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7 ways life is more expensive today for American millennials than previous generations
7 ways life is more expensive today for American millennials than previous generations
Hillary HoffowerMay 21, 2018, 17:07 IST
Mikhail Goldenkov/Strelka Institute/Flickr
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Millennials shoulder a different and bigger financial burden than Gen X and baby boomers.
While incomes have increased for millennials, many significant economic expenses, such as the cost of buying a home and college tuition, have increased at a faster rate.
The financial struggle millennials face is making them more financially savvy.
It can be easy to gripe about millennials, but the truth is that in some ways millennials face a harder life than their parents did - largely because they're confronted with different financial struggles and increasing expenses.
While millennials have benefited from a 67% rise in wages since 1970, this increase hasn't kept up with inflating living costs - rent, home prices, and college tuition have all increased faster than incomes in the US, reveals research conducted by Student Loan Hero.
However, not all costs have soared.
While the cost of some consumer goods has risen, it's mostly remained stable and has even plummeted for some goods, such as computers, televisions, and other electronics.
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Surprisingly, gas is also cheaper. One gallon of regular unleaded gas was 60 cents in 1976; adjusted for inflation, it was $2.65 a gallon, reports Student Loan Hero. In 2016, it was just $1.96 a gallon.
And, fun fact: a pint of beer in 1976 was $1.12, or $4.94 in today's dollars. Today, it's only $3.99.
While it's nice to save on these everyday purchases, The Atlantic points out that it's the most important parts of the economy that are getting more expensive. Consequently, it creates an even bigger financial burden for millennials to shoulder.
But it may be making millennials more financially savvy.
"Facing a stark set of financial circumstances, millennials started adulthood with less room for financial mistakes than previous generations," writes Student Loan Hero's Shannon Insler. "In response, they are managing their money differently. More millennials are refinancing student loans, delaying a home purchase, and looking for creative ways to earn more money through side hustles."
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Here are the most significant ways life is more expensive for millennials.
Millennials are saving more money for a longer time to become homeowners.
Millennials are waiting longer to buy homes than previous generations, but that's because they have to spend more time saving money.
Millennials buying their first homes today will pay 39% more than baby boomers who bought their first home in the 1980s, according to Student Loan Hero.
The value of homes has increased 73% since the 1960s, when adjusted for inflation. The median price of a home then was $11,900, which is equivalent to $98,681 in today's dollars. In 2000, the median price of a home rose to $119,600, more than $170,000 in today's dollars.
And those numbers only continue to climb. As of April 2018, the median home value in the US was $210,200, reports CNBC.
Millennials face soaring rents.
But saving up for a home can be hard to do when millennials are shelling out money for climbing rents in the meantime.
Rent increased 46% from the 1960s to 2000 when adjusted for inflation. In 1960, the median gross rent was $71 — that's $588 in today's dollars. In 2000, that number rose to $602, or $866 in today's dollars.
Millennials have to pay more for a four-year college degree — and are left with higher student loan debt.
Millennials have to pay to get paid down the road. Unfortunately, college tuition was more affordable for older generations, reveals Student Loan Hero.
Between the late 1980s and the 2017-2018 school year, the cost of an undergraduate degree rose 213% at public schools — and that's adjusting for inflation.
Back then, average annual tuition for public college cost just $1,490, or $3,190 in today's dollars, compared to today's price tag of $9,970.
Private college tuitions fared a little better, with a cost increase in the same time period of 129% when adjusted for inflation. In the late 1980s, it cost $7,050, or $15,160 in today's dollars, for a private undergraduate degree. Today, the average cost is $34,740.
Millennials spend more money on entertainment.
If millennials want to experience some of America's favorite pastimes, it comes at a cost.
In 1976, it cost just $5.50 for a top box seat to watch the Yankees play. That's only $24.27 in today's dollars. The same seat at a Yankee game in 2016 set fans back $245.
In 1970, the average price of a ticket to the Super Bowl was $91.52, adjusted for inflation. As of 2014, it was $1,250.
Concert tickets are also becoming a luxury form of entertainment. In 1969, a ticket to a Rolling Stones concert cost about $8. In 2003, it cost up to $350. Ten years later the average price was $624.
However, not all is lost on the entertainment front. While movie tickets seem overpriced these days, they're actually not. In 1976, the price of a ticket was $2.13, or $9.40 in today's dollars. As of 2016, the average price was just $8.65.
Millennial parents pay more for child care than their parents did.
Kids have always been expensive, but it costs more than ever to raise a child in the US.
Adjusting for inflation, the average weekly child care costs increased from $84 in 1985 to $143 in 2011, according to the U.S. Census Bureau.
The cost of child care and nursery school increased on average by 2.9% annually between the end of the recession in 2008 and 2016, surpassing the inflation rate of 1.6% during that seven-year period, reports the Wall Street Journal.
On top of that, Jonnelle Marte of The Washington Post reported that childcare and pre-college education makes up 18% of the total cost of raising a kid, compared to 2% in 1960.
Millennials have to shell out more money for a set of wheels.
While some cars have remained in the same price range compared to 30 years ago, many have not.
A Porsche 911 in 1965 was $6,370, or $46,795 adjusted for inflation. In 2012, it cost $82,100.
Even some mass market cars have gone up in price. In 1950, a Volkswagen Beetle was $1,280, or $12,290 adjusted for inflation. As of 2012, the price was $19,795.
The upside is that these higher prices often come with higher quality and more extras than cars in the past.
The downside is that they also come with higher associated expenses. Costs for motor vehicle insurance have increased by 50% and costs for motor vehicle maintenance and repair have increased by 27% in the same decade.
Millennials are looking at pricier health insurance premiums.
Millennials are lucky they can stay on their parents' insurance until they're 26. But when they hit that age, they're faced with higher health insurance costs than their parents were at the same age — even if their employer is footing the bill.
The average worker shells out $5,714 for a family health-insurance plan, 30% of the total $18,764 cost. Just five years ago, they were paying $4,316 of the $15,745 cost, or 27%, reports Bloomberg.
To put that into even more perspective, the average annual health insurance cost per person in 1960 was $146, reports CNBC. In 2016, it hit $10,345 — nine times higher now, when adjusted for inflation. Costs are expected to increase to $14,944 in 2023.
