When is the right time to become financially independent? Many millennials are – perhaps surprisingly – more eager to pay their own way at younger ages than when baby boomers think they should.
In a new survey by Bankrate, millennials and baby boomers were asked what ages were most appropriate to begin paying for housing, buying a car, and paying their cellphone bill. The ages millennials chose were younger than what baby boomers thought was appropriate.
For example, when it came to paying rent, 33% of millennials surveyed thought they should be on their own by age 22. Just 8% thought parents should help with rent between the ages of 26 and 29. The majority of baby boomers surveyed chose age 23 1/2 for when they thought millennials should pay rent without financial help.
Both demographics may be a little too ambitious. According to the US Census Bureau, there are around 24 million young people living at home with their parents. And for those on their own? Around 40% of people between 22 and 24 get financial help from their parents for living expenses.
Want to pay for something more in your price range? Millennials think 18 ½ is the best time to get off the family plan and start paying for your own phone. Baby boomers think 20 is the more appropriate age.
But expect to shell out major cash — a new iPhone 7 will set you back $769 without a contract. An unlimited data plan is typically $50-$90 a month before taxes. So staying on the family plan may be the more economical bet for financially savvy millennials — at $100-$200 a month for up to 4 people, think about sending a check to mom instead of to your phone carrier.
And when it comes to buying a car, millennials think those expenses should be their responsibility starting around age 20. Baby boomers said 22 is the more appropriate age to start paying for a car.
According to Bankrate, the survey showed that while millennials are often stereotyped as entitled, with the expectation of financial help from their parents, at least according to this survey, most millennials strive to be financially independent as early as possible.
But millennials face many challenges in actually making that happen, compared to baby boomers when they were the same age – the most important one being income. According to the Federal Reserve, millennials earn 20% less than baby boomers did at the same stage of life. Today, millennials have a median household income of around $40,500.
Also hindering financial freedom? Student loans: 42% of people between 18 and 29 reported having student loans, and the average millennial owes approximately $30,000.
The dream of financial independence and the reality of their current financial situation continues to be at odds for many millennials.