What's up you guys, it's graham here and unfortunately i have some rather discouraging news. Some of this might come as a surprise to you, and some of it might not, but regardless here's what we're dealing with right now in terms of the middle class here in the united states, 78 percent of full-time workers are living paycheck to paycheck. Sixty percent of americans don't have five hundred dollars in savings. The average american holds fifty seven hundred dollars worth of credit card debt.

They spend on average one thousand four hundred and ninety seven dollars per month on non-essential items and, finally, to top it all off 25. Have absolutely nothing saved for retirement and the culprit of all of this? Besides, the lack of financial literacy taught in schools combined with the toxic consumer psychology to keep buying new things is the average american budget. That's right when i started digging deeper into how much normal everyday people spend on their day-to-day expenses. It came as quite the shock and quite the revelation as to exactly why people have so little money left over at the end of every month, not to mention at this current rate.

If this continues, the middle class are going to be financially ruined unless changes are made as soon as possible, but really quick. Before i begin, i just want to sincerely thank everyone for all of your support for hitting the like button or commenting down below. It seriously makes a huge difference in my videos and the more engagement a video gets, the more likely the algorithm is to push the video out to a brand new audience. You can also hit the like button and just repeat the cycle, and also i want to thank our video sponsor today, wealthfront, but more on that later.

Alright, so here's where this all begins and where the trouble starts. According to the current population survey, the average u.s household income is 63 179 dollars a year, which that in itself is not the main issue, but instead the problem is where all of that money is going. The consumer expenditure survey broke down the average american budget, and now some of the statistics that i mentioned in the beginning of the video are gon na start to make some sense. First, we have ten thousand eight hundred dollars going towards housing, nine thousand dollars towards transportation.

Seventy four hundred dollars towards taxes, seven thousand dollars, gets eaten up by utilities and other household operating costs. Sixty six hundred dollars goes towards food and social security and paying off debtor savings, and, as you can see, this goes on and on. That means that the amount of money total left over on the average income on the average budget is nothing at the end of the day. For the majority of the middle class in america, there is nothing left over for any emergencies or any savings or any buffer.

Should something happen, but there's another side effect of not having enough money left over that many people don't talk about and that's the profit you miss out on when you're not investing your money. When everything you have goes towards expenses, you inadvertently don't get to participate in the market in such a way that your money can continue to grow. That's why the top one percent has seen such tremendous growth over the last 40 years, because they've been able to invest in the markets and subsequently grow their wealth without working any harder, so with the bad news out of the way. How could this be solved? Well i'll tell you it's by taxing the rich because they make too much money just kidding, but now that i got your attention, we could do this by adding just a few small adjustments to the average american budget and with a few, very small, minor adjustments.

Building your wealth is going to be a lot easier. All right, so here are the biggest mistakes that the average person is making and, of course, how you could fix them. First, let's start with housing when you combine both the housing expense of ten thousand to eight hundred dollars and the operating expenses of owning a home that very few people. Think of you come to a total of seventeen thousand one hundred and forty eight dollars a year.

Now the general rule of thumb when it comes to this is that you should never spend more than one third of your income on rent. So in this situation, it's right on the line in terms of what's acceptable. Now, what most people don't realize is that things like insurance, property taxes, repairs, maintenance and lawn care and everything else that goes into owning a home could really add up and it gets expensive so much so that on average, renting a home can often be slightly less Expensive than buying that same home, when you take into account non-recupable costs, however, there are some ways around this where you could get the best of both worlds and make money in the process, and that would be through a term called house hacking. This is the practice where you could buy a two to four unit property or a home with a guest house or a home with a livable basement, and then you could rent out the spaces that you're not using and then use that money to cover your expenses.

This is what i did shortly after investing in real estate. I bought a duplex. I moved in one side and between the tax, write-offs and renting out the other. I was able to cover my entire overhead of living in the home, essentially being able to live there for totally free now.

