Leading up to the Great Recession about 15 years ago, President Bush Had this to say to the American people. This word begins with keeping our economy growing and I encourage you all to go shopping more when you hear things like that. It's no surprise that 70 percent of the US economy is currently made up of consumer spending. That right There is over 14 trillion dollars a year.

So it's probably not surprising when I tell you that 58 of Americans are living paycheck to paycheck 70. feel stressed about their finances, and even 63 percent of people currently have some type of credit card debt. America might be built on capitalism, but most people don't capitalize on the opportunities that are out there to build true wealth. So in this video, I'm going to share with you exactly how you can break out of those statistics and believe it or not, it might not be as hard as you might think it is.

So first of all, let's talk about the problem at hand. Okay, so for starters, I'm going to use the average American Income for a single person as the guideline in this video. So right now that number is just over seventy thousand dollars every year, which breaks down to be about five thousand nine hundred dollars a month. Let's paint the picture of how you're probably spending money now so I can show you the adjustments to make.

For starters Right off the top. Here in Maryland, you'll have about 27 taken for taxes now starting with your housing. The average: American right now spending about 34 on their rent or their mortgage. So that means on this income, you'd be paying about 1 475 dollars a month on that.

Ladies and gents, In some parts of the US this could be a problem, but let me tell you, my area in the DMV the current average rent price is around a two thousand One hundred dollars. Let me tell you, that's more on the conservative side because I've paid way more than that too. So if you're living alone, this could also mean that you're spending a much more significant amount of your money just to have somewhere to live. Now that we have housing, you'll also need a way way to get around.

So right now, the average person is spending about 16 percent of their total income on their transportation. Again, a ton of factors can impact this, but that means right now there's about 50 percent of your money. That's just it's gone. Now if we add all those things up, we have 12 that goes towards food and around 22 that goes towards entertainment.

And if we just add those four categories up, it'll be 84. And it means we're not even accounting for other things like travel, subscription services, online shopping, and all the Tendencies where people tend to overspend. In fact, on average, every person right now seems to be overspending by seven thousand four hundred dollars every single year. And this is probably due to the fact that 65 of people don't even know how much they spent last month.

And as a result of that overspending, the average American has around 5 900 in credit card debt, even though that number fell quite a lot a few years back thanks to those stimulus checks. And Doughboy were those stimulus checks. Those were nice going back back into this video. Ladies and gents, this is all very important stuff to be aware of, because right now the US economy has been pretty unsteady.

If you don't believe me, just look at current inflation rates, look at the rising interest rates to try and account for those, and then take a look at the bank collapses that we had, and even now our recent debt ceiling crisis. Because of that, over a hundred and seventy five thousand people have been laid off Nationwide in the first four months of a year. Now, While all of that does sound pretty bad, there is an upside to recessions. Last year, the average stock fell by about 20 percent, with tech stocks averaging even higher of a loss at 30 percent.

Bitcoin is currently down at 66 from its current all-time high just about a year and a half ago, and as the markets have become more unstable as the Federal government continues to raise those interest rates, you'll know that an opportunity has also opened in front of you. To unlock the gates of that opportunity, you first would need to take some proper steps. This raises the question: how can you actually build Financial stability to weather the storm of the recession? So here's a solution. First, you need to find out how much you spend.

Get all your bank records. you got to know exactly where you're leaking money, Get your credit card statements and be aware of all the cash that you spend out of all this. The Next Step You want to do is categorize all of it and find out exactly where your monthly spending is going. Now look Anytime.

I Do This. I Actually get surprised by some of the things I learn like subscription services that end up piling up because you know, look, a 14 a month subscription doesn't sound like a lot, but over time it does end up being a lot except when it's of value like our Patreon group which is 14.99 a month and for that amount you're actually getting a pretty solid Roi Link Down Below in the description below. If you're struggling financially normally I wouldn't recommend people to be joining for these type of groups, but this is exactly for people who are struggling financially so it can get you on the right path and start making. Bing Ignoring the value packed subscription Services If we talk about like the booty cheek ones, the ones that really don't add up to be much and they're just subscription services that really just cost you more energy and cost you time like Netflix HBO Look, ladies and gents, try to find ways where you can substitute things that take up your time that you don't either use or that don't just give you a positive return in this life.

