How much money do millennials really make?

Your income provides a way for you to pay for housing and food, save for retirement and meet other life goals. Some people are fortunate enough to be able to cover all their needs and wants with just one primary income source. Others, however, have to stretch each paycheck to cover their basic expenses. And according to a report conducted by the TIAA Institute, millennials are the generation most likely to face financial strain in areas such as paying down debt and saving money.

Millennials — classified by the Pew Research Center as people born between 1981 and 1996 — have gotten a ton of attention as a generation struggling to balance their lifestyle costs with their financial goals. And a large part of that imbalance could stem from not earning enough money to float their costs.

According to data from the U.S. Census Bureau, the median millennial household pretax income was $71,566 in 2020. However, a Sunmark Credit Union study on the spending habits of different generations found that millennials spend an average of $208.77 per day. This includes the average daily costs of groceries, housing, utilities, insurance, entertainment, eating out and more. That number works out to be $1,461.39 spent each week and $5,845.56 per month. But at the end of the year, the average person will have spent $70,146.72 — just under the median millennial income.

Spending almost as much as they earn each year means that there's less room to save for emergencies or invest for retirement. But with the average cost of rent — millennials' largest expense — weighing in at $1,584 for a studio and $1,636 for a one-bedroom in the U.S., many millennials find that their wages just aren't enough to allow them to keep up with the costs of day-to-day life.

The 2008 recession took a huge financial toll on millennials. A lack of jobs meant that fewer millennials were able to earn income or advance their careers, which set them back financially. In fact, a report from a non-profit group called the Young Invincibles found that the 2008 economic downturn cost younger workers an estimated $22,000 in lost earnings per person.

Even after out-of-work millennials finally landed jobs in the years following the recession, their salaries had decreased. The Hamilton Project, an economic analysis from the Brookings Institute, found that prior to economy-related job loss, millennials earned around $3,640 per month, which works out to be $43,700 annually. But two years after the recession hit, those who landed jobs earned an average monthly income of only $1,910 ($23,000 per year). Millennials have had to work their way back up from this staggering difference in earnings.

And while the 2020 COVID-19 pandemic had an effect that played out across all age groups, it seemed as if millennials took yet another hit, as they are the largest generation currently in the workforce. According to the Pew Research Center, 30% of Americans between the ages of 30 and 49 say that they, or someone in their household, lost a job due to the pandemic. However, it may still be too early to see the pandemic's full impact on millennial earning potential.

While the issue of low wages may not be solved overnight, there are some ways millennials can go about retaining more of their money and adding new income streams. Side hustles have risen in popularity as a way for workers to supplement their income, save more and even have some extra spending money. And while the extra cash can go a long way, millennials may also consider cutting some "silent costs" that are eating up their money, like interest charges and recurring monthly expenses they may have forgotten about.

The Mint app can analyze your income and expenses and help you build a budget based on your spending patterns. This can help you uncover unnecessary or unwanted expenses so you can save some extra money.

And although credit cards can be a useful financial tool when it comes to building credit and reaping rewards points and cash back, you're getting hit with interest when you don't pay your balance in full.

If you already have a balance that seems difficult to pay off, you might consider using a balance transfer card with a 0% intro APR period. Consider the cards below:

If you have your credit card payments under control, you can also use your card to earn extra money back when making purchases. You might consider a credit card with a big welcome bonus — like the Citi Premier® Card. Welcome bonuses allow you to earn a large amount of points for opening a card and spending a certain amount of money in a specified time frame.

With the Citi Premier Card, you can earn 60,000 bonus points after spending $4,000 in purchases with your card within the first three months of account opening (redeemable for $600 in gift cards when redeemed at thankyou.com). Plus, for a limited time, earn a total of 10 ThankYou® Points per $1 spent on hotel, car rentals, and attractions (excluding air travel) booked on the Citi Travel℠ portal through June 30, 2024.

Cardholders can also choose from a large selection of gift cards, including department and home stores as well as restaurants. You can use the card to pay for your regular expenses — and you should be able to pay it off right away since you'd spend on costs you'd need to pay for anyway — and then you'll use your points on things you want to buy.

Lastly, you can invest your money and have it grow on its own over time. When you keep all of your cash in a regular savings account, your money loses value over time because of inflation, which means it'll afford you less and less as the years go by. Investing, however, gives your money the opportunity to grow even if you don't make any additional contributions (though, the more you contribute the more it'll grow). If you're new to investing, you might consider robo-advisors like Wealthfront and Betterment, which can invest your money into portfolios that best suit your goals.

Millennials have already lost a lot of ground when it comes to their earnings thanks to the 2008 recession and now the Covid-19 pandemic. But by taking some small steps, like using credit cards that let them save on interest, investing and supplementing their income through side hustles, millennials can start to strike a better balance between what they need and what they can afford.