3 Signs Millennials Making $75K Are Richer Than You Think
For millennials, making money can be tough. They are the generation that straddles the line of pre- and post-internet boom, surviving the dot com meltdown, the Great Recession and the economic fallout of the COVID-19 pandemic.
As a millennial, it can feel like the road to building wealth doesn’t exist for you and your cohort. However, if you are making $75,000 annually with retirement still decades away, you might be richer than you think.
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Keep reading to learn the evidence of how.
Real Estate
You might be a millennial who feels broke, but do you own your home? Then you might be accruing wealth within that asset alone. Cameron Walker, a manager of the agent network at Clever Real Estate, said that a Census Bureau showed that there was an increase of $40,000 in median net worth of U.S. households in 2022 compared to 2019, and home equity was the biggest factor.
“In the three years from 2019 to 2021, the median net worth of U.S. homeowners increased by $47,900 due to equity in their homes,” said Walker. “Many of the homebuyers in the starter homes that our agents sold in that boom are now homeowners with equity in their homes of over $100,000, yet many of them still say that they are broke. The twist and the real story [are] that many people earned a raise equivalent to a down payment without one.”
Retirement
While the majority of millennials are still part of the workforce and deep into their careers, having a retirement plan and savings shows they are creating a rich lifestyle for their future golden years. According to James Shaffer of Insurance Panda, they're creating wealth through "silent" building mechanisms, such as automatically sending a percentage of each paycheck into their 401(k).
"Someone in their 30s working to make $75,000 per year by contributing 5%-10% of their income into a workplace retirement plan, and aggressively paying off their mortgage principal, are accumulating tens of thousands of dollars in hidden equity each and every year,” Shaffer said.
Spending Habits
The cost of living is something that everyone, no matter what generation they are, must contend with. However, if millennials are feeling broke, it might not be that they are underearning, but rather overspending. Achim von Bodman, a senior tax manager for Watter CPA, urged millennials to pay attention to how much money is coming in and how much money is going out every month.
“Your balance sheet tells you how you are doing over the term,” Bodman said. “Someone who makes $75,000 per year can have a time making ends meet but still be in good shape financially in the long run.”
Bodman said that feeling broke is not a sign of failure.
“It is like getting a receipt for something you bought that you cannot use yet,” he said. “The feeling of being broke is because you are using your money to build wealth that you cannot spend now.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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