A few weeks ago, I was sitting around a dinner table with some fellow 20-somethings and their parents. We chatted about the holidays, my recent engagement, and lots of football.
The conversation eventually turned to wedding planning. I was peppered with questions:
- When are you getting married?
- Where will you do it?
- How many people will you invite?
- How formal will it be?
All fair questions on their own.
All tiny bits of data helping calculate in their heads the answer to the question that no one dared to ask…
How much is it going to cost?
The 20-somethings began commiserating about the stress of wedding planning dancing around the real issue – the stress we feel about paying for them.
Finally, after about 20 mins of millennial-boomer back and forth, Jen exclaimed, “you don’t get it – we just can’t afford to pay for the normal things that your generation could.”
I was just about to back her up and yell, “yeah, we’re just so f*cked.” But I stopped myself.
Although, I agree with Jen’s feeling, I started wondering why so many of us think this way – and how our mindset was making us even more anxious.
Maybe the reason we feel so screwed is because we keep telling ourselves we are. Now, I’m not saying I don’t think things are hard for this generation. My wedding stress is causing me to bite my nails till the point of bleeding and home ownership feels like climbing a mountain. However, I know there is power in believing that your dreams are possible.
What you tell yourself often becomes true, so I want to start telling myself “I can” not “I’m f*cked.”
WTF are you talking about?
We all have the power to achieve our financial goals.
That being said, many genzers and millennials face high hurdles trying to live the lifestyle of their parents’ generation thanks to credit card debt, student loans, inflation, and more. While a positive mindset isn’t going to magically pay down debt or lower the cost of living, telling ourselves we’re screwed is definitely not going to fix the problem.
So, let’s see if we’re really as screwed as we say, shall we?
FACT: Homes are more expensive – According to data from the National Association of Realtors, the median home price in the United States in the1970s (when many baby boomers were in their 20s) was around $23,600. Adjusted for inflation, this would be equivalent to around $148,000 in today’s dollars. In contrast, according to the Census Bureau, the median sales price of new houses sold in the United States in 2020 was $346,800. In other words, our parents paid less than half.
FACT/FICTION: School is more expensive – In the 1970s (when many Baby Boomers were in college), the average cost of tuition and fees at a public four-year college was around $1,836 per year. This would be equivalent to around $11,745 in today’s dollars. For the 2021-2022 academic year, the average cost of tuition and fees at a public four-year college was $10,560 for in-state students and $26,820 for out-of-state students. Meaning, the cost of tuition and fees at a public four-year college is actually lower today (in-state), when adjusted for inflation.
However, the overall cost of college, which includes other expenses such as room and board, books and supplies, and transportation are more expensive for students today and many are attending out-of-state or private universities.
FACT: We have more student loan debt – According to data from the Federal Reserve, the total amount of student loan debt in the United States has more than tripled over the past two decades, reaching a record high of $1.64 trillion in 2020.
This trend is largely driven by the fact that the average college tuition costs have been increasing at a faster rate than inflation (remember, in-state is actually lower though so these loans are largely driven by private and out-of-state universities), making it harder for students to afford the cost of their education without borrowing. As a result, many millennials have taken on significant amounts of student loan debt in order to finance their education.
FICTION: Weddings are more expensive – No one is going to want to hear this but I need to share the facts. The average cost of a wedding in the United States for millennials (born 1981-1996) is around $33,000, while the average cost of a wedding for baby boomers (born 1946-1964) was around $16,000. Adjusting for inflation, $16,000 in the 1970s would be equivalent to around $115,000 in today’s dollars. So next time your parents tell you the DJ is too expensive, tell them their generation spent a downpayment on their wedding and the DJ cost is FINE.
FACT: Millennials are paid less – In general, wages in the United States have not kept pace with inflation over the past several decades. The real (inflation-adjusted) value of the minimum wage peaked in 1968 and has declined significantly since then. According to data from the U.S. Bureau of Labor Statistics (BLS), the real value of the federal minimum wage was 26% lower in 2021 than it was in 1979. This means that, in general, workers today may be earning less in inflation-adjusted terms than workers in previous generations. It’s important to note, however, that these trends do not hold true for all workers or in all industries. Some workers, especially those with higher levels of education and training, may be earning more in inflation-adjusted terms than their counterparts in previous generations
FACT: Wage Gaps are Real. According to data from the U.S. Census Bureau, the median earnings of full-time, year-round female workers in the United States were 82.5% of those of male workers in 2020. There are also significant wage gaps based on race and ethnicity.According to data from the U.S. Census Bureau, in 2020, the median earnings of full-time, year-round workers in the United States were as follows:
- Asian men: $92,600
- White men: $80,500
- Hispanic men: $57,000
- Black men: $66,700
- Asian women: $78,000
- White women: $70,700
- Hispanic women: $50,000
- Black women: $62,800
WTF, Is this supposed to make me feel better?
Well, no, but keep reading.
