millennials

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Despite the prevalence of TikTok videos and recent articles detailing stories of individual college graduates struggling to find good jobs, the data tells a different story.

After all, the overall labor market is stronger than it’s been in decades. And Zoomers who recently graduated from college are certainly better off, in most respects, than previous generations of new grads.

“If you’re a recent college grad, right now things aren’t booming with opportunities like they were a couple years ago,” says Nick Bunker, economic research director for North America at Indeed Hiring Lab. “But it’s still really a relatively solid labor market. And hopefully, fingers crossed, the market stays strong for a couple years. And that gives you more opportunity to find a job as opposed to hanging your hat for the first six months after you graduate.”

When you compare the labor markets faced by Zoomers with previous generations, recent college grads now are better off than their older counterparts: Zoomer grads are earning much higher salaries today than Gen X did in the mid-1990s. Inflation may eat away at Gen Z’s high wages, but it doesn’t touch the stagflation of the 1970s and 1980s that baby boomer college graduates encountered.

The short recession that Gen Z experienced at the start of the pandemic is certainly no Great Recession, which technically lasted less than two years, but was followed by several years of tepid economic growth. That period stymied recent millennial graduates during crucial early employment years and is likely to negatively impact their lifetime earnings.

“It’s not just the year that you graduate,” says Bunker. “Your first years out probably make the most difference because that’s when you’re getting your foot on the career ladder.”

Gen Z bounced back fast

Despite the fact that the oldest cohort of Zoomers — 2020 grads — entered a job market with the highest unemployment rate in the modern era, that recession lasted just two months. And what followed was one of the strongest economic bounce backs ever.

The nation’s unemployment rate has hovered between 3.4% and 4% since December 2021. The current rate, 4.1%, remains among the lowest in 50 years, which means Zoomer college graduates have strong prospects for getting jobs right out of school and moving up the career ladder.

Bunker says the job market has cooled compared with two years ago. There is far less competition among employers than in 2022, which means fewer opportunities, according to Bunker. But it’s not all that dramatic in the broader context.

“If we wind the clock a little bit more and compare to what we saw pre-pandemic, it’s around those levels,” Bunker says. He adds that when compared with previous cohorts of graduates, job opportunities are roughly in line with those enjoyed by millennials who completed college in the early 2000s.

Gen Z’s unemployment outlier

Even with all of the positive aspects of the current labor market, there’s still a unique trend among recent Gen Z graduates that earlier generations haven’t faced: an unemployment rate that’s higher than overall unemployment.

It’s a particular quirk seen when you parse unemployment data among recent graduates over the past 30 years. The unemployment rate as of March 2024 for recent graduates was 4.7% — a full percentage point higher than the overall unemployment rate at that time, 3.7%.

This is an unusual development. Before 2018, the unemployment rate among recent grads was almost always lower than overall unemployment, due to strong employer demand for highly educated workers.

The reversal is likely because there’s been a surge in demand for non-college-educated service workers since the pandemic.

Underemployment is still high among recent grads

Labor data shows that underemployment — the rate of those with college degrees who are working jobs that don’t require degrees — has always been higher among recent graduates compared with all bachelor’s degree holders.

“They go ahead and get that college degree and then they can’t get on a career track that uses that education,” says Elise Gould, senior economist at the Economic Policy Institute (EPI), a nonpartisan think tank.

It doesn’t help that certain job sectors have become more crowded. Majoring in computer science, for example, doesn’t guarantee a job anymore as tech companies pull back from hiring.

Underemployment among computer science majors is higher than those who study health-related programs, education or engineering, according to a February 2024 report by The Burning Glass Institute, a labor market analytics firm, and Strada Education Foundation. But fewer computer science majors are underemployed when compared with those who study social sciences, psychology, humanities and business management.

As of March 2024, some 40% of recent graduates are working in jobs that don’t require a degree versus 33% of all college graduates, according to data from the Federal Reserve Bank of New York.

Salaries for recent grads have spiked

Gen Z college graduates can expect higher-than-ever salaries when they enter the job market: The typical recent college graduate with a four-year degree can anticipate a salary of around $62,609, according to an analysis of employer job postings and third-party data sources by ZipRecruiter, a job posting site. That roughly matches the Federal Reserve Bank of New York’s finding of $60,000 as the median annual wage for a recent graduate with a bachelor’s degree.

As the chart below shows, current median salaries are above those held by earlier generations of newly minted graduates when adjusted for inflation.

