Your mom and dad may advise you exactly how to budget but be careful. The world is very different today than it was when they were saving as a young adult. While the game remains the same the rules have changed dramatically since their time. The reality is that budgeting as a millennial is a very different proposition. Let’s discuss why and what you can do about it.
Today Millennials are earning less money (accounting for inflation) than Generation X were earing as young adults. This makes it difficult to follow the same saving guidelines that they followed. The reality is that while nominally Millenials may be earning a similar amount, they can afford a lot less. The prices of houses and other assets have increased exponentially. This has led to a crisis in many cities around the world and means that many Millenials can’t own a home until much later in life while Generation x often bought their first house when they were in their first job. Today that is impossible.
Today Millennials have more debt than Generation x. The reason for this is student loans. A university education costs more today than ever before. Most young adults today realize that they will carry their student debt for many years as they climb the corporate ladder. This is very different from Generation x when they either had no student debt or paid it off much faster. University educations are also worth far less. While in the time of Generation X a master’s degree made you stand out from the crowd and walk into a well-paid job, today you will likely start in an entry-level position no matter what degree you have. The education system has saturated the graduate market.
So what can you do about it? Well, the principles remain the same you need to save money where you can and pay off your debt as fast as possible. You may need to have realistic expectations though as buying your own house is probably not on the realistic list for a few more years. You could look at buying an apartment as your first step on the property ladder or look at buying a house as a group. Of course in both cases make sure you know who you are investing with and that the property is located in a place that it is certain to increase in value, otherwise it will trap you. Work on your student debt faster than the automatic payments. Once you are rid of it everything becomes much easier. Whatever you don’t stress. While some things are tougher for the Millenial generation, we also live in the most mobile open economy ever. You really are free to choose what to do with your life and how to live it.