Every month we do our best to connect with our friends, partners and other providers in the industry to bring you the latest and best. This month, InvestmentZen came out with a phenomenal info-graphic regarding salaries of millennials. As wages have remained remarkably unchanged in recent times, this graphic, and the types of investing/saving/spending behaviors it speaks about, can help millennials plan for the future – which may include even buying a home! The creator/writer of the article, Tiffany McAdams, has a special forward to introduce the topic as well.
Budgeting for a Good Life
The good life! Millennials are starting their first “real” jobs or making the next career move, relocating for quality of life and looking for their first home on their own or with a significant other. They’re confident they will be better off than their parents.
After a few months in a new job, many are surprised that the entry level position with what seemed like a generous salary isn’t covering monthly expenses. They start using credit to supplement their income. Even if the employer is doing well, raises average 5% or less and there aren’t many open positions at the next salary level. Some start job hopping to increase their pay.
The reality is over half of today’s millennials live paycheck to paycheck, many receiving financial assistance from their families. Wages increased from 1984-2009 but the cost of living increased more. Their pay is buying less than it would have 20 years ago. For millennials, looking for other sources of income is a good option. Learning to budget an entry level paycheck is a better one.
No matter how small the income, the first important lesson to learn is one doesn’t have to spend it all. Honesty about spending and a budget are the best friends at this point. Rent is expensive. Student loans have to be paid off. Fun is a priority. It’s all possible on a budget.
The 50/20/30 rule is an easy plan to follow. Living expenses–rent, food, transportation and utilities–account for 50% of income. If they’re more than this, time to consider a less-expensive car or apartment. Savings, or paying down debt, should be 20% of monthly income. The final 30% is for personal spending–dining out, clothing, vacations and the like.
A lower salary doesn’t mean a dull life. A change in spending habits, money in the bank and enjoying low-cost or free activities in the area help anyone enjoy life on a moderate income.