Even though salaries are at a peak for recent grads, the latest cohort might not be earning what they expect: A survey released by Real Estate Witch, a housing market research and review site, found 2023 graduates expected to make around $85,000 at their first job and the minimum salary they said they would accept is around $73,000. However, Real Estate Witch found that the average starting salary for a recent grad is about $56,000.

“If you’re a young person graduating now, maybe the differential between what you expected and what reality is, is quite large,” says Bunker.

It’s also possible that wage growth for young new hires may have plateaued as the momentum in the overall labor market that was pushing wages higher has now slowed, says Liv Wang, senior data scientist at ADP Research Institute, which measures workforce data. “If we look at ages from 23 to 26 — that includes a lot of recent grads — and the median hourly base pay for them is like $17, and that per-hour has been little changed since June 2022,” says Wang, citing recent ADP data.

Still, as Gould points out, young workers are disproportionately lower-wage workers — even if they have a college degree.

Jobs for New Grads: How Does Gen Z Stack Up Against X and Y?

Find out what the overall labor market was like when cohorts from Generation X and Generation Y (aka millennials) entered the workforce after college compared with today’s graduates. Read more.

Gen Z grads do face economic and employment uncertainty

Today’s college graduates heading into the workforce aren’t free from economic challenges. They’re dealing with elevated inflation that eats away at their wages. And when you earn less — as most young workers do — higher costs take a bigger bite. In recent years, the cost of housing has skyrocketed, especially for renters, while health insurance and car ownership have both grown more expensive. And, Gould says, like generations before, young workers fresh out of college who have student loan debt will carry an additional burden.

Salaries, overall, may be higher than ever, but it varies based on your degree. And there are still persistent gender and racial inequities to earnings, Gould points out.

But once again, the data shows it is still a pretty good time to be a college graduate and, in general, to have a degree.

It still pays to get a college degree

Those with college degrees remain more likely to be employed than workers in the same age group, ages 22 to 27, according to an analysis of U.S. Census Bureau data from the Federal Reserve Bank of New York. Even an associate degree or professional certificate can give young workers a leg up, as many areas of the country are facing a shortage of middle-skills labor.

In March 2024 the unemployment rate for recent college grads — those ages 22 to 27 — was 4.7% compared with 6.2% for all young workers in the same age group.

(Photo by Nic Antaya/Getty Images News via Getty Images)

Source: nerdwallet.com

Apache is functioning normally

Americans with a financial advisor expect to retire two years earlier according to Northwestern Mutual’s Planning & Progress Study Ready to Retire: 75% of those who work with an advisor say they will be financially prepared for retirement versus 45% of people without an advisor Free from Anxiety: 64% of Americans with an advisor say … [Read more…]

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HELOC, Live Pricing Data, VOIE Tools; LO Survey, Webinars and Training

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HELOC, Live Pricing Data, VOIE Tools; LO Survey, Webinars and Training

By:
Rob Chrisman

Tue, Jun 25 2024, 11:54 AM

Everyone’s above average, right? If you are a lender and making money, you’re in the majority. It’s not that you’re not special, it’s just that with cuts and servicing income, and unprofitable companies going away, most companies are in the black: In the first quarter, 59 percent off all mortgage banking companies were profitable per the MBA Performance Report, buy it for details. Is our government profitable? Of course not, almost regardless of Administration. The federal budget deficit is expected to swell to around $1.9 trillion this year, according to the Congressional Budget Office, which was higher than its previous estimate of $1.5 trillion. This takes into account increased spending for student loans and Medicaid as well as the recently passed $95 billion foreign aid package. National debt is even poised to top $56 trillion over the next 10 years, or 122 percent of GDP, surpassing the 106 percent seen in 1946 after World War II. Meanwhile, the eurozone is facing debt issues of its own, with the ECB warning eight of its members (including Belgium, France, and Italy) over their excessive budget deficits. Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a warranty, eliminating repurchase worries. Hear an interview with FinLocker’s Brian Vieaux on bringing consumer permission data to property searches and originations.

Software, Products, and Services for Lenders and Brokers

“Truv is the only consumer-permissioned VOIE platform approved with both GSEs, solidifying our commitment to delivering top-notch verification services tailored for mortgage lenders, banks, and credit unions. What does this mean for your business? Faster turn times, lower buyback risks, compliance assurance, and reduced operational costs. Read about why this matters for your business here.”

