A majority of millennials – those who fall in the 18 to early 30s age range – will go through some major life events within a relatively short period of time. Not only are these life events usually incredibly expensive, but they also come at a time when salaries and pay are relatively low compared to later in life. Usually the first decade or so out of college is filled with “paying your dues” and trying to figure out what you want to do career-wise for the rest of your life.
Today I want to look at some of these major life events and how they impact the finances of those in their 20s and 30s.
Most young adults choose to go to college after high school. Problem is, the cost of attending college is rising at a meteoric rate. Not only is tuition higher than ever, the costs of housing, text books, food, transportation, entertainment, etc. all have to be factored into the equation. Most finance their college education through student loans. While there is plenty of debate about whether young adults are taking out too many student loans, the reality is that many graduate college with a sizable debt load.
Even if you are able to land a good job after graduation, student loan payments have to be factored into the budgets of many college grads for years after graduation. Let’s not forget the fact that many career tracks also require graduate school, advanced degrees, and expensive professional certifications.
Most people see themselves getting married one day. While people are getting married later in life than they have in the past, many still get married before the age of thirty. Unless you have parents bankrolling your wedding, you likely will need to come up with $10,000+ in financing (not counting the engagement ring, fellas!). While your wedding day certainly will be one of the most memorable of your life, it’s important to factor in all the costs and consider different ideas for keeping costs down.
Most people have children when they are in their 20s and 30s. Not only do children cost a ton of money over the course of their lives, but they also require a lot of time. There are some bloggers out there who work full-time, blog on the side, and have children, I have to believe that my blog work would have to be scaled back if I had children. What would I do without my beloved side hustles? I also am amazed at people who are able to work full-time, pursue an advanced degree, and raise children all at the same time.
I know I’m not hitting on the specific costs involved with having children but I think it’s pretty undeniable that they are an additional expense that need to be factored into your budget.
Buying a House
Buying your first home, whether it’s a single family home, condo, or townhouse, will be one of the biggest purchases you will have made in your life. As you can imagine – or maybe even have experienced yourself – there are a lot of advantages to owning a home. You build equity instead of paying rent, usually get a lot more space than you would renting, and have a place to call your own.
The costs involved in purchasing a home can add up quick, and they don’t stop once you close on your house. Consider the following expenses:
- Down Payment
- Closing Costs
- Unexpected Expenses
The costs add up quick. Combine these expenses with all the other expenses that young adults face and you can see why so many have trouble keeping their personal finances straight.
The Good News
Despite the high costs of being a millennial, there is plenty of good news:
- Time – While it may be hard to come up with money for a retirement fund with so many expenses, millennials have a long investment horizon where compound interest can work in their favor.
- Income will Increase – In your 20s and 30s you are likely making the least you will make in your career; your income will increase over time. While this is not always true, it is for most people. This means if you can balance your budget today, it will only become easier over time.
- Major Expenses are usually Worth It – Your wedding will be one of the most memorable days of your life. Your education will open up doors for you and likely increase your income.
If you are a college grad, gotten married, have kids, and/or bought a house, how did you plan and deal with the costs involved? How are you planning ahead for these costs?
David Carlson writes at Young Adult Money where topics include saving money, making money, real estate, health care, careers and more. You can find him on Twitter @DavidCarlson1 and also follow Young Adult Money on Facebook and Twitter.
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