Millennial spending

A recent blog post on InvestmentZen highlighted what Millennials make and how they can better budget their paychecks. It’s a neat infographic for any young person trying to figure out how to make those paychecks work better for them.

At first glance, the infographic showing 30 percent of income should be going to personal spending, which for someone making $34,000 a year after taxes is $850 a month. Plenty of money to invest in a boat and have money left over, right?

In theory, yes. But there was one big number that was missing: student loan debt. It’s not factored into essentials, and if savings is “paying off debt or adding money,” that’s where it has to go.

I can tell you right now as a Millennial that between all of my student loans, that $566 a month under savings is basically gone if I pay the minimums on my loans for the month. If I want to save for retirement, a nest egg for life emergencies, etc., I would have to take that money from personal.

So let’s say the Millennial in this scenario has my student loan debt and decides to cut personal in half to pay themselves for those additional savings items, because this Millennial happens to be pretty responsible. That means each month, there is $425 for disposable income. It’s honestly a little bleak.

How are we supposed to convince these young people to spend what are precious disposable dollars on boating? In many cases it may be the only thing they can spend their money on each month, and would they use it enough to justify it?

I share this infographic because not only is it a very useful budgeting tool if you know any Millennials who are struggling with getting started, but because it brings in the realities of capturing Millennials. While nearly 35 percent of Millennials work in the top two occupations, which pay significantly more than the $34,000 example, that means roughly 35 percent of Millennials can afford boating, not factoring the possibility that some of the less-popular occupations are high paying. But according to Fortune, the mean income for all Millennials is much closer or less than that $34,000 after taxes figure. 

Hopefully those wages will increase, but if they don’t, we will be working with a very small pool of prospects unless we do better at addressing affordability issues, whether through product or access opportunities. 

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