“Did you know that Polly is the rate engine for HousingWire’s Mortgage Rates Center? We offer the same capability to display live rates on lender websites, helping borrowers better assess your competitive edge against other lenders. This live data ensures that as the market fluctuates, prospects get real-time insights into your rates. Because in the current rate environment, having accurate, up-to-date rate intel on your homepage is crucial. It signals transparency, allowing potential borrowers to make informed decisions faster, without needing to supply personal information. This convenience can significantly increase your site’s engagement and drive more volume your way. On the flip side, NOT displaying live rates may deter potential borrowers, as they could perceive higher costs or simply prefer quick access to this information. Now, let’s take it several steps further; Polly’s Lender Intelligence will help you keep your rates competitive, ensuring you stay at the forefront of your peers. Let’s talk about it.”

“Calling all loan originators: We need your insights! Take the annual Loan Originators Survey from MGIC and Loan Officer Hub to weigh in on how you handled the challenges and opportunities of the past year. Get a head start on comparing your strategies to your peers’: Complete the survey by June 30 and you’ll receive exclusive early access to the full survey report this fall!”

Optimal Blue announced its new Competitive Data License today. In a news release, the company described its new data solution as a collection of key national mortgage pricing data that empowers lenders to price products competitively, operate more profitably, and react swiftly to changing market conditions. This product from Optimal Blue includes loan-level data from the industry’s most widely used product, pricing, and eligibility engine, providing a full price trace from borrower/buy-side to investor/sell-side pricing. Optimal Blue’s new data solution equips lenders with the ability to benchmark every aspect of their pricing strategy, providing extensive insights into markups, loan-level price adjustments (LLPAs), servicing-released premiums (SRP), concessions, loan officer compensation, base price, and PAR rate. Optimal Blue will be hosting a webinar on July 10 for those interested in learning more about Competitive Data License and its other data solutions.

HELOC borrowers can pay off debt to qualify and still close in as little as 1 day! With trillions of dollars in accessible home equity nationwide, there’s never been a better time to become a REMN Partner. REMN Wholesale, leading the way in Wholesale Digital HELOCs nationally, now provides the DEBT ELIMINATOR feature to its EQUITY ACCESS Digital HELOC. DEBT ELIMINATOR gives borrowers the ability to pay off debt to qualify. With loan amounts from $25k to $400k and recent rate reductions, REMN’s Digital HELOC is designed for fast closings. Additional features: Instant Income Verification for the vast majority of W-2 borrowers; automated analysis of bank statements to determine Income for both W-2 and Self-employed borrowers; single AVM up to $400k (appraisal options available); Broker Portal with robust functionality and real-time detailed status on all pipeline loans. Minimum FICO 640 and max 80% CLTV (see rates/guides). Flexible: Hybrid platform is digitally fast with humans to solve real-life complexities! And they provide fast payout (utilizing ACH). White Label: Brand your company/MLO. REMN is only wholesale! Contact Carl Markman.

Webinars and Shows

“Unlock the key to closing more loans in a competitive market. Join us on Thursday, June 27 at 2 pm ET / 11 am PT for the NMP Webinar “Build Your Personal Brand (and Close More Loans) by Optimizing Borrower Credit Scores.” Hosted by Mike Darne, a seasoned marketing executive who has led branding efforts at Capital One and Marriott, this webinar will share proprietary research from CreditXpert on what borrowers seek in a lender and how credit optimization meets those needs. Discover how you can help borrowers qualify, access better loan programs, lower their cost of homeownership, and reduce LLPA premiums. Learn to leverage credit optimization to build your personal brand, stand out in the marketplace, and ultimately close more loans. Don’t miss this chance to enhance your skills and grow your business: Register for the webinar here.”

Podcast: How the NAR Ruling Will Impact Lenders (& the Entire Home-Buying Process). The groundbreaking NAR settlement has real estate agents, lending professionals, and home buyers scrambling to understand its ramifications. Here to weigh in is Maxwell’s Clear to Close crew: In this conversation, Alan, Bryan, and Anthony channel their experience in the industry to walk through possible outcomes of the ruling. Specifically, this episode explores how new policy changes are likely to impact lead generation, methods to earn borrower business, and more—and how lenders can get ahead of the major ways the home-buying process is about to change. Click here to listen to How the NAR Ruling Will Impact Lenders (& the Entire Home-Buying Process).

A good place for longer term conference planning is to start is here, and click on “Conference List” for in-person events in the future.

Join Kristin Messerli and Robbie Chrisman today at 10am PT/1pm ET for the latest episode of Mortgages with Millennials as they share some new research on NextGen money trends, this time based on a personality quiz she developed to better understand the mindset, planning style, and behaviors of millennials when it comes to money and homebuying. sharing some new research on NextGen money trends, this time based on a personality quiz she developed to better understand the mindset, planning style, and behaviors of millennials when it comes to money and homebuying.

