Why So Many Millennials Feel Broke Even With a Six-Figure Salary
Not so long ago, earning six figures pretty much guaranteed financial stability. But for many millennials, crossing that threshold has not necessarily delivered the security they expected. Soaring costs and greater financial pressures mean even high earners often feel financially stretched.
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Experts break down why so many millennials feel broke even earning six figures.
Why a $100K Salary Doesn’t Feel Rich Anymore
Many millennials earn more than their parents ever did yet they feel less financially secure, according to Julian B. Morris, certified financial planner (CFP) and principal at Concierge Wealth Management.
Modern fixed costs are “enormous and growing,” he said. “A household can make $300,000 a year and still feel financially squeezed after taxes, housing, childcare and debt when they live in a major metropolitan area.” While a “six figure income used to signal wealth in many cities, today that’s just the basic entry point to live a moderately comfortable life," he added.
Housing Costs Have Completely Redefined a Comfortable Salary
Housing is one of the biggest reasons millennials feel financially strained despite earning more than previous generations.
Jeffrey Hensel, a broker associate for North Coast Financial, said housing is often “the first number to fail the math.” He noted that today’s inflation-adjusted housing costs can make a $100,000 salary feel much closer to $60,000 “in today’s dollars” after rent or mortgage payments.
Another issue, according to Joseph M. Favorito, a CFP and managing partner at Landmark Wealth Management LLC, is a shift in what is considered "normal" for housing.
“We aren’t just paying more for housing,” he said. “We are buying nearly three times more space per person than the 1950s family.”
Favorito pointed out that the average new home in 1950 was under 1,000 square feet with one bathroom and no air conditioning, while today’s average new home is roughly 2,500 square feet. Millennials may compare themselves financially with prior generations, but many are also maintaining a lifestyle that previous generations never considered normal.
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Lifestyle Inflation Eats Up Higher Incomes
Lifestyle inflation is a big culprit in why six-figure earners still feel cash-strapped as well. It can happen so quickly people barely notice it, Hensel noted.
“Lifestyle inflation is rarely one giant purchase but rather death by 1,000 different upgrades,” Morris said. From one-day shipping to DoorDash, “people are trading their cash flow for convenience.”
Favorito also finds that many things that were regarded as luxuries to past generations “are now viewed as essential.”
Social Media Is Creating a New Kind of Financial Pressure
Millennials face a unique psychological burden: constant exposure to curated luxury lifestyles online.
“Social media normalized luxury spending long before people actually built financial stability,” Morris said. “The emotional pressure to look successful has become a real financial expense.”
Social media can press people to spend heavily on vacations, experiences and parties to keep up with their peers, he added.
The Financial Habits That Actually Help High Earners Feel Secure
The solution to feeling broke is to build structure around money before lifestyle costs take too much.
“Rule number one in financial planning is the first bill you pay is yourself. Save 10% to 15% of your gross income before you start eating out or taking a vacation,” Favorito said.
Six figures may no longer automatically create wealth, but intentional spending, automated savings and resisting lifestyle creep can help millennials regain a sense of financial control.
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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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