I Also want to mention: look, I'm not all against Netflix and HBO and all those things because I frankly myself, I watch it too. but I do it after I Get all my work done and I've done it only after I've been able to accomplish some of the many goals that I set. On top of that, there's also a way where you can earn money by spending money. We'll get to that in a second.

But first of all, let's take a look at how your monthly spending pie chart should actually break down. and we're going to be using the budgeting Infamous rule known as the 50 30 20 rule where you're going to be splitting up your spending based on 50 that goes towards essential needs, 30 that goes towards once and then 20 that goes towards investing in savings. Let's first break down 50 of that first according to the number that we used earlier. If you want to make sure everything's in check, your housing should first be under thirty percent of your total spending.

which on average means you should be spending less than thirteen hundred dollars a month based on the average amount that people make in bigger cities like New York La I mean even Austin Texas I Heard is getting a bit more expensive or even things like DC Sometimes you might even have to consider getting roommates, but if the alternative is not investing or Saving right now I'd say it's definitely a worthy sacrifice to make. now. Transportation out of that should sit under 10 to 15 percent in the last 10 to 15 should include gym memberships Insurance Basics of getting groceries and anything towards your loan repayments. Now some of these may not exactly line up and that's where you'll have to make a decision because maybe you might have more loan repayments or maybe you have a giant car payment and that's the case.

You might need to find a lower cost car or even reduce that 30 in the wants category to make it all balance out. Now the rest of this is pretty simple. We have that 20 we talked about earlier which should always be maintained for investing in savings and now for that 30 percent this is going to include the rest of your grocery expenses, dining out, shopping, entertainment, subscriptions, and holidays. This here is the area where most people end up overspending, so it's important that you're really clear on how much you can spend without going too far over.

So for our average income, 50 or 2 165 dollars is going towards needs, 30 or 1 298 is going towards wants and 20 of that or 865 dollars is going towards investing and saving. One question you might have here is why are we not investing in Saving more You have a good point and you can adjust that number however you wish, but this guideline is likely the best for your average. American Joe Cutting out too much from your wants and needs might even lead you to be unhappy, which may be fine in the short term, but in the long term this could lead you to making even more irrational financial decisions that could totally erase the progress that you made. And by the way, to add to that, your Investments do end up compounding over time as well as your income.

So in theory, this is still a great starting point. On top of that that as your income increases, you can keep your expenses low to really add to that 20. So if your income happens to double but your expenses don't go up by much, then you'll still be able to make a large amount of progress in investing. The whole point I want to make is on top of budgeting and investing.

Always continue looking for ways to increase your income folks. Whether this means it's you getting a new job since most people get a pay bump whenever they do change a job or starting a new side hustle, these are all different ways to improve your financial situation. Now that we've covered your general blueprint, I'm going to be sharing with you the next five tips on how to help you figure out how to best use that 20 and how also how you can use the remaining eighty percent to get even more positive return on value. Starting first with an emergence fund, If you don't already have an emergency fund, this should be your first priority.

You should be building up for the average person you want to have around three to six months of living expenses set aside in a savings account. Now depending on how broke you are, you might be living life on the edge. but I'd always recommend to have something where if you happen to lose your job, if your side hustle or business goes bankrupt, that you'll still be able to survive and you won't have to worry as much knowing that you got some of that mattress. Money aside now, I do want to add that if you have any type of credit card, debt, any personal debt, anything that is costing you 10 to 20, or even 30 percent, you're going to want to have a smaller emergency fund.

Because basically at this point your goal is to just cover any large unexpected expenses. But also for any people with debt, you want to make sure that you're focusing on actually repaying that debt and not holding too much cash because interest is going to be eating up the savings that you have. This rolls into the second largest and most important thing you need to do. and that is for any kind of high interest debt, you have to make sure that you focus on paying it off.