Every Tuesday at 11am PT, two veteran LOs discuss all things mortgage with Industry Leaders. Mortgage Pros 411 with Audrey Boissonou and Kevin Casey.

Register for Silicon Valley CAMP’s Free Marketing Presentation: “AI for Dummies via Zoom,” today at 9:30 AM (PDT).

In support of the Credit Score Models and Credit Reports Initiative, FHFA has announced a new stakeholder forum, an “Overview of Historical Credit Scores,” that will take place today from 3-4 p.m. (ET). FHFA, Freddie Mac and Fannie Mae will provide details regarding the Enterprises’ forthcoming publication of historical credit scores to support the implementation of the VantageScore® 4.0 credit score model.

MBA’s Single Family Research Showcase 2024 Virtual Meeting, June 25 & 26, 1:00 – 5:00 pm. MBA’s Research & Economics team will take you on a deep dive behind the data during our one-of-a-kind Single-Family Research & Economics Showcase. Led by MBA’s Chief Economist, Mike Fratantoni, Ph.D., this two-day online event highlights the most current results and insights from our popular residential surveys, forecasts, and reports. For those unable to attend, meetings will be recorded on both days. Register to receive the recordings.

Capital Markets

As optimism about a US Treasury rally grows among investors, a key bond market indicator suggests high interest rates could persist, potentially hampering the Federal Reserve’s ability to cut rates. Market forecasts indicate that the economy’s neutral rate, crucial for balancing growth, is significantly higher than the Fed’s current projection, hinting at long-term elevated borrowing costs.

While we do have some significant data later this week (GDP, inflation, consumer sentiment, home prices, etc.), this final week of June began yesterday on a quiet note without much market movement. This week also brings the quarterly refunding, which sees an increased flood of Treasury issuance that investors will be asked to absorb: $211 billion in new debt this week alone, with all of it coming on the front end of the curve. Today, markets will receive $69 billion 2-year Treasury notes.

Today’s economic calendar kicked off with the non-market moving Chicago Fed National Activity Index for May (better than expected) and Philadelphia Fed non-manufacturing for June. Later today brings Redbook same store sales for the week ending June 22, April house price indices from FHFA and Case-Shiller, the Consumer Confidence report for June, Richmond Fed manufacturing and services/revenues in June, and Dallas Fed Texas services for June, followed by the aforementioned Treasury note auction. Two Fed Governors are scheduled to make appearances: Governor Bowman and Governor Cook. We begin the day with Agency MBS prices little changed from Monday’s close, the 10-year yielding 4.22 after closing yesterday at 4.25 percent, and the 2-year at 4.72.

Employment

Mortgage Equity Partners (“MEP”), a mid-cap IMB headquartered in Massachusetts, is proud to be recognized as the fastest-growing IMB in the state measured in both units closed and volume funded in 2023 and YTD 2024. MEP has added production in many of its 22 states over the last 12-14 months. “As a mid-cap, we inherently have a flatter management structure, are more nimble, and can adapt to change quicker. Consistently, we see LOs migrate from large-cap IMBs because, as architects of their own businesses, LOs want quicker access to decision-makers. Those LOs want to operate at their own cadence and not be bogged down with layers of management. Our environment has a positive impact on LOs as strong business partners to support their referral sources,” said Sean Riley, CEO and General Counsel. To learn more about MEP, visit meploans.com or contact John Cabral, National Sales Director.

A seasoned Mortgage Executive is seeking a new opportunity to help lead a mortgage lender or vendor toward achieving their growth goals. Are you a mortgage lender or vendor (established or new) in need of leadership to navigate the current market and drive future growth? This executive has extensive sales leadership experience in all production channels (TPO, Retail, and DTC) and is an expert in all product types (Agency, Non-QM, and Private Money Lending). They also have deep knowledge of the vendor and technology space. Please send inquiries to Anjelica Nixt to pass along to the candidate and specify the listing.

(Remember: job seekers can post their resumes for free on www.lendernews.com where employers can view them for several months for a nominal charge.)

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

There’s good and bad news for mortgage rates this week. The good news is rates have continued their slow downward trend, averaging 6.87% on 30-year, fixed-rate mortgages, Freddie Mac reported.

Although this is promising, lowering interest rates is far from the norm. Last week, 30-year mortgages had average rates of 6.95%. However, compared to a year ago when rates averaged 6.67%, this week and last week’s rates are still relatively high. Still, any improvement is better than nothing.

