There was in fact a time where you could survive off of $300 a month. Apparently it was in 1970. This was a comment on an Investing Circle article about budgeting on a teachers salary. It was so shocking for me that I had to check the numbers. Could you really rent a place for $75 a month?!
$75 a month was pretty close to the median monthly rent. If you were careful with your budget you could make it work with $300 a month. This also proves that overall expenses were lower. While this person wasn’t living a cushy life, they were making it. Keep in mind the average salary of a teacher in the 70s was approximately $9,000. Fast forward to 2023 and now the median rent is $2,029 for the US with the average teacher salary sitting at $68,000. The rent equates to 36% of the salary vs the 25% in our commenters example.
A lot of people do, but not for the right reasons. Many in my generation are regularly reminded what worked in the generation prior and that “Back in my day” things were different. So the older generation want to remind the new generation that they rubbed a little dirt on their plan and hard work and everything turned out okay after 50 years of working the same job. Then our generation wants to use this data to show how things are different and how it’s affecting our generations ability to build wealth and grasp our financial freedom.
Well Pop Pop things were different. So different that the ‘blueprint’s’ you used to build wealth need to change. The ways we make money are different. The prices are different. W2 income hasn’t kept pace with inflation. Yet that doesn’t mean your grandpa doesn’t have a point.
Both generations are right… and wrong
1 point for the Boomers – where they’re right: There are in fact blueprints like Real Estate investing that still hold true like this article here. There are ways to get creative with financing and build wealth that have held true for decades. Doesn’t mean they’ll always be there, but there are some things that the older generation did that we can use today. Just with a little twist on it.
Millennials need to recognize that there is a system in place and take the time to understand it. Taxes, Dividends, Real Estate, etc. There are still ways to build wealth that have worked for quite a while and that they have slowly adapted to our current economy. Instead of a ‘I can’t afford it’ attitude we should turn over to ‘how can I afford it?’ Some of that does lend itself to living with parents a little longer, keeping roommates for longer, or cutting expenses. Which is where the Boomers lose touch with reality.
-2 points for the Boomers – where they’re wrong: “Back in my day” doesn’t work any more (to an extent). As seen in the example above expenses have outpaced income and the classic ‘work at a job for 65 years’ won’t get the freedom most desire (or retirement for that matter). To see pay increases, Millennials must move on to a different job after 5 years, Rent has ballooned, and the digital world has made having ‘side hustles’ a real thing. Since most of the older generation is coming up on retirement with pensions and wealth that was built over decades, there is a massive disconnect with what the younger generation has to tackle.
Our generation has to adapt and change to increased expenses, stagnant income, with the same world turmoil (if not a bit worse). While we’re extremely resilient and adapting to the changes through the creator economy, side hustles, and creative finances, we still need the support from our older generation.
Remember folks – We can’t pay $75 in rent a month anymore, but that doesn’t mean what our grandparents and parents say doesn’t have merit. There is a nice in between where both generations can see eye to eye, accept the very apparent differences, and learn from one another.