Millennials have somehow gotten a bad rap in recent years and have become the subject of a lot of think-pieces on how the millennial generation is ‘killing’ certain industries. While millennials have become a convenient punchline, the fact of the matter is that our generation has had to make a lot of changes in our lifestyle because the American dream we were sold has turned out to be a lie—or, at least, become financially unobtainable in the face of our many economic challenges.
Growing up, we probably all imagined living a similar life to that of our parents or their parents before them—you go to college to get an education, and a great job would surely follow. At the same time as you’re starting your 401K at the great job, you’ll be buying your own car, taking out a mortgage on your first home, and starting a family. If you’re really lucky, you’ll even be able to travel and go on family vacations every now and then.
Well, I’m sorry to crush your dreams, millennials, but these things just aren’t going to work out for us like they did for our parents. With technological advancements, economic changes, and the cost of living constantly on the rise, it’s become virtually impossible for this trend of the dream life to continue.
So what happened? What’s the big difference between our parents’ generation and ours?
First, let’s start with the cost of living and achieving the dream financially.
1. The Average Salary
If you grew up like I did, it was probably hammered into your head that you had to go to college and get a degree if you ever wanted to make anything of yourself. While this is great in theory, the ROI after racking up tens of thousands of dollars in debt isn’t paying off for most millennials.
According to a study by executive search firm Korn Ferry, the average starting salary for a college graduate in the U.S. is about $50,000/yr. While this might sound great at first, when you break that down to a monthly salary of $3,200 per month (after taxes, take home revenue) and look at the rises costs of living, this number doesn’t look too great for long.
2. Monthly Expenses
Now that we’ve broken down the average monthly salary, let’s discuss the expenses, on average, per month for each thing a recent college grad is expected to pay for.
– Student Loans: Avg. $280 per month
The average college grad is about $25,000 in student loan debt thanks to that degree that was supposed to give them a dream life. If you want to pay off your loan in 10 years, then you’re looking at a payment of $280 a month.
– Health Insurance: $320 per month
If you don’t a government subsidy to help with health insurance costs, then you’re looking at a monthly payment of $320. This might seem like a lot of money for something you might not even need to use (so long as you stay healthy), but paying for this coverage is better than having to accumulate more debt from medical costs should anything happen to you.
– Rent: Avg. $895 per month
The average amount for rent or mortgage payments—if you’re able to afford a house in the first place—for millennials (aged 25 to 34) is $895 per month, or just over a quarter of the average monthly salary of a college grad.
– Car Payment: $295 per month
If you’re hoping to have a car that will help you get to and from your job, then you’re going to have to pay for it. The average monthly pay for a new or used car is $295.
– Car Insurance: $75 per month
To safely drive that car on the street, you’re going to have to dish out even more money. The average cost for car insurance, per month, is $75.
– Gas: $205 per month
To power that car, you’re going to need to fill it up with something. On average, recent college grads are spending$205 a month to fuel their vehicles.
– Utilities: $240 per month
To keep your living space powered, you’re going to be looking at an average monthly utilities bill of $240 per month.
– Food: $480 per month
Keeping your belly full is another expense you need to factor in. To keep your fridge full of groceries and factoring in the amount spent on eating out, college grads are looking at a food bill of about $480 a month.
– Credit Card Payments: $60 per month
College grads should also factor in credit card payments, which on average equal $60 per month.
– Entertainment: $200 per month (pets, events, going out, etc.)
If you want to keep up with a social life to ward off your impending crippling economic anxiety as a college grad, then you’ll probably be spending about $200 a month for entertainments.
– Miscellaneous: $250 per month
Factoring in things like clothes, personal care products, repairs for vehicles or replacing broken things in the home, alcohol, cigarettes, or other things that go into living life, another $250 should be budgeted toward miscellaneous expenses.
All of these expenses total roughly $3,300 per month, and there are probably a few things we’re even forgetting here.
3. Now What?
Obviously these numbers are not conducive to a successful future, at least not the one that we might have imagined having based on the pattern of the generation before us. It doesn’t leave much wiggle room for big item purchases or any room for saving/retirement in the years following graduation.
Unfortunately, some people might have to open more credit cards to help offset debt or help with a lack of funds. This only leads to more debt and creates a continual loop of financial stress and hardship.
That’s why college grads are increasingly looking to either create multiple income streams, or are branching off on their own to start their own businesses. While running your own business might be intimidating, it allows people more flexibility and a better work/life balance.
If you’re considering starting your own business, visit Cereal Entrepreneur Academy to see if starting a social media or digital marketing agency might be just what you’re looking for.