'Little treats' are popular with students, as HECS debts rise and housing remains unaffordable

At just 23, Veronika Gobba owes over $41,000 in HECS debt on a course she's yet to complete.

It's a debt many Australians know all too well.

But there are some things she's not willing to give up – her iced vanilla lattes and frozen yoghurt treats.

"Things can feel hopeless. Why bother saving? The odds are stacked against me," she says.

"Spending money on little treats can bring you joy when don't feel optimistic about being able to make bigger purchases long term."

The dopamine hit

Little treats create moments of happiness in the face of a grim financial future, with 'little treat' posts amassing hundreds of millions of views of TikTok.

Veronika and her friends are among the countless young people opting to spend their savings on these little luxuries.

"We're a bit stressed out. Little treat. We've completed something. Little treat.

"It's like 'let's go reward ourselves with a little muffin, a little bubble tea or a little frozen yoghurt'. You get such a dopamine hit and then you feel happier," she said.

"So many people my age are drawn to the little treat trend because when things seem so financially grim sometimes all you can do is think about one day and making that day a bit better."

The federal government recently announced it was changing the way HECS debts accrue, allowing indexation to be based on either inflation or wage increases, depending on which is lowest.

Veronika is unimpressed.

"It's minor in change in the larger scheme of my HECS. It's not going to help me get a mortgage. I'm grateful but they've really just thrown us the bare minimum to keep us happy," she said.

"I feel sick. I'm already dreading thinking about paying this off later."

Little treats ease 'cozzie livs' crisis

Veronika's not the only student indulging a little to ease her stress.

Joni Granger, aged 20, is considering opting out of postgraduate studies because of rising costs. Her HECS debt is $27,000 and she still has a year of studies to go.

She's trying to manage her mental health and finds little treats give a sense of reprieve amid the cost-of-living crisis. Sometimes an oat milk latte or a flaky pastry can go a long way.

"Why not use the money that I have now to make myself feel good and feel a little bit happier?" Joni says.

She'll buy a coffee because "it's tastes better when someone else makes it" and she'll go for a drink with friends because "even in this economy, social experiences are important".

The government thinks that if the HECS changes pass through parliament, this year's indexation rate will be 4 per cent, which will add another $1,080 to Joni's current loan. This cost is equivalent to studying another subject.

Studying finance at the University of Western Australia, Joni's conscious about how excessive loans will impact her ability to borrow money for a house.

CoreLogic's April data shows Perth property prices have risen more than anywhere else in the country. The median house price is now $753,947.

"Our saving is not going to have the same kind of value as our parents," Joni says.

"Saving a little portion from a casual job isn't going to feel like it's making much of a difference."

Winning the 'generational lottery'

The idea of treating yourself to a little luxury you can't afford is nothing new.

"To have a disciplined savings approach or a goal, you need to believe it's realistic and within your reach," UWA behavioural economist Raymond da Silva Rosa said.

"So if you don't think that's possible, then you might think, 'let me just treat myself now because it's not much point exercising self-control'.

"Young people are under a lot of psychological stress. Their psychological bandwidth is much lower, which can make it hard to make sensible financial decisions."

Mr da Silva Rosa said in his generation, saving up for house was considered a reasonable goal that didn't impinge too much on one's lifestyle.

"Now, for young people to get a house in the same suburb as their parents or that has the same quality, they really have to make considerable sacrifices, which seem unrealistic," he said.

"I used to think 'oh god, if only I won the lottery'. And, in fact, I had, I just didn't know it. I won the generational lottery."

Younger generations are also more likely to spend their disposable income on experiences – viewing saving for big-ticket items as "unrealistic" and having a "spend now" mentality, according to Mr da Silva Rosa.

He worries about the consequences of this attitude to spending, warning poor mental health combined with financial insecurity can be a dangerous combination.

Entitlement mentality

Joni said there was sometimes an element of overspending to try to buy a life people felt entitled to.

"You think — I've worked really hard, I could afford this, I can afford that," she said.

"Then you end up paying for parking when you could've taken the train … just because you thought you deserved it for studying hard.