60% Of Millennials Who Earn Over $100K Per Year Claim To Be Living Paycheck To Paycheck
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How many times do people need to hear “It’s not how much you make, it’s how much you keep” to start saving and investing for the future? But the truth of the matter is money doesn’t go as far as it used to and $100,000 isn’t what it used to be.
That six-figure paycheck goes even quicker if you live in an expensive city. So learning that 60% of millennials who make $100,000 live paycheck to paycheck isn’t very surprising. Especially once you consider how dangerous lifestyle inflation can be.
According to a new survey from PYMNTS, high earning millennials aren’t the only demographic who are living paycheck to paycheck. Out of 28,000 Americans (across all generations) analyzed, 54% say they are living paycheck to paycheck and 40% of those who earn over $100K per year are living paycheck to paycheck.
While living paycheck to paycheck isn’t just an issue for high earners in the millennial generation, it is alarming that the percentage is so much higher for the generation. And it could be contributing to the fact that millennials are far less wealthy than baby boomers when they were the same age. In 1989, Baby Boomers owned 20% of all the wealth in the U.S. In 2020, Millennials and Gen-Z only combined for 5%.
Way Are So Many Millennials Living Paycheck To Paycheck?
Shall we list the all the financial roadblocks millennials have faced?
Between wage stagnation, lifestyle inflation, geographical location, actual inflation and the general costs associated with getting older (children, mortgage, etc), there are a few factors working against millennials. Also account for the rising cost of a college education, plus the lack of personal finance education in the U.S. and it is no wonder why so many Americans are struggling.
Per the PYMNTS study, of the people living paycheck to paycheck — all generations not just millennials — their average savings is less than $4,000. That doesn’t give you much peace of mind if something unexpected, and costly, happens.
When you add all these rising costs together, you get a middle class that is shrinking. In fact, per the Pew Research Center data from 2018, $100,000 per year puts you right in the middle class. Nothing more, nothing less.
- Low Income: Less than $48,500 (29% of the population)
- Middle Income: $48,500 to $145,500 (52% of the population)
- Upper Income: Greater than $145,500 (19% of the population)
When you’re making $50,000, someone making $100,000 is ballin’. If you’re making $100,000, someone making $200,00 is ballin’. When you’re making $200,000… you get the point! And that point is… There is always going to be someone who is making more money than you. There is always going to be someone who has more unnecessary toys than you. But to achieve financial freedom, when you are in the middle class, you need to stop focusing on what you don’t have and start focusing on these habits that will build wealth and free you from the shackles of a paycheck.
- Avoid bad debt (credit cards, car loans, etc)
- Avoid lifestyle inflation
- Follow the 50/30/20 rule for budgeting (at minimum!)
- Take advantage of geographical arbitrage
- Stop trying to keep up with the Joneses
- Have a side hustle
- Create streams of passive income
If you do even half of these things, you will soon have way more than $4,000 in savings and you’ll be much further along than most Americans.