They believe they should cover their expenses at an earlier age - despite the fact that they still live at home.
It must be financially frustrating to be a millennial.
They want to pay their own bills, but the Census Bureau reports that 1 in 3 still live at home — and almost half of those who do live on their own receive money from their parents for cell phone bills, utilities and groceries from their parents.
The facts don’t seem to change their outlook on financial independence though. They feel they should pay for their cell phones, cars and housing earlier than older generations would agree with, says a study from Bankrate.
Millennials say they can make payments on their phones at age 18, car at 20 ½ and housing at 22 — all before most will graduate college.
It’s great that more millennials say they want to move out and pay their own bills, but it’s unclear if they can actually do it. Forty percent of millennials ages 22-24 are receiving funding from their parents to pay their rent. On average these parents are paying $3,000 a year for their kids to “live on their own.”
On top of that, more millennials who are buying their first homes are relying on the assistance of their parents for the down payment — and their parents are expecting the need to.
“Support from parents is playing a significant role in the housing recovery,” says Dave Norris, president and chief operations officer at loanDepot. “Without that financial support, it’s likely the pool of millennial first-time home buyers would be even smaller than today.”
Talk is cheap
That many young people wanting to support themselves at a younger age sounds positive, but it’s hard to consider the goal practical in the world today. Nowadays millennials can expect to make $10,000 a year less than baby boomers did back in 1989, and they didn’t need to go to college for a decent job.
The job market is a lot smaller, and so are the wages, if you don’t have a college degree. Many millennials find themselves stuck with mountains of student loan debt, and they’re still likely to find low-wage jobs that can’t surmount the heap of debt after graduation.
The average college graduate leaves school with $37,000 in student debt. Then, when they graduate, they can expect to make $26,575 a year at their first job. Many have no choice but to move back home with their parents.
“Today’s college graduates are clearly under financial strain due to escalating tuition fees and stagnant wages,” says JJ Kinahan, chief strategist at TD Ameritrade. “Moving back in with mom and dad is a short-term sacrifice that could pay off in the long-run.”
Costs of living aren’t easing up
Housing affordability remains a concern for millennial homebuyers, 35 and younger, although in some cases it’s becoming cheaper than renting. It’s still far from the norm: The average price of a new home in the United States in 2017 is $361,800. The average cost to rent an apartment in the U.S. in 2015 was $1,021 a month.
To own a new car in the U.S. was about $33,000 in 2016. The average monthly payments equaled about $482 in 2014. Like marriage, children and homeownership, most millennials have put off purchasing vehicles right away, too.
Then there’s the average cost we pay for a smartphone here in the U.S., $1,260 a year — adding up to about $105 for our monthly phone bills, says Techhive.
Millennials may feel excited about cutting the cord to their parents’ bank accounts, but they may second-guess their decision once they start paying all these bills.
Article last modified on July 3, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Plot Twist: Millennials Want to Pay Their Own Bills - AMP.