How Much Money Do Millennials Really Make?

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Your income allows you to pay for shelter and food, save for retirement, and achieve other life goals. Some people are fortunate enough to be able to meet all of their needs and wants with just one main source of income. Others, however, must stretch each paycheck to cover their basic expenses. And according to a report by the TIAA Institute, Millennials are the generation most likely to face financial hardship in areas such as paying off debt and saving money.

Millennials – ranked by Pew Research Center as people born between 1981 and 1996 – have received a ton of attention as a generation struggling to balance the costs of their lifestyle with their financial goals. And a big part of that imbalance could come from not making enough money to float their costs.

According to data from the United States Census Bureau, the median pre-tax millennial household income was $ 71,566 in 2020. However, a Sunmark Credit Union Study on the spending habits of different generations revealed that millennials spend an average of $ 208.77 per day. This includes the average daily costs for groceries, housing, utilities, insurance, entertainment, dining out and more. That number equates to $ 1,461.39 spent weekly and $ 5,845.56 per month. But by the end of the year, the average person will have spent $ 70,146.72 – just below the millennial median income.

Spending almost as much as they earn each year means there is less room to save for emergencies or invest for retirement. But with the average cost of rent – the biggest expense for millennials – weighing $ 1,584 for a studio and $ 1,636 for a one-bedroom in the United States, many millennials find their wages just not enough to cope at daily costs of living.

Factors Affecting Millennial Income

The 2008 recession took a toll on millennials. Lack of jobs meant fewer millennials could earn income or advance their careers, slowing them down financially. In fact, a report by a nonprofit group called the Invincible youth found that the 2008 economic downturn cost young workers about $ 22,000 in lost earnings per person.

Even after unemployed millennials finally found jobs in the years after the recession, their wages fell. The Hamilton project, an economic analysis from the Brookings Institute, found that before the economy-related job loss, millennials earned about $ 3,640 per month, which equates to $ 43,700 per year. But two years after the onset of the recession, those who found a job were earning an average monthly income of just $ 1,910 ($ 23,000 per year). Millennials had to work their way out of this huge difference in income.

And while the 2020 COVID-19 pandemic had an effect that occurred across all age groups, it looked like millennials had taken another hit, as they are the largest generation currently on the planet. the work market. According to Pew Research Center, 30% of Americans aged 30 to 49 report that they, or a member of their household, have lost their jobs because of the pandemic. However, it may still be too early to see the full impact of the pandemic on the income potential of millennials.

How millennials can keep more of their money

While the problem of low wages won’t be solved overnight, there are ways for millennials to keep more of their money. and adding new sources of income. Side activities have become increasingly popular as a way for workers to supplement their income, save more and even have a little more spend money. And while the extra money can go a long way, Millennials can also consider cutting some “silent costs” that eat away at their money, like interest charges and recurring monthly expenses that they may have forgotten about.

The mint The app can analyze your income and expenses and help you budget based on your spending habits. This can help you uncover unnecessary or unwanted expenses so that you can save extra money.

And while credit cards can be a useful financial tool when it comes to accumulating credit and earning reward points and cash back, you get hit with interest when you don’t pay your balance. In totality.

If you already have a balance that seems difficult to pay off, you may want to consider using a balance transfer card with a 0% APR introductory period. Consider the cards below:

American bank Visa® Platinum card

On the secure site of US Bank

  • Awards

  • Welcome bonus

  • Annual subscription

  • Introduction APR

    0% for the first 20 billing cycles on balance transfers and purchases *

  • Regular APR

    14.49% – 24.49% (variable) *

  • Balance transfer fees

    Either 3% of the amount of each transfer or $ 5 minimum, whichever is greater

  • Foreign transaction fees

  • Credit needed

Wells Fargo Active Cash Card℠

  • Awards

    2% unlimited cash rewards on purchases

  • Welcome bonus

    $ 200 cash rewards bonus after spending $ 1000 on purchases in the first 3 months after opening the account

  • Annual subscription

  • Introduction APR

    0% APR on qualifying purchases and balance transfers during the first 15 months from account opening

  • Regular APR

    14.99% to 24.99% variable on purchases and balance transfers

  • Balance transfer fees

    3% launch fee ($ 5 minimum) for 120 days from account opening, then up to 5% ($ 5 minimum)

  • Foreign transaction fees

  • Credit needed

If you are in control of your credit card payments, you can also use your card to earn extra money while shopping. You might consider a credit card with a big welcome bonus, like the Chase Sapphire Preferred® Card or the Citi Premier® Card. Welcome bonuses allow you to earn a large amount of points by opening a card and spending a certain amount of money within a specified amount of time.

With the Chase Sapphire Preferred® Card you can earn 100,000 points (worth $ 1,250 for travel booked through the Chase Travel portal or $ 1,000 in cash back) if you spend $ 4,000 in the first three months after opening the map. You can use the card to pay for your regular expenses – and you should be able to pay them back right away since you would be spending on fees that you would have to pay anyway – and then use your points for a vacation you really want. to take.

Finally, you can invest your money and make it grow on its own over time. When you keep all of your money in a regular savings account, your money loses value over time due to inflation, which means it will offer you less and less over the years. Investing, however, gives your money the opportunity to grow even if you don’t make additional contributions (however, the more you contribute, the more it will grow). If you are new to investing, you might consider robo-advisers like Wealth front and Improvement, who can invest your money in portfolios that best suit your goals.

Wealth front

On the secure Wealthfront site

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle chosen. Minimum deposit of $ 500 for investment accounts

  • Costs

    The fees may vary depending on the chosen investment vehicle. No account, transfer, transaction or commission fees (fund ratios may apply). Wealthfront’s annual management advisory fee is 0.25% of your account balance

  • Premium

  • Investment vehicles

  • Investment options

    Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources, and dividend-paying stocks

  • Educational resources

    Offers free financial planning for college planning, retirement, and home buying

At the end of the line

Millennials have already lost a lot of ground in terms of income thanks to the 2008 recession and now the Covid-19 pandemic. But by taking a few small steps, like using credit cards that allow them to save on interest, invest, and supplement their income through side activities, millennials can begin to find a better balance between this. what they need and what they can afford.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.

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