“Mortgage rates fell for the third straight week following signs of cooling inflation and market expectations of a future Fed rate cut,” Freddie Mac Chief Economist Sam Khater explained. “These lower mortgage rates coupled with the gradually improving housing supply bodes well for the housing market. Aspiring homeowners should remember it’s important to shop around for the best mortgage rate as they can vary widely between lenders.”

On top of 30-year rates, 15-year mortgage rates also dipped this week, but still remain above the 6% mark. Interest rates for 15-year fixed-rate mortgages averaged 6.13%, down slightly from last week when they averaged 6.17%.

If you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.

MOST HOMEOWNERS WOULD RATHER REMODEL THEIR HOME THAN BUY ANOTHER HOME: STUDY

Average Americans must put down over $100,000 to afford monthly mortgage payment

Down payment requirements are increasing across the country for the average prospective homebuyer. Households making a middle class income must put down $127,750 on an average priced home to realistically afford the monthly payments, according to a Zillow study.

This down payment is equivalent to about 35.4% of a $360,000 dollar home, which is the price of a typical U.S. home. A down payment of this size helps buyers pay no more than 30% of their income on mortgage payments.

Just five years ago, many households could afford monthly mortgage payments without paying any down payment for their new home.

“Down payments have always been important, but even more so today,” Zillow Chief Economist Skylar Olsen said. “With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less. Mortgage rate movements during that time could make the difference between affording that home and not.”

To save up the necessary down payment, it would take many households making a median income, 12 years to save. This assumes putting 10% of their income aside — an unlikely reality for many facing skyrocketing costs in all areas of their lives.

“Saving enough is a tall task without outside help — a gift from family or perhaps a stock windfall,” Olsen said. “To make the finances work, some folks are making a big move across the country, co-buying or buying a home with an extra room to rent out. Down payment assistance is another great resource that is too often overlooked.”

A site like Credible can let you view multiple mortgage lenders and provide you with personalized rates within just minutes, all without impacting your credit.

MILLENNIALS MOST LIKELY TO UNLOCK LOW MORTGAGE RATE TO MOVE: FREDDIE MAC

Desire to buy a home hits an all-time low for prospective buyers

Interest may be lower to a small degree, but prospective buyers don’t seem to be ready to dive back into the buying market. Fannie Mae’s Home Purchase Sentiment Index dropped 2.5 points in May to 69.4, signaling that buyers don’t have positive attitudes about buying at the moment.

This drop puts the index at an all-time low. In May, only 14% of consumers believed it’s a good time to buy a new home, down from 20% in April. Consumers still think affordability will remain difficult for most buyers, at least for the foreseeable future.

“Consumer sentiment toward housing declined from its recent plateau, as an increasing share of consumers struggle to find the positives in the current housing market,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “While many respondents expressed optimism at the beginning of the year that mortgage rates would decline, that simply hasn’t happened, and current sentiment reflects pent-up frustration with the overall lack of purchase affordability. 

“This is most clearly evidenced by our ‘good time to buy’ component falling to a new survey low this month. On the other hand, homeowners’ perception of home-selling conditions declined only slightly and remains largely positive after a steady increase over the last few months,” Duncan said.

To see if you qualify for a mortgage based on your current credit score and salary, consider visiting Credible, where you can compare multiple mortgage lenders at once.

FREDDIE MAC PROPOSES PRODUCT TO HELP HOMEOWNERS TAP HOME EQUITY WITHOUT LOSING RECORD LOW MORTGAGE RATES

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Source: foxbusiness.com

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Members of Generation X are more concerned about their post-retirement ability to support the lifestyles they’ve grown accustomed to when compared with other generations — including baby boomers and millennials — according to the results of a recent survey conducted by Allianz Life.

In the company’s 2024 Annual Retirement Study, respondents indicated that 62% of Gen Xers “feel confident about being able to financially support all the things they want to do in life,” compared with 82% of baby boomers and 77% of millennials. But more than half of Gen X respondents (55%) also said they “wish that they would have saved more money for retirement,” a feeling that is more severe among Hispanic (63%) and Black (56%) members of the cohort.

“Gen Xers are reaching crunch time for retirement planning. For Gen Xers, retirement is no longer this far off idea. That can feel stressful, but by preparing now, they can create a strategy that will help them seek their ideal retirement,” Kelly LaVigne, vice president of consumer insights at Allianz Life, said in the report. “The good news is that it is never too late to prepare for retirement. You can wish you started sooner, but you’ll never wish that you waited longer.”