FACT: Access to real estate is possible – We have access to more unique real estate investment opportunities than our parents’ generation. A few years ago when some of my friends started buying properties in Utah, I felt like an idiot. All of them were owning homes when I wasn’t even beginning to dream about it (the average down payment in Utah is about a quarter of what it is in California to be fair). However, a friend told me about Fundrise. Although I didn’t have enough to put on a down payment, I had the ability to get broader exposure to real estate without the big commitment.
There are also so many more companies popping up that are rethinking the home ownership process like Roots – a rent to buy platform. There’s also a credit card company called Bilt that you can use to pay your rent with and STACK points. So you no longer have to keep saying “paying my rent is like lighting cash on fire.” I say it too, no judgment.
Remember, telling yourself you’re f*cked isn’t going to change reality. Sometimes, we just need to be a bit more creative, and boy do we have creative opportunities.
FACT: We might have more student loan debt, but we also have options. If you have a good credit score and a steady income, you may be able to refinance your student loans at a lower interest rate. When I had about over 10 separate loans, I ultimately refinanced and bundled my loans with First Republic bank. Although this prevented me from obtaining student loan forgiveness, I did the math on the bundled loan interest rate versus the old process. I had saved much more in interest rebundling than I could have gotten with the student loan forgiveness plan ($20,000 in value).
FACT: Wedding cost transparency is better than ever. I recently started using Zola and it changed my life when thinking about wedding planning and budgeting. I put my wedding budget in and they told me, by category, how much I should consider spending on each. They also let me price compare vendors to give me more negotiating power. For instance, I’ve been talking to photographers and many of their rates are published, so I would go back and tell them, “hey can you meet me at this rate?” and oftentimes they would. You can’t get what you don’t ask for.
I even did this with wedding blocks. When I received the initial rate for our wedding block, I cross checked the hotel rates on the venue’s website. I had been quoted at a higher price. I also looked at other hotels in the area and sent that to the venue. They met me on every cost I asked for because I had the information to support my argument.
Let access to information be your friend, not foe.
FACT: Salary transparency is getting better. While we may be getting paid less, we have an opportunity to ask for more. I will say, I know this is a privilege and want to treat this matter carefully, but the purpose of this article is to inspire and help even just one person get paid more and if there is any small thing I can do, it’s to encourage you to ask for more and know your worth. For me, the best way to feel empowered to ask for more is to know how much others are getting paid. You might even be legally required to know. For instance, in the state of California, employers with 15 or more workers will be required to list salary ranges on job postings on a company’s hiring page or third-party website like Glassdoor, LinkedIn or other job board.
FACT: Wage Gaps are improving. According to data from the U.S. Census Bureau, the median earnings of full-time, year-round female workers as a percentage of those of male workers was 60.2% in 1970. Today, that number is 82.5%. While there is still significant progress to be made, knowing progress can and has happened helps us realize that more is possible.
**I wasn’t able to find sound data on the racial wealth gap progress as the 1970s data was varying. However, I want to acknowledge that this remains a significant issue and I do not want to undermine that. The data I noted earlier speaks for itself.
Things To Be Mindful Of:
Manifestation isn’t enough – Antoine de Saint-Exupéry once said, “A goal without a plan is just a wish.” The same is true for finance. You can’t just say to yourself every morning, “I’m gonna own a home” and expect for it to come true. You need to actually take the steps to make it a reality. I’ll give you another analogy – people say, “it’s so hard to become famous – it’ll never happen to me.” I used to believe that until I met a friend who became famous. She said, the only reason I am here is because I told myself from the beginning I am going to make it. And I worked everyday harder than the last to make it come true. Now, I’m also not saying people that work hard don’t fail, but I am saying I think the person that believes in themself is way more likely than the one that doesn’t.
Planning is key – This might sound like it’s coming from your parents but I think it’s true. If you don’t plan, you won’t make the magic happen. Telling yourself you won’t own a home is easier than telling yourself you can. But telling yourself you can and believing it , gets you one step closer to asking the scarier question ‘how?’ This is often the hardest question because it means we’re going to try – it means we might fail and it might be our fault if we do. In other words, avoidance is more comfortable often than confrontation. But you can’t grow from a place of comfort.
Example: Let’s say you need $69,360 (20% of the median home $346,800). You might just need to break that up into $1,025.92 saved every month for 5 years. If you have a partner, that is $512.96/month each.
Have a goal you want to plan for play around with the calculator here and watch as the impossible becomes possible.
Play the game; don’t let it play you – When I had a ton of student loan debt, I thought “I am very going to get out of it.” I cried about it constantly and felt like the entire system was against me. News article after article bombarded me with “you’re in trouble” “you’re irresponsible,” and “debt is your fault.” I figured what’s the point of even trying.
Then, I joined Goldman Sachs – I became an industry insider. It wasn’t just possible for me to get out of debt, it was expected, inevitable even. I finally started seeing myself as a player in the game, rather than a spectator. I started investing to beat my student loan interest rate and stopped expecting to be in debt forever.
FACT: The system was designed to make us feel bad. To encourage us to take out more student loans and set us up to miss our payments, to overdraft, to incur credit card debt.
So yeah – it’s absolutely f*cking f*cked, but we don’t have to be. If we learn to play the game, we will win and our world can be better.