So this could be credit cards. This could be lines of credit and we've even talked about on this YouTube channel. Some alternatives on what you could do: You could get a no interest credit card, move that balance over it in a balanced transfer way and that could instantly boost up your credit score. It could save you on interest for 12 to 15 months and when you do want to pay it off, you're not going to have to worry about pinning that extra payment towards the banks that you would pay in interest fees.

Now guys. I'm not totally against any type of loans, but if it's high interest credit card debt, please fix that. We always educate people that watch our videos to make sure that it is taken care of first and then on top of that if you have a car payment, you have a mortgage. Things like that I Think that's fine because you're still leveraging other people's money and if your interest rate is still reasonable I Believe your money could be working for you and investing into yourself or investing into a business instead.

The third thing like I kind of just mentioned, but you want to make sure that you fully utilizing credit cards Now this year is my favorite tip because obviously I make a lot of content on credit cards I know the ins and outs of it. And like I just mentioned, make sure you fully utilize zero percent Intro: Aprs fully utilized balance Transfer cards because this is going to save you from paying 20 to 25 on your interest on some of those cards and the ones that I would recommend Off the top of my head the City custom, the City double cash the Capital One Saver One card that's a really good one. the Chase Freedom Flex and even American Express has a ton of great credit cards and believe it or not, they also give you a big all credit limit increase too if you request for one most the time. if you guys want to learn more about balance transfers or what some of the best credit cards are.

for anyone who does have credit card debt, be sure to check out my video linked Down Below in the description for that. Going to the fourth solution that you need to know about and this is avoiding lifestyle inflation now I'll be the first one to say but I have definitely struggled my way through this and I have come out on the other side because you know guys, if you remember the bull Market I Mean those are some crazy times when you're making crazy money from crypto from stocks from Nfts. It just feels like money was infinite. I Remember, even during that time like I was just I hired someone at Fold My Laundry and like I was thinking about hiring a private Chef because at that point I was always so busy that every single minute of my day mattered.

and if I wasn't working because it was so easy to make money back then, just studying the markets making content I Figured that was the way to go. but look looking back at it. hindsight I wish I calmed down a bit more I wish that lifestyle inflation didn't creep up on me as much as it did, but at the same time I follow a principle where if one day at the end of times, come for at least the Brian Jung life I don't want to be passing away with all this money that I never got to spend. so I think it's a balance.

Okay, for the amount of money that you spend, you don't want to save so much of it that you have so much left over. but you also don't want to spend all your money so that you're broke. Sure, if you get a raise from your job, you can increase your lifestyle a bit or you know, if your business is taken off, you can go celebrate. You can you know, get a car if you want? I Don't think it's a bad thing to enjoy some of the luxuries in life.

Just don't worship it. and and don't you know, idolize it all the time. But I Believe in the practice of just trying to keep your expenses low, especially while you're young or as your income grows, it'll be important to at least be able to invest that into something like an Investment Portfolio Last but not least, and this is hands down one of the most important ones and this is to make sure that you don't put all your eggs in one basket by diversifying properly. As you guys know, you can diversify in many ways.

You can diversify through the different cryptos you hold Diversified in different markets, but make sure that no matter where you put your money, that you're not putting it all in one basket where it's high risk, where you could lose the whole entire thing. A few great ways to combat this is to look into index funds. This actually spreads out your investment. and instead of just looking into things like the stock market, look into other equities, look into precious metals.

I Mean there are a ton of ways for you to diversify and one of the best ways to make sure that you survive any type of Market volatility is making sure your eggs are completely spread out now. I Also have a full video I made recently about how to get started with investing and I got a lot more detailed information in there so if you guys want to check that out as well. So ladies and gents, if you did enjoy today's video, be sure to drop a like down below subscribe to the channel if you haven't done so already and I'll see y'all soon.