The difficult part for this is that, depending on where you live, buying a property could be very expensive beyond that, though, it's really important to also evaluate very closely whether or not it's actually a good idea to buy a home in your area in many locations. Renting can very much work out to be the cheaper option, but on the downside, you're gon na miss out on home appreciation and you're not going to be forced into a savings account by paying down your mortgage every single month, but either way house hacking still has The potential to bring down your costs substantially as long as you could save up enough for the down payment and you find the right house the cash flows for you to be able to live there for free. In fact, i'm actually going to be putting a counter right here, just to show you guys how much you could be saving every single month now, even though it might be unrealistic to assume that everyone could househack and live for free, even by renting out an unused Space or bedroom or anything else like this, i have a feeling that this would be able to save you on average about 400 a month, but before we go into that when wealthfront found out, i was making this video and discussing why so many people were falling Behind financially, they immediately wanted to step in and help more people invest, and so they've graciously agreed to sponsor this video. For those not aware, wealthfront is an automated investing platform that utilizes software to find one of the best portfolios for you to grow your money, long term, and then from there you can sit back, relax smash the like button and they're going to take care of the Rest until you're ready to retire, they even allow you to take automation, a step further to the point where you can decide how much cash you want to keep sitting in your account or how much you want to invest on a regular basis and from there they'll Make sure you get the most value for every dollar you have without you needing to do any more work.

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This works by selling off investments which are dropped in value and immediately replacing it with a similar security, thereby allowing you to take a tax loss that way those savings could be reinvested elsewhere to increase your return best of all wealthfront software is checking every single day For opportunities like this, and they say that 96 of their clients have had their advisory fees fully covered by just this alone. Not to mention i've been using their high yield savings account for years and they get access to all their financial planning tools for totally free and that estimates, how much you could be worth in the future and how you could better optimize your saving and investing. So that long term you can have more money. So if you're interested in signing up or learning more, like i mentioned, wealthfront has agreed to waive the advisory fees up to the first ten thousand dollars for the rest of your life, and all you got to do is use the link down below in the description.

So feel free to check them out and now we'll get back to the video, the second. We have one of the biggest money wasters of the middle class, and that would be transportation. What i find remarkable is that on average, 10 800 is spent on housing and almost the same amount at nine thousand four dollars a year is spent on transportation. Now, according to experian, they found that the average u.s car payment is 568 dollars a month.

Combine that with another 250 a month in gas 150 a month for insurance and then maintenance beyond that, and it's easy to see why transportation is holding so many people back plus. If you want to hear this getting even worse, the average interest rate on a car loan is 5.27. So right there, the average person is buying a car. That's losing value every day, that's costing them nine thousand dollars a year, including a five percent interest rate on whatever their loan balance is.

Arguably, this is one of the worst purchases that someone can make and just by fixing this one single expense, you could change the entire trajectory of your life, your net worth and how much money you have invested. My recommendation is this: unless you need a really nice car for professional use, go and get the most affordable, reliable good on gas used car that you could possibly find and then drive it until it doesn't run anymore. I know it's not going to be the coolest car, but a 2008-2012 toyota camry is something you could buy for less than ten thousand dollars, it's incredibly reliable with good gas mileage, cheap insurance and cheap parts. So instead it's worth it to wait until the car that you want has already taken the biggest hit on depreciation and then buy it at the bottom of its depreciation curve.

For example, a brand new toyota corolla costs 27 000, but buy a 2014 car. That's seven years old and it's half the price at twelve thousand dollars. Now you buy that same car, ten years old and it's eight thousand dollars and buy a car fourteen years old and it's seven thousand dollars. So, as you can see, the difference in price between a 2011 and a 2008 is just a thousand dollars.

So over those seven years, you've only lost 27 a month in depreciation, and when you see that the average american is buying a brand new car every six years, you can see how that depreciation really adds up significantly over time until the rest of eternity. So instead buy a used car at the bottom of its depreciation curve. Don't lose a lot of money from this and then drive it until it stops running. That alone could easily save you 5 000 a year or 416 dollars a month now, even though you might not be the coolest person on the road driving around in this you're, certainly going to be the coolest person at the bank.

Next, we got to talk about one of my least favorite terms in the entire dictionary, and that would be taxes that, for me, is basically the monetary equivalent of smashing that dislike button. Now here we see on average, seven thousand four hundred and thirty two dollars is going to the irs, which is pretty normal for most w-2 employees. On payroll. However, for many people in this situation, one of the best ways to save money and invest.

At the same time is to make sure you're taking advantage of your employer's 401k. If you have one, this is a tax advantaged account that lets. You contribute up to nineteen thousand five hundred dollars a year in pre-tax money, meaning for every one dollar. You contribute to a 401k.

