Millennials: $100K/Yr & Broke
/A Business Insider article this weekend said 60% of millennials earning over $100,000/yr are still living paycheck-to-paycheck.
So I guess my question to most is… what the F*ck are you doing?!
In short the article, broke down how most of the millennials in this category are HENRYs (High Earning, Not Rich Yet), but primarily struggle to get ahead/save due to life style choice.
Elon Graduation: May 2008
As an ’08 college grad, who entered the ‘adult world’ just in time to watch the market, retirement plans and peoples life savings get totally whipped out… While balancing the reality of earning enough to survive and what I wanted out of life… I remember thinking if I could just work my way up to making $65-80,000/yr I would be able to have all I really needed. I actually still believe this to be true.
Don’t get me wrong, living costs and inflation have certainly played a role. $100,000 is not what is was 10, 20 or 30 years ago. Our generation also came in straddled w/ higher debts (student loans hello) than those prior. The Pew Research Center basically showcased that $100,000 (in most of US) firmly plants you in the middle class today.
However, the study showed that these HENRY millennials on average had a lot more discretionary spending (eating out, vacations, entertainment etc..) including just over $2000+/yr on average at coffee shops. Which is why so many are living paycheck-to-paycheck, not being able to save to buy a home, putting off starting a family, etc..
Lets be honest your Lib Arts degree, like mine, didn’t teach you a thing about budgeting, investing, filing taxes or what tax advantages are available to you. So you reluctantly pay TurboTax every year and get pumped when the screen tells you they found you x amount of tax savings, but then wonder why it’s so hard to get ahead.
So what do we do?!
1- Delay Gratification
Even w/o much savings, I took a few trips and bought a few things in my 20s I look back on and laugh at. We’re told life is short (so def live it up while we’re young)… but it really isn’t. Chances are many of us will live well into our retirement years and then some.
Soooo… while I’m not telling you to not spend some of your hard earned $$ on things you enjoy, maybe just pick and choose a bit better.
Ex: When I hear this study unveiled the HENRYs spend on average $2000+/yr at coffee shops, I think you need to not just move change your Venti to a Grande, but start just taking advantage of the free coffee at your office or make some at home. My very simple combo of French press, hot water and some fresh ground coffee beans roughly cost me $.18 per cup (that’s $131/yr if I drink exactly 2 cups per day)
I know of friends who consistently track their spending on everything…. literally everything. I must say I’m not as meticulous and will splurge on things occasionally, but I do audit my spending 1-2x a year to keep myself honest. It’s helped w/ eliminating everything from subscriptions I’ve forgotten about to, to overpriced coffees, to simply pre-making some lunches. Whether this $$ goes into a vacation fund, retirement fund or blown on some Meme stock, you’ll at least give yourself the freedom of choice… which is what this post is all about.
So whether it’s budgeting better on your consumption, your travel or your 4th best friends wedding gift, no matter how much or little you make we can all consistently improve so we can save a bit more, invest a bit more so in the future we have a bit more. While delaying gratification is a big part of it, once you start making a few bucks one of the easiest things to do is keep adjusting, for this you simply need to….
2- Prevent Lifestyle Creep
You took the new job and you got a pay increase of 20%… cool. So you might go buy that car you’ve had your eyes on, adjust your budget for that home you all have had your eyes on because it gets you into the better neighborhood, book better trips at nicer hotels… the list goes on and on.
I was 100% guilty of this.
When I first started my RE career and was flipping my first house, I literally only ate out for friends bdays and typically ate before so my tab wasn’t too high, I only went to fancy grocery stores (Whole Foods) when I knew the sandwiches at 8-9pm were half off and would load up 3-4 for next couple of meals, took advantage of any/all free office supplies, flipped yard/garage sale items for extra cash, booked random odd jobs on Craigslist on weekends… in short I hustled my face off. Those days, while a tad stressful made my life very simple and streamlined.
Then a couple checks come in. Naturally I wanted to enjoy. I didn’t care about bargain shopping for clothes (paying retail), took a few extra getaways, shopped at fancy grocery stores more regularly, picked up friends tabs, got a better car, bought a comfy house, etc…
But after doing this for 2 years recognized I was putting a min aside for my future and beginning to finally question how the hell would I ever retire or at least become financially free.
So instead of spending my hard earned $$ on things that helped cope w/ my lack of knowledge I took the next step and…
3- Invested in Myself
I don’t know if it’s because we watched too much Disney or our Boomer-era parents all subscribed to the same ‘You can be whatever you set out to be’ parenting style, but accepting that there was no easy path, no short cut or no free ferry that simply took you from the care-free child port to the care-free adult port was/is a crucial step.
I accepted what I didn’t know
I have an Economics degree and could spout off theory and sound really smart at cocktail parties, but knew nothing of personal saving, investing, what kind of investing was best, how to get ahead with tax-coordinated moves, how asset classes were impacted by capital gains, what fees were charged, how it worked over a 5-10-30-50 year time horizon or how to even get started. So, I did what any rational millennial would do, I googled… and googled… and googled.
I found some people I really liked
I read a lot of junk
I observed
I made a plan
‘The plan’ is like a working title. It’s a good foundation, but is more rubber than concrete. It’s flexible as i’ll refuse to ever stop learning/investing in myself, but i’m damn glad I started somewhere.
I can 100% guarantee I’ll read this in 10 yrs and laugh at myself by recognizing mistakes made, opportunities missed and possibly observe how small I thought. Maybe, maybe not, but the important thing for me is taking ownership of my own life by observing, improving and continually tweaking the decisions I make every single day in hopes of creating a vibrant and free future.
This is available to each and every one of us and we are no longer handicapped by what our parents, grandparents generations were; lack of information.
If you are reading this I assume it’s because you likely fit the mold of the individual described and at minimum have access to Wi-Fi… so the information/next steps are quite litterally at your finger tips.
