The spare money of people in their 20s and 30s shrank again for the first time in three years, making it harder to grow asset through savings or investment. While income growth slowed, housing costs and interest burdens rose quickly.
According to the Korean Statistical Information Service (KOSIS) on the 14th, as of the third quarter this year, the average monthly surplus for households headed by those under 39 was 1,243,000 won, down 2.7% from a year earlier. It was the first decline in the surplus since the third quarter of 2022, three years ago. Over the same period, the surplus for all household heads was 1,437,000 won, up 12.2%, in contrast.
The surplus is the amount left after subtracting non-consumption expenditure such as taxes and interest, and consumption expenditure such as food and housing costs, from household income, and generally means spare money that can be used for savings or investment.
The decline in young people's spare money stems from a combination of slowing income growth and rising expenditure. In the third quarter, the average monthly income of household heads under 39 was 5,036,000 won, up only 0.9% (46,000 won) from a year earlier. This is the lowest third-quarter growth rate and increase in amount since statistics began in 2019. Considering inflation, real income effectively fell.
Current income was 4.95 million won, up 1.3%, but the growth rate was the lowest since the third quarter of 2022. Earned income was 3,771,000 won, down 0.9%, marking the first drop in five years, and business income (530,000 won) also fell for the third straight year. In contrast, public transfer income, including support from the government and local governments, rose to 441,000 won, increasing by nearly 60% due to the payment of consumption coupons to help people's livelihoods recover.
The expenditure burden rose faster. Third-quarter consumption expenditure averaged 2,859,000 won per month, up 3.1%, and among that, actual housing costs were 214,000 won, up 11.9%. Interest costs also surged 23.4% to 166,000 won, increasing the burden on young household.
The decrease in spare money also aligns with the trend of more young people being outside the job market. As of last month, the number of people in their 20s and 30s who were unemployed, preparing for employment, or taking a break was 1,589,000, up 28,000 from a year earlier.