What's influencing the large ticket purchases of young earners?

We’ve all been there – staring at a big ticket item that we really want, but feeling hesitant to pull the trigger. Whether it’s a new car, a vacation, or a piece of furniture, the new Apple Watch Ultra; sometimes it seems like there’s always a reason to hold off on making that big purchase.

But why? It's a question that's been on most retailers' minds lately. Is it because we're all secretly frugal at heart, or is there something deeper going on?

Well, we decided to find out. We conducted a survey of 180 UAE residents (age 24-38years) to get to the bottom of this mystery, and the results were eye-opening (and a little bit amusing). 52% respondents delayed a big purchases in last 3 months and there are the top four reasons:

1. Looming recession

"I'm not saying the world is going to end, but it's a possibility... and a new car won't help." - Ron Swanson

With the economy still recovering from the pandemic and uncertainty about the future, many young earners are worried about the prospect of a recession. In fact, one-third of respondents in our survey said that they had scaled back spending due to concerns about an impending recession, with Boomers and Gen Xers being the most pessimistic.

Let's face it – we're all a little bit worried about the economy these days. With so much uncertainty on the horizon, it's no wonder that many young earners are hesitant to take on big expenses.

Respondent P: "I don't want to buy a new car if I'm not sure I'll even have a job next year. What if I am forced to go back home"

2. Lack of affordability:

"I can't afford to buy anything expensive, unless it's on sale. Or free. Or stolen." - Jarod Kintz

For many, the issue isn’t so much the fear of a recession as it is a lack of affordability. The increased cost of living (especially home rentals) and close to stagnant wages is making it difficult to save and afford big ticket purchases. According to our survey, 44% of respondents cited increases in cost-of-living expenses as a reason for reducing non-essential spending, while 38% postponed a major purchase due to a lack of affordability.?

Respondent K: "Real estate has churned out great returns in the UAE. I'd love to buy a house too, but I just don't have the money for a down payment."

It's a common problem, and it's one that's likely to continue as the cost of living continues to rise.

3. Fear of new loans:

"I can't afford to save any money – I have too much month left at the end of my paycheck and EMIs."

For many young earners, the prospect of taking on new debt can be intimidating, especially if they are already struggling with outstanding loans. In our survey, 25% of respondents said that they had postponed a major purchase due to concerns about taking on new debt, with Millennials being particularly wary of this. The fear of taking on more debt can be a powerful deterrent to making big purchases.

Respondent M: "I'm trying to pay off my massive BNPL EMIs before I even think about redoing my house. Well, the seasons decor can wait.

It's a wise approach, and one that will likely pay off in the long run.

4. Outstanding debt:

"I'm not saying I have a lot of debt, I'm just saying I have so much debt that I can't even afford to pay attention." - Andy Dwyer

Finally, there are those who are simply too bogged down by outstanding debt to even consider taking on more. In our survey, 22% of respondents said that they have currently postponed a major purchase due to outstanding debt, with credit card debt being the most common type. A whopping AED 7200 on an average.

Respondent V: "I'm trying to get out of debt, not dig myself in deeper. It's not me - i am resisting the urge though"

It's a common sentiment, and one that's likely to resonate with many young earners.

There you have it – the top four reasons why young earners are delaying big ticket purchases until 2023. But don't despair! And here comes the twist:

When we asked our survey respondents if they would consider not making large ticket purchases at all, the answer was a resounding "What, why not?!" It seems that young earners are still interested in making big purchases, but they just want to be cautious and make sure they’re doing so in a responsible way.

Respondent Q: "I plan to be cautious, not be MIA. And, the sentiment could be short-lived too. Can't tell in which direction though"

So if you’ve been feeling hesitant about making a big purchase, don’t worry – you’re not alone. Remember, it's important to do your due diligence and make a plan before making a big purchase. This could involve saving up for a down payment, seeking the advice of a financial professional, or researching your options.

And, at last, it might be helpful to remember the words of the great American philosopher Ralph Waldo Emerson: “The purpose of life is not to be happy. It is to be useful, to be honourable, to be compassionate, to have it make some difference that you have lived and lived well.” So go out there and make your big purchase – just be sure to do it with your eyes wide open and a solid (saving and spending) plan in place.

About Sav : We believe that managing money should not be complex and that is why we are building simple and transparent digital solutions for your financial lives. Sav is a hyper-personalized money management App for young earners to be in better control of their money, very effortlessly. See you on the better side of money!