8/20/25

Why My Generation Still Lives At Home

As you’ve probably realized, since I work in the financial industry, in addition to typing stuff into my computer all the time on this blog, I think about money and numbers all the time.

And lately, I’ve been thinking about how much money I make. I’ve come to the realization that B)I’m not making enough, fast enough, and B)I don’t make anywhere near as much as I think I do.

What do I mean? Don’t I have a set salary?

Well, yes, of course I do. But salary isn’t an indication of how much money I make… in fact, for most people, it’s usually an indicate of how much money they spend.

That’s because Americans are shoddy savers overall. They keep an abysmally low sum of the money they make each month. Everything they make is going to the mortgage, the car payment, the student loan, the restaurants they eat out in, the kids’ private schools, the bathroom upgrades, the furniture in their house, their gym membership, or any number of other things, not to mention food and other necessities of life.

I prefer to look at salary a little differently.

If we define “salary” as the amount of money we are keeping each month after all expenses, instead of the amount we bring in each month, we get a truer picture. In other words, any money which goes toward something productive, which will earn us interest or a return over time, we should count as salary, and nothing else. Once we have this nailed down, we can better define our actual salary, even down to an hourly rate.

And if you have a good idea of where your money is going, as well as a system set up where you always pay yourself first, it’s pretty easy to figure this one out.

Take an account of all money you keep. This includes the following:

Money going towards principal on your home mortgage
Money you contribute to a 401K
Money your employer matches in your 401K
Any extra amount you put into savings or investments when you “pay yourself first"
Any amounts left after you have paid bills, bought necessities of life, etc

Let’s make this interesting with a case study.

I’ll pretend I’m the average American who makes around $52,000 per year. This makes my hourly pay roughly $25 per hour.

My bi-weekly income is an even $2000. I contribute 5% pre-tax to my employer’s 401K, and the company matches another 5%. My mortgage is $750, but only $250 of that is going to principal. I save an additional 10% of my gross income to put into savings and investments. I have $200 left at the end of the month. This amounts to:

$5200 per year for the 401K contributions
$5200 per year on the personal savings
$3000 on the mortgage
$2400 in extra money at the end of the month

It looks like I’m saving $15,800 per year towards something productive. How’s my pay rate look now?

Well, the average person works 2060 hours in a year (160 per month, 40 per week), so I guess I’m actually only making about……

$7.66 an hour??????

That freaking sucks! I was making better money as a 16-year-old living at home with my parents, scooping ice cream for a living in my free time, where I got to keep roughly 82% of my take-home pay!

Why is that?

Because having a college degree simply enabled your spending level to go through the roof, while your savings level is probably lower than ever, because our society is not focused on saving, but spending.

Do you see what we did here? Do you see now why I said I’m not making enough money, fast enough? At this rate, no one is going to retire early… unless some changes are made.

How to Fix This

What’s the solution here?

I need to dial up my savings rate, and dial up my investing. I need to dial down my spending by getting rid of stuff in my life that’s causing me to lose money.

I’ve written before about how it’s possible, according to the math of retirement, to make sure you have no more than a 10-year working life, as long as you’re disciplined and smart with your money. I recommend you review that article.

And if you run this own exercise on your own situation and find that you're making even less than what I came up with above.... it's time to make some serious lifestyle changes. Imagine if you came up with $0 per hour. You would have to ask yourself, "Where am I going in life?"

If you've come to that conclusion, you could use a drop-by to my section on Personal Finance. It's got a lot of great insight about how to minimize expenses and maximize savings.

So take the time to look into this, and do whatever you need to, to get moving toward financial stability and independence.

Live long and invest,

Jeremiah