High-earning Millennials have a major spending problem.
What are the details?
A new survey conducted by PYMENTS and LendingClub, which analyzed the financial data of roughly 30,000 Americans, found that 60% of Millennials making more than $100,000 a year still said they were living paycheck-to-paycheck, Business Insider reported.
That surprising figure was not far off from the 70% of Millennials in total who reported living paycheck-to-paycheck. Millennials are individuals born between 1981 and 1996.
In the survey, those living paycheck-to-paycheck were defined as consumers who “manage to pay their monthly bills but have little left over.”
According to the report, Millennials were not the only demographic of high earners who still lived paycheck-to-paycheck. In total, 40% of those earning more than $100,000 a year still struggled to make ends meet and have money left over.
But the fact that so many Millennials seem to struggle financially is indicative of a problem with exorbitant spending, not insufficient income, the report argued. Put simply, most Americans have not been saving enough money to avoid a paycheck-to-paycheck lifestyle.
The survey found that “70% of consumers have less than $15,000 in savings, and one-third of all consumers have less than $1,000,” or not a sufficient a cushion to shield against unexpected expenses.
Business Insider suggested that the Millennials highlighted in the survey are likely HENRYs — which stands for “high earner, not rich yet.” This term has come to define the subset of affluent 30-somethings who struggle to balance spending and saving habits.
They often fall victim to lifestyle creep, a phenomenon that occurs when individuals increase their standard of living to match their level of income rather than saving extra money alongside income gains.
The report did note, however, that $100,000 does not go as far as it used to, especially considering the rising cost of living and inflated cost of postsecondary education.
“Consider the example of a 35-year-old with a college degree: This graduate could easily be earning more than $100,000 yet have expenses — such as a mortgage, student loan debt, and a child — that could leave little money for major purchases or unanticipated events,” the report stated.
Furthermore, $100,000 is now considered to be a middle-class income by the Pew Research Center, which defines the U.S. middle class as people earning two-thirds to twice the median household income. According to the most recent data, that covers people making between $48,500 and $145,500 a year.