Starting Out on $50K

Summary

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WSJ Your Money Briefing: Starting Out on $50K

Date: September 16, 2019
Host: J.R. Whalen
Guest: Francesca Fontana, Wall Street Journal Reporter

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Episode Overview

In this episode, host J.R. Whalen discusses the realities of starting adult life on a $50,000 salary for recent college graduates. Wall Street Journal reporter Francesca Fontana shares insights from interviews with five recent grads living independently across the U.S. The episode explores cost-of-living challenges, budgeting strategies, and whether $50K is a manageable starting salary in today's environment.

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Key Discussion Points & Insights

Student Loan Debt & Financial Attitudes

• Student loan debt in America: Student loan debt totals $1.6 trillion nationwide.
  • Attribution of blame varies by age group:
    • 18–44 years: 40% blame the government, 27% blame students, only 5% blame parents.
    • 45+ years: One-third blame students, one quarter blame government.
    • 65+: Nearly a quarter suggest students simply need to work harder.
• Solutions supported: Both younger and older adults agree on free public college and lower interest rates as possible fixes.

The $50K Starting Salary: Before and After Taxes

• Korn Ferry’s Report: Average entry-level salary for graduates is $51,347 in 2019.
• Net income reality: After taxes (roughly 30%), healthcare, and 401(k) contributions, grads feel the squeeze.
  • Quote: "They were pretty honest with me about how tight things were after all of those things were taken out."
    — Francesca Fontana [02:52]

Saving Despite Tight Budgets

• Saving is a priority: Despite strained budgets, most grads still value saving.
  • Clever saving habits:
    • Splitting checked luggage on vacation to save money and avoid overpacking.
      • Quote: "One woman said that she will split a checked bag with a friend if they're going on vacation, if they're going on a girls trip."
        — Francesca Fontana [03:15]
    • Hunting for food to cut meat expenses.
      • Quote: "Another guy in Oklahoma City, he hunts, so he actually hasn't bought red meat in months."
        — Francesca Fontana [03:48]
  • General management: Despite stereotypes about Millennials and Gen Z, most surveyed are committed to living within their means and acknowledge the need to save for the future.

The Impact of Location

• Cities profiled: Houston, Minneapolis, Oklahoma City, Charlotte, Tucson.
  • Transportation varies greatly:
    • In cities like Houston, the lack of public transit means significant car expenses.
      • Quote: "I talked to a girl in Houston who spends a pretty significant amount of her paycheck each week on driving..."
        — Francesca Fontana [04:16]
    • Minneapolis stands out for bus accessibility.
    • Oklahoma City: Rural setting leads to a lot of driving but “you can drive a little faster.” [05:06]
• Roommates and living arrangements:
  • Some grads live alone, others with roommates or partners, dramatically impacting monthly expenses.

Honest Approach to Budgeting

• Not following “golden rules”: Many grads aren't able to fit traditional savings advice into their lifestyles due to high student debt and housing costs.
  • Quote: "They're facing a very different landscape than other generations. They often have higher student loan debt, housing's eating up a larger chunk of their paycheck, and they have lower incomes compared to all of that."
    — Francesca Fontana [05:34]
  • Candor in sharing struggles, e.g. saving for a wedding or only making minimal 401(k) contributions.
• Finding a balance: Some prioritize specific goals (e.g. saving for a wedding, a house, or simply building savings) over following set financial “rules.”

Commitment to Frugality & Future Planning

• Case Study—David in Oklahoma City:
  • Investment professional earning ~$45,000.
  • Highly committed to saving for the future (Roth IRA, savings account), simple living with his fiancée and dog.
  • Forgoes vacations to build long-term financial security.
    • Quote: "In the years that he and his fiance have been together, they've actually never been on vacation together, not because they don't want to, but because they look at it and they think, well, what can we do with this money that will last a little longer than, you know, a three day trip or something like that?"
      — Francesca Fontana [06:53]

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Memorable Quotes & Moments

• On perceptions vs. reality:
  "There's this sort of stereotype that millennials and Gen Z might not know how to manage their money. But...despite the fact that things might be tight, they found ways to save, which was really interesting to see."
  — Francesca Fontana [03:15]
• On lifestyle choices:
  "He told me that he's a big time saver. He's a homebody. He likes to be home with his fiance and his dog."
  — Francesca Fontana [06:53]
• On housing costs:
  "Housing's eating up a larger chunk of their paycheck, and they have lower incomes compared to all of that."
  — Francesca Fontana [05:34]

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Notable Segments & Timestamps

• Student loan blame & national attitude: 00:36–02:32
• What $50K really means after taxes: 02:32–03:09
• Creative saving choices among grads: 03:09–04:04
• Location and transportation impact: 04:04–05:06
• Modern budgeting challenges and candid truths: 05:23–06:32
• Profile: David’s story of frugality and saving: 06:32–07:27

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Tone and Takeaway

The episode maintains a candid yet optimistic tone, emphasizing the resourcefulness, integrity, and openness of young people learning to live on modest means. Rather than universal hardship, Fontana reports a range of strategies and honest self-assessment among those starting out on $50K—showing that with planning and sacrifice, it’s possible, albeit with some tough trade-offs.