The most common action that the cohort is taking toward their long-term financial goals is in paying down debt (64%), building up an emergency fund (58%) and aiming to make choices that result in a material credit-score improvement (55%).

But high costs are also keeping many Gen Xers from saving more for retirement. They say that “expenses for day-to-day necessities (61%), credit card debt (40%) and housing debt (39%)” are the key culprits keeping them from saving more.

“Saving more overall is foundational to retirement,” Lavigne added. “However, Gen X may need to take this a step further and remember that a retirement strategy isn’t just about one big final number in the bank. Once you retire, you are going to need to draw from those assets for income.

”A sound retirement income strategy will help use your assets efficiently and include contingencies for risks that can cause you to spend down savings faster than anticipated. You need to ensure the money lasts.”

Despite the difference a long-term plan can make, few Gen Xers employ one, the study found. Only 35% of Gen X respondents said they use the services of a financial professional, compared to 46% of millennials and more than half of baby boomers. But Gen Xers are also thinking more about retirement than they have before, the results found.

“Nearly two in three (63%) say one of their top three goals in the next five years is to save enough and make plans to live a comfortable retirement,” the report stated. “This increased from 56% in 2023. Gen Xers who are Asian/Asian Americans (68%) were more likely to say this than white (61%), Hispanic (61%), and Black/African American Gen X respondents (55%).”

Older members of Gen X are increasingly approaching retirement age. Most researchers agree that the generation begins around the mid-1960s, and those born in 1965 will turn 59 in 2024.

While most members of the cohort are too young to qualify for a Home Equity Conversion Mortgage (HECM) through the Federal Housing Administration (FHA), several leading reverse mortgage lenders offer proprietary reverse mortgages that allow the eligible borrowing age to be as young as 55 in some states.

Source: housingwire.com

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2024 Market Research Unveils Untapped Online Potential Amid Strong In-Store Shopping Preference

CHARLESTON, S.C., Feb. 26, 2024 /PRNewswire/ — In a groundbreaking study that could redefine ecommerce strategies, the 2024 Home Decor Ecommerce Market Research Report by 2 Visions has revealed a significant willingness among consumers to purchase home decor items online, with an astounding 82.46% expressing openness to online shopping. This finding challenges the long-held belief that physical retail spaces hold undisputed dominance in the home decor sector.

View the full 2024 Home Décor Ecommerce Market Research Report.


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Source: prnewswire.com

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Beauty may be subjective, but modern beauty standards heavily influence what many of us find aesthetically pleasing. Three-quarters of Americans (75%) agree that “pretty privilege,” or personal and professional advantages for those perceived as beautiful, is real, according to a new NerdWallet survey. And many are spending on beauty, possibly to reap those benefits.

The survey of over 2,000 U.S. adults, commissioned by NerdWallet and conducted online April 15-17, 2024, by The Harris Poll, finds that three-quarters of Americans (75%) have made beauty-related purchases for themselves, spending that includes products, services and procedures. The survey also asked Americans how they pay for beauty and how they think social media has impacted beauty spending.

Key findings

  • Some Americans have gone into debt for beauty spending. Of Americans who say they’ve made beauty-related purchases for themselves, 15% paid with a credit card that they didn’t pay off by the due date and 9% used “buy now, pay later” services, according to the survey.

  • Cosmetic procedures are a career investment for some. The survey found that 11% of Americans think cosmetic procedures are a good financial investment — they think looking better will be an asset to their career.

  • Many agree social media has exacerbated beauty spending. Three-quarters of Americans (75%) say social media has made beauty spending much worse, according to the survey.

  • Beauty spending is sometimes seen as a necessity. Nearly a third of Americans (31%) consider at least some of the beauty products and services they buy as essential in their budget, the survey found.

“Spending on beauty products and services can be fun and enjoyable, even helping shoppers feel a boost of confidence and joy. But it may also have a dark side,” says Kimberly Palmer, personal finance expert at NerdWallet. “Spending more than you can comfortably fit into your budget can lead to financial stress and, in some cases, long-term debt.”

Some beauty spenders are taking on debt

Three-quarters of Americans (75%) have made beauty-related purchases for themselves, the survey found, including products, treatments and procedures. The most popular expenses are skin care products (54%), hair products (41%) and cosmetic products (39%).

Many of these purchases were made with cash. According to the survey, 72% of Americans who purchased beauty products, treatments or services for themselves say they paid with cash or a debit card. And nearly 1 in 5 (19%) paid with savings.

