How Much Money Do Millennials Really Make?

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 the Pew Research Center as people born between 1981 and 1996 – have garnered 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 US Census Bureau, the median before-tax household income of millennials was $ 71,566 in 2020. However, a Sunmark Credit Union study on the spending habits of different generations found that millennials spends an average of $ 208.77 per day. This includes the average daily costs for groceries, shelter, 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 – Millennials’ biggest expense – weighing $ 1,584 for a studio apartment and $ 1,636 for a one-bedroom in the United States, many millennials find that their paychecks just aren’t. sufficient to enable them to keep pace with the costs of daily living.

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 Young Invincibles found that the 2008 economic downturn cost young workers about $ 22,000 in lost income per person.

Even after unemployed millennials finally found jobs in the years after the recession, their wages fell. The Hamilton Project, an economic analysis by the Brookings Institute, found that before the economy-related job losses, millennials were earning about $ 3,640 per month, which works out 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 find their way to overcome this huge income gap.

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

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 grown in popularity as a way for workers to supplement their income, save more, and even have extra pocket 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 app can analyze your income and expenses and help you budget based on your spending habits. This can help you find 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:

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 (valued at $ 1,250 for travel booked through the Chase Travel portal or $ 1,000 in cash back) if you spend $ 4,000 over the course of the first three months after opening the card. You can use the card to pay for your regular expenses – and you should be able to reimburse them 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’re new to investing, you might consider robo-advisers like Wealthfront and Betterment, who can invest your money in portfolios that best suit your goals.

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.