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Transcript

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Small Business Owner]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whalen]

Here's your money briefing. I'm J.R. whelan at the Wall Street Journal in New York. How easy is it to live on $50,000 a year? The Journal asked five recent graduates not living with their parents if and how they get by. We'll have details in a moment. First, some money in market news you should know. So who's to blame for the nation's $1.6 trillion student loan debt crisis? Well, that depends on who you ask. A survey from CreditReport.com shows that 40% of people age 18 to 44 blame the government, while 27% say fault lies with students. Just 5% blame students parents. Now, people over age 45 were asked the same question. A third blame students, and about a quarter blame the government. Both groups agree that free public college and lower interest rates are viable solutions. Seniors over 65, however, were a little more direct. Nearly a quarter of them said the debt crisis could be solved if students worked harder. And all the talk of trade battles and a global economic slowdown did not deter Americans from buying cars, sales of which rose 1.8% in August. The Commerce Department says that consumers were also in a buying mood when it came to spending online, as well as buying things like building materials and sporting goods. But they pulled back on food, dining out and spending at furniture and department stores. Could you live on $50,000 a year? The Korn Ferry Recruiting Company says that recent graduates in entry level jobs will make an average of $51,347 in 2019. Is that enough to live on? Let's bring in Wall Street Journal reporter Francesca Fontana. She spoke with recent grads in five U.S. cities to find out, and she joins us here in our studio. So, Francesca, just to start, $50,000 sounds like a decent starting salary. But that's before taxes, right?

[Francesca Fontana]

Yes, it is. And the millennials that we talked to, their salaries ranged from 45 to around 55. That was sort of the net we cast because we understand not everyone's going to make exactly that dol.

[J.R. Whalen]

And you take about 30% out of that, I would imagine, for taxes during the year.

[Francesca Fontana]

Yeah. And then obviously they have health care costs and things like that that might come out. Quite a few of them are contributing to their 401, so they were pretty honest with me about how tight things were after all of those things were taken out.

[J.R. Whalen]

After expenses and leisure time, a few of them don't have much left over, but saving is pretty significant to them.

[Francesca Fontana]

Yeah, I think that's something that people were surprised by. You know, there's this sort of stereotype that millennials and Gen Z might not know how to manage their money. But it seems like despite the fact that things might be tight, they found ways to save, which was really interesting to see. You know, one woman said that she will split a checked bag with a friend if they're going on vacation, if they're going on a girls trip.

[J.R. Whalen]

I like that idea.

[Francesca Fontana]

Yeah. And you find the cheapest flight and then another.

[J.R. Whalen]

And that way you don't overpack, Right, Exactly.

[Francesca Fontana]

It's useful in a lot of ways. And another guy in Oklahoma City, he hunts, so he actually hasn't bought red meat in months. And so he's saving money that way. So it's interesting to see all of these different ways that they're finding ways to save. On this salary, you go out and

[J.R. Whalen]

catch your dinner for the night. You spoke with people in five US cities. Houston, Minneapolis, Oklahoma City, Charlotte and Tucson. And how far $50,000 goes really does come down to where you live.

[Francesca Fontana]

Absolutely. There were a lot of variables, like, you know, some folks were living closer to the city and living alone, and others were sharing an apartment with a fiance or with roommates. Transportation was also an interesting one. I talked to a girl in Houston who spends a pretty significant amount of her paycheck each week on driving because she has to drive everywhere from home to work. Nothing's close enough for public transportation, so she ends up filling her tank a little more than once a week. And she says that eats up quite a bit of her budget.

[J.R. Whalen]

Yeah, I noticed that Houston, probably the largest of those mid sized cities, I noticed that Natalie in Minneapolis is the only one of those five who actually can take a bus to get around. But a lot of them, they did list fairly hefty expenses associated with their car.

[Francesca Fontana]

Definitely. Oklahoma City was another one where I spoke to a guy named David and he said that there's a lot of rural areas. You don't have to look far to find rural areas in Oklahoma. So a lot of his time is spent driving too. But he says he can drive a little faster.

[J.R. Whalen]

You know, millennials and people in Generation Z sometimes get a bad rap for not being smart about money. But for the most part, this group seems to understand the need to live within their means.

[Francesca Fontana]

Absolutely. I think that, you know, they're facing a very different landscape than other generations. They often have higher student loan debt, housing's eating up a larger chunk of their paycheck, and they have lower incomes compared to all of that. But the people I spoke to, they were really honest and they were saying they aren't necessarily following the sort of golden rules around savings that they might have inherited from their parents or from adults in their life, but many of them were finding ways to save. Whether it's contributing at least a little bit to their 401, or, like I said, hunting instead of buying red meat, they were finding ways to save even a little. And if they weren't finding ways to save, like Leslie in Houston, who's planning a wedding and all of her income leftover is going towards that, she was upfront about it. They were all really honest. It was really, it was really great to hear them speak very candidly about their situations.

[J.R. Whalen]

And David, the man you spoke to in Oklahoma City, he works in the investment world. He makes about $45,000 a year, but he is very, very serious about putting money away into a Roth IRA and into his, into savings accounts. And he and his fiance have really lived a fairly simple life as a result of being serious about saving.

[Francesca Fontana]

Yeah, that's a big priority for him. He reiterated that to me. And it seems to be a big part of his lifestyle. He told me that he's a big time saver. He's a homebody. He likes to be home with his fiance and his dog. And in the years that he and his fiance have been together, they've actually never been on vacation together, not because they don't want to, but because they look at it and they think, well, what can we do with this money that will last a little longer than, you know, a three day trip or something like that? So he was a really interesting person to talk to.

[J.R. Whalen]

All right, that's Wall Street Journal reporter Francesca Fontana here in our studio. Francesca, thanks for coming on the show.

[Francesca Fontana]

Thanks so much.

[J.R. Whalen]

And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Small Business Owner]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.