Credit cards are another popular payment method for beauty-related spending. Paying with a credit card can provide more payment protection than a debit card, as well as potential rewards on spending. However, due to interest charges, this is generally only a good idea for those who pay off their balance in full by the due date, and not all beauty spenders did that. While 44% of Americans who have made beauty-related purchases for themselves say they used a credit card that they fully paid off, 15% say they used a credit card that they didn’t pay off by the due date, the survey found.

Credit card debt isn’t the only debt Americans have taken on for beauty spending. Nearly 1 in 10 Americans who have made beauty-related purchases for themselves (9%) used buy now, pay later services and 5% used a loan product from the provider of the beauty product or service.

Some beauty products and procedures are medically necessary and may allow people to use insurance and/or an HSA/FSA. (An HSA is a health savings account, and an FSA is a flexible spending account; both can be used for eligible health care costs.) For example, sunscreen may be a HSA/FSA-eligible medical expense and Botox as a treatment for chronic migraines may be covered by insurance. The survey found that 8% of Americans who have made beauty-related purchases for themselves used insurance and 5% used their HSA/FSA.

26% of Americans have paid for cosmetic procedures

More than a quarter of Americans (26%) say they’ve purchased cosmetic procedures for themselves, with the most popular (19%) being cosmetic dental procedures, like teeth straightening or whitening, according to the survey. In addition to dental work, 7% of Americans say they’ve purchased nonsurgical procedures, like Botox or dermal fillers, and 7% say they’ve purchased cosmetic surgeries, like rhinoplasty or liposuction.

Cosmetic procedures are common for some: The survey found that 11% of Americans say cosmetic procedures are normal in their social circle. Those with a household income of $100,000+ are more likely to say this — 15% say cosmetic procedures are normal in their social circle compared with 8% of those with a household income less than $100,000.

Like with beauty spending in general, the most popular way to pay for cosmetic procedures is cash or debit card (59%), followed by a credit card paid in full by the due date (39%). But some have gone into debt to pay for beauty procedures, with 14% using a credit card that they didn’t pay off in full by the due date, 10% using a loan product from the service provider and 9% using buy now, pay later services.

Taking on debt for nonessential purchases isn’t generally recommended, but more than one-tenth of Americans (11%) say cosmetic procedures are good financial investments, believing that looking better will help them get ahead in their career. This sentiment is most popular among young Americans — 17% of Gen Z (ages 18-27) and 20% of millennials (ages 28-43) see procedures as a good investment compared with 6% of Gen X (ages 44-59) and 4% of baby boomers (ages 60-78).

Some cite beauty spending as a necessity

Investment or not, going into debt for beauty spending isn’t looked at favorably by the general population. According to the survey, 4 in 5 Americans (80%) think it’s unacceptable to go into debt for beauty products or services. But this line may be blurry for some. Debt may be considered more acceptable when used to pay for necessities rather than extras and nearly a third of Americans (31%) — including 42% of women — consider at least some of the beauty products and services they buy as essential in their budget.

Social media is very good at influencing purchases, and beauty products and procedures are no exception. The survey found that three-quarters of Americans (75%) agree that social media has made beauty spending much worse. This could be due to ads and influencer marketing, or pressure to look a certain way.

The survey found that 12% of Americans feel pressured by society to spend more on beauty products and services than they would like to, and nearly a third of women (31%) wouldn’t feel comfortable going into work without wearing makeup.

How to keep beauty spending in check

If spending on beauty products and procedures is something you can afford without jeopardizing your finances, then it could fit into the 30% “wants” category in a 50/30/20 budget plan, for instance. But if you’re looking for ways to minimize such spending, here are a few tips to get started.

Save where you can on beauty products to put money away for your future. If spending on beauty is keeping you from saving enough — or saving at all — one place to start is to look at your spending and see if there are ways to cut back. Maybe you believe the serum you love is worth the money, but you’re fine getting fewer pedicures, for example. Think about what’s most important to you and adjust your spending accordingly.

“Taking time to look back at your beauty spending over the last year could lead to some surprising insight into how much you’ve been spending on products and services, perhaps without even realizing it. You might decide to make some changes going forward based on your priorities,” Palmer says.

Set boundaries with kids when it comes to beauty spending. The survey found that 57% of parents have made beauty-related purchases for their children, including skin care products (29%), hair products (27%) and nail salon treatments (21%). For younger children, you can start by setting budgets for nonessential beauty purchases and talking about your limits. For those old enough to take on part-time work, it may make sense to have them contribute or pay for beauty products that aren’t necessities, like cosmetics or manicures.

