent of millennials are supported in terms of down payments or installments, and as many as 12.38 percent are fully backed by their parents. For the rest, they do not buy property because they get an inheritance.
Lecturer in the Department of Accounting, the Faculty of Economics and Business, Universitas Indonesia (FEB UI), Prita Hapsari Ghozie, S.E., GCertFP, M.Com., said that in the next five years, the young generation born in 1981–1994 is threatened with not being able to buy a house because the raise in their salary is not proportional to the price of housing on the market. This is based on research results by Rumah123.com and Karir.com in 2017 which found that normal pay raises outside of promotions throughout 2016 were an average of 10 percent, whereas house prices soared at least 20 percent.
Even so, the imbalance between pay raises and the rise in house prices is not the only cause of the inability of young people to buy houses. According to Prita, youth’s consumerist culture for lifestyle is another cause that makes them unable to prepare for future needs. The younger generation who have a high consumption pattern will find it difficult to repay the Home Ownership Credit (KPR).
This consumption pattern of young people is exacerbated by the ease of access to purchasing goods. Information technology innovation in the financial sector, known as financial technology (fintech), on the one hand, creates a more practical and secure financial transaction process, but on the other hand, it can backfire for young people who lack financial literacy. One that can be a double-edged sword is Buy Now Pay Later (BNPL) feature or what is popularly known as paylater.
BNPL is a loan to buy goods on credit without a credit card. This service allows consumers to pay for a transaction at a later date, either with one payment or in installments. This loan facility is also often called a credit limit. This method is becoming an appealing payment option for people on a limited budget.
Various fintech as platforms for providing online financial services, online shopping sites, to digital wallet services offers product diversification into the realm of credit financing. Until now, various types of e-commerce have collaborated with fintech to apply for loans, such as Gopay which provides PayLater features, OVO with OVO PayLater, and various marketplace companies such as Traveloka, Shopee, Kredivo, and so on, which also provide paylater feature to their users.
Based on research conducted by Kredivo and Katadata in June 2022, there are several reasons users choose paylater as a payment method. As many as 56% of respondents felt the benefits of flexibility with the installment payment of paylater, 55% of respondents appreciated the easy access to paylater which helps them get credit, and 51% of respondents considered paylater safe because it is integrated with e-commerce that has been registered and supervised by the Financial Services Authority (OJK).
Unfortunately, this paylater payment system encourages young people to fall into consumptive behavior because, with just a click on the screen, they can buy things they do not really need. In fact, some of them order food, plane tickets, and hotels for their vacations even though they do not have any money. As a result, many young people are in debt of up to tens of millions because they cannot pay off payments.
According to Prita, the debt that befalls paylater users, especially young people, occurs because they have not had any income yet but have taken paylater. They usually take loans beyond their means and carry out a scheme to pay a debt by incurring a new one, so when one debt has not been paid off, they take on new debt. The addiction to online shopping, coupled with the lack of financial literacy, has exacerbated the situation.
To overcome this situation, Prita suggested the need for literacy related to financial management for the young generation. Based on the framework of the Organization for Economic Cooperation and Development (OECD), there are three main components in measuring financial literacy, which are knowledge, behavior, and attitude. Financial literacy can shape the behavior of the younger generation so that they are not consumptive when shopping.
“Proper financial literacy can make individuals more careful in managing finances and able to sort out the purchases of goods or services needed. In financial management, young people can use a separate account system, for example alloting 50% of living expenses to the savings account, 30% of savings to the investment account, and 20% of money for lifestyle in the digital wallet. That way, finances are more under controlled and the consumptive behavior of the young generation can fade,” said Prita, who is also the CEO of @zapfinance.
Author: Sasa
