Why 70% Of Millennials Are Financially SCREWED
Published: 2021-07-30
Status:
Available
|
Analyzed
Published: 2021-07-30
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
A significant majority of Millennials were living paycheck to paycheck in 2021, indicating financial management issues regardless of income level.
"70% of Millennials are now living paycheck to paycheck in 2021."
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Even high-earning Millennials (above $100k) were experiencing financial strain, living paycheck to paycheck, suggesting issues beyond just income level.
"60% of Millennials earning above $100,000 a year were also living paycheck to paycheck."
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Compared to previous generations, Millennials were falling behind on key financial milestones, including wealth accumulation, debt levels, homeownership, and investment.
"Millennials are significantly further behind in almost every single Financial Milestone owning less wealth taking on more debt earning a smaller amount delaying home ownership and refusing to invest."
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A majority of Millennials anticipated working beyond the traditional retirement age, likely due to financial challenges.
"61% of Millennials now expect to work through retirement."
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Millennials held a disproportionately small share (5%) of total US wealth.
"Millennials own just 5% of all us wealth."
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The perceived income required to maintain a middle-class lifestyle in a major city with a family of four was estimated at $350,000 annually.
"you now need to make $350,000 a year to live a middleclass lifestyle in a big city with a family of four."
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Even with an income of $350,000, the described budget did not allow for sufficient retirement savings.
"with $350,000 they cannot save enough money for retirement."
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The family with a $350,000 income had the capacity to save and invest $100,000 annually without reducing current spending.
"this family is still able to save and invest $100,000 a year without cutting back at all."
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A significant portion ($20,000) of the $350,000 income was spent on discretionary and non-essential activities, which could be cut.
"another $20,000 spent on recreational and non-essential activities that you could easily remove entirely if needed."
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With proper budgeting and discipline, the $350,000 income family could save an additional $10,000 or more monthly.
"this family could be saving $10,000 a month or more on top of everything else with a proper budget plan and discipline."
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A substantial percentage of Millennials in a high earning bracket ($75k-$149k) reported living paycheck to paycheck.
"44% of Millennials earning between $75,000 and $149,000 a year said that they were living paycheck to paycheck."
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The term 'HENRY' (High Earner Not Rich Yet) describes professionals who earn well but increase their lifestyle expenses, leaving no disposable income.
"it's called Henry which stands for high earner not rich yet this encompasses young professionals who quickly start earning a lot of money but simultaneously increase their lifestyle to the point where all of a sudden they don't have any more money left."
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Millennials had a higher average daily spending ($27) compared to the general American population.
"Millennials spend an average of $27 a day which is about $44 more than the average American."
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Millennials allocated the largest portion of their budget to eating out compared to other generations, averaging $300 per month.
"eating out was an extra $300 a month which was found to be the highest food budget among all generations."
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A vast majority of Millennials prioritized dining out at nice restaurants, even when finances were tight.
"87% of Millennials say they're willing to splurge on a nice meal out even if money is in short supply."
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A large percentage of Millennials acknowledged purchasing clothing they did not require.
"70% of Millennials admitted to spending money on clothes they don't necessarily need."
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A majority of Millennials spent over $4 daily on coffee.
"60% of Millennials say they spend more than $4 on coffee."
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Millennials' average monthly expenditure on non-essential items was $838.
"Millennials spend an average of $838 a month on non-essentials."
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Nearly half of Millennials reported that their non-essential spending led to accumulating debt.
"49% of millennial respondents said that their non-essential purchases contributed to the dword and that would be debt."
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The ideal housing expense should be no more than 30% of income, with a preference for aiming closer to 20%.
"generally the rule of thumb is that your housing payment should not exceed 30% of your income ideally I would even go so far as to say that if you could get that number closer down to 20%."
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A significant portion of Millennials (43%) were not investing any money at all.
"43% of Millennials are straight up just not investing anything."
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Approximately half of Millennials were delaying investments until they earned more, which was identified as a major issue.
"almost 50% of them are waiting to earn more money to invest which is a huge problem and not acceptable."
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The largest expense category for Millennials, after housing, was discretionary spending, encompassing dining, entertainment, clothing, and coffee.
"the biggest expense Beyond housing is discretionary this includes eating out entertainment clothes and uh coffee."
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Younger Millennials (25-34) were spending over $2,000 annually on coffee shop purchases.
"the average 25 to 34-year-old admitted to spending more than $2,000 a year at coffee shops."
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A significant minority of Millennials were prioritizing coffee spending over their retirement savings.
"40% admitted to spending more money on coffee than they do on their retirement."
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The recommendation was to reduce discretionary spending enough to maximize a Roth IRA contribution of $6,600 annually.
"do enough to cut back in your discretionary spending to max out your Roth IRA at $6,600 a year."
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Investing the maximum Roth IRA amount annually from age 25 with a 7% return could result in nearly $1.4 million tax-free by age 65.
"by the time you're 65 you're going to have nearly $1.4 million completely taxfree."
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Employees who changed jobs every 2-3 years earned approximately 50% more than those who remained with a single employer.
"people who switch their jobs every 2 to 3 years make nearly 50% more than someone who stays at the same company."
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A single job change could result in an average salary increase of 15%.
"if you switch jobs just once you could see yourself with an average of a 15% pay raise."
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Wages for the top 1% of earners increased by 138% since 1979.
"wages for this group went up 138% since 1979."
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In contrast, the bottom 90% of earners experienced only a 15% wage increase over the same period.
"for some context the bottom 90% of earners only saw 15% increase."
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Between 2007 and 2017, the income of the top 20% of earners grew significantly more (1,300%) than that of the lowest income tier.
"the income for the top 20% of earners Rose 1,300% more than the lowest income tier between 2007 in 2017."
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Technology, Healthcare, and Finance were identified as industries offering high-paying job opportunities.
"these industries include technology Healthcare and finance."
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Pursuing careers in high-demand and hard-to-replace fields is advised for increased earning potential.
"picking something that's in demand and difficult to replace should help you make more money overall."
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A combination of low wages, rising expenses, and poor spending habits contributed to Millennials having little money left over.
"low wages increasing expenses and poor spending habits all cumul into the perfect storm of little leftover money."
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Lifestyle inflation and social comparison were identified as primary reasons why 60% of high-earning Millennials (above $100k) lived paycheck to paycheck.
"lifestyle inflation and keeping up with the Joneses seems to be one of the main culprits behind why 60% Millennials earning above $100,000 are also living paycheck to paycheck."
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To accumulate $1.5 million for retirement by age 65, investing $333 per month starting at age 18 would be sufficient.
"if you need $1.5 million to lay on a beach all day after the age of 65 you could do that by investing $333 a month starting at the age of 18."
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Starting retirement investments at age 25 would require $550 monthly to reach the same $1.5 million goal.
"if you start at the age of 25 you'll need to invest $550 a month to wind up with that exact same amount."
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Starting retirement investments at age 30 would require $791 monthly to reach the same $1.5 million goal.
"if you start at the age of 30 you'll need $791 a month."
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Delaying retirement investments until age 35 would necessitate investing $1,158 monthly to reach the same $1.5 million goal.
"if you wait until the age of 35 you will need $1,158 a month."
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