“Spending on beauty products also offers a great chance for kids to practice budgeting themselves. Giving them an allowance and encouraging them to make their own purchasing decisions gives them experience with those kinds of trade-offs,” Palmer says.

Avoid debt for nonessential procedures. Of Americans who purchased cosmetic procedures for themselves, 14% used a credit card they didn’t pay in full by the due date. Evaluating your options before swiping could save a lot of money in interest.

Some procedures are medically necessary, and if that’s the case, check out your insurance options or whether the procedure is HSA/FSA-eligible.

For procedures that aren’t medically necessary, saving up first is a good idea. Taking on high interest debt for any purchase could lead to future resentment.

“It’s easy to get swept up in trends and overspend. Just as with any big purchase, pausing to think through whether or not the treatment or procedure is actually worth the cost can help you make the best decision for you and your money,” Palmer says.

Consider your motivations for spending. More than a third of Americans who have made beauty-related purchases for themselves (36%) say the products they buy are status signifiers, and as mentioned, many Americans (75%) think pretty privilege exists, giving beautiful people real-world advantages. But it’s a good idea to think critically about why and how much you spend on beauty products.

Consider what beauty products and services you enjoy spending on and what you’re buying because it feels compulsory. Pausing to consider your motivations for your spending may help avoid buyer’s remorse.

Methodology

This survey was conducted online within the U.S. by The Harris Poll on behalf of NerdWallet from April 15-17, 2024, among 2,082 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, contact [email protected].

Disclaimer

NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.

Source: nerdwallet.com

Apache is functioning normally

The average annual cost for a homeowner to perform maintenance on their single-family property has grown 26% over the past four years, faster than the rate of inflation, a Bankrate study found.

Nationwide, the current average cost for maintaining a typical single-family home is $18,118 per year, the Bankrate Hidden Costs of Homeownership Study reported. Using an average property value of $436,291, it means the buyer is paying $1,510 per month in addition to their mortgage payment in homeownership costs.

Back in 2020, before the pandemic-fueled run-up in home prices, it cost $14,428 annually for maintaining or repairing a typical single-family home, equivalent to $1,202 per month.

The cumulative rate of inflation, as measured by the Consumer Price Index, from 2020 until now is 21.7%.

The report’s calculation assumes that the homeowner pays 2% per year of their home’s average value on these costs. 

“While homeownership is worth the financial sacrifice, homeowners also need to be aware of the ongoing expenses that go along with owning property,” said Jeff Ostrowski, Bankrate analyst, in a press release. “After you achieve homeownership, you need to fatten up your emergency savings account for all those surprise repairs.”

Incentivizing homeowners to create emergency savings accounts to deal with unexpected events including job loss helped to reduce mortgage default rates, a 2018 JPMorgan Chase study claimed.

While describing these as the hidden costs of homeownership, some of the items used in the calculation are typical beyond maintenance costs, such as property taxes and homeowners insurance, the T&I portion of the mortgage payment. However, rising costs here have been seen as a stressor on troubled homeowners, a panel at a Mortgage Bankers Association conference noted earlier this year.

Some of these other costs are also common (although not necessarily a part of depending on the agreement) to renting a home, such as electricity, internet and cable television service. Many renters also have an insurance policy to cover their personal property.

In a related Bankrate report that came out at the end of May, while 24% of home purchasers said they put aside money to pay for home repairs and maintenance, 19% have needed to take out additional debt for these costs.

Of that second group, 60% financed through credit cards, one-third took out a personal loan, while 25% obtained a second mortgage (respondents were able to make more than one choice for this question).

There’s also a generational divide among those seeking financing. Gen Z makes up the largest cohort of those having to take out debt, at 31%, followed by 26% of millennial homeowners.

At the other end of the spectrum is Gen X, at 19%, and the baby boomers at 13%.

“There’s no question whether these hidden costs of homeownership, involving plumbing calls, appliance replacement or repair, or getting a new roof or HVAC, will occur,” said Bankrate Senior Economic Analyst Mark Hamrick in a press release. “The key questions involve timing and costs. Planning for the expenses, including through dedicated savings, can help affirm the positive experience of what many consider the American dream, which is homeownership.”

The same generational divide exists among the savers, with the younger groups actually claiming a higher rate, 30% of Gen Z and 25% of millennials, while the baby boomers had 24% and Gen X trailed at 20%.

“By avoiding the elevated cost of borrowing, homeowners can hold onto more of their money, which is almost always a good thing,” Hamrick said.

Source: nationalmortgagenews.com