As a young professional, you may get little empathy when your expected salary is unexpectedly small. You may have heard from that “you need to work your way up” or just “be grateful for what you have” however, your small paycheque may result in older generations feeling the pinch too.
An article in the Globe and Mail confirms that you are probably making less money than predicted – the average annual salary for grads is not keeping up with inflation and in some cases has declined. Salaries for graduates six months out of school “went from $41,699 in 2006 to just $42,636 in 2011”. Even more intimidating, is that two years post-grad, “the average declined from $49,468 in 2006 to $49,398 in 2011”. The numbers don’t lie – it can be tough out there. But you have to start somewhere and generations before us have had to start at the bottom and work up the ladder as well. It’s a fact.
While Millennials’ financial woes may seem like they only impact their bottom line, the reduced spending power of this age group has financial ramifications for everyone. According to the article, home-ownership rates in the 25 to 35 year old age group has fallen to 50 percent from 55, in part due to new mortgage rules, higher home prices and as I mentioned earlier- stagnating salaries of this generation. So you might find renting is the common trend in a few years time. Doesn’t mean you can’t save for your own pad though!
When this generation delays buying a home, the older generations will have a harder time selling – potentially reducing their profit in a less competitive housing market.
Growing up financially in a post-recession world may continue to mean tough times for our peers, our selves and our parents. We can’t control the economy, but we can all work towards better budgeting, saving money where we can and hustling hard to ensure we are financially sound through every stage of our lives. As they say, (financial) knowledge is power.