You are reducing your taxable income by that very same one dollar. So that way, you owe less money in tax and therefore you're gon na have more money saved up to invest even better than that, but some employers will also match your contribution dollar for dollar, essentially doubling your initial investment up front instantaneously, with no risk whatsoever. Now, if you're, watching this and you're thinking, but graham, why are you telling me this? This is all just common sense. Why don't you go back to making more black and white angry compilations of you yelling! That's what i really want to see.

Well, if you thought it was common sense again, you would be surprised. According to the u.s census bureau, only 32 percent of americans are investing in a 401k. That means that more than two-thirds of americans are not utilizing this to reduce their tax bill, even though this would not only help them save more money, but also invest more money. So my biggest tip here to reduce your taxes is to contribute to a 401k.

That's going to get you invested in the markets and most likely you'll end up saving about 150 a month after that we have food at 6, 600 a year or 550 a month. According to the study about 60 percent of that food was eaten at home and the remaining 40 or 220 a month was eaten out at restaurants. Now, i'm not just gon na sit here behind my phone or computer screen and start yelling at you for spending money at restaurants. That's a no-no, even though that would be an easy solution to start saving more money, but instead i'll take a more reasonable approach.

I think, if you're dining out going to restaurants or getting food delivery, avoid doing that out of laziness like if you're going and buying a 20 lunch from work every day, because you don't feel like packing lunch from home, avoid doing that and that's a big money. Waster, but if your idea of having a good time is going out once a week with friends or family to a restaurant, then sure i think it can be a valid expense as long as you're, not dining out at mastros. So i would say the best way to save money here is to eliminate all lazy spending if you're too lazy to make coffee at home. So you go to starbucks, stop it if you're too lazy to make food at home, so you spend 30 on food delivery.

Stop it going out to eat at restaurants, even though you have perfectly good food at home. That's about to expire! Stop it! By doing this, even if you're able to save just a hundred dollars a month, it really begins to add up, and this is all money that you could be using to put yourself ahead financially. Next, we have social security, personal insurance and pensions. At hundred and twenty eight dollars per year or four hundred and sixty dollars a month now, even though social security and pension might be a fixed cost, depending on where you work, personal insurance is something you're absolutely able to shop around, for i think you would be Utterly surprised how much money you could save with an hour's worth of work, calling around just to compare your insurance rates to try to save a little bit more money.

After all, i saved 15 percent of my car insurance by smashing the like button for youtube algorithm, but seriously. Just recently, i had to switch my car insurance over to las vegas. I spent about a half hour submitting applications around and i was able to find an insurance provider for 30 a month cheaper than the other lowest rate. I got that works out to be a 360 a year savings just for some work.

I was doing in the background, and i bet that same would apply for you if you spent the time to shop around, i nearly guarantee for probably 75 to 80 percent of you. If you just spent 30 minutes shopping, around insurance rates, you'd probably be able to save another 30 a month. Now i know it's a pain, because that means you're going to be getting a bajillion phone calls from all the insurance companies. You decided not to go with, but just block those numbers and enjoy some of those sweet sweet savings.

Next, we'll talk very briefly about debt repayment and savings. This study lumps them together at five thousand two hundred and fifty two dollars a year, but when the average american has fifty seven hundred dollars worth of credit card debt, i think any type of expense like this is unacceptable, especially if there are other ways that you Could cut back and eliminate this debt altogether? I would say the biggest issue i have with this is that the average credit card interest rate is 16, and that means on a 5700 balance. You are spending 76 dollars a month. That goes straight to the credit card companies every single month that you don't pay off your bill in full.

Now that might be a good thing if you're buying american express or visa stock, but it's not so good for you if you're, actually the one paying interest, because that's essentially just like you're flushing money down the toilet. So instead i would take the approach of cutting back as much as you can in any area possible and then throwing all of that money towards paying down any debt. That's above a five percent interest rate. Now, once the debts paid off you're going to have that entire amount left over to then go and reinvest elsewhere, but until you're completely out of credit card debt, i would say paying down credit card debt would be your biggest priority and since we're adding all of This up, the average person would see a savings of 76 a month that would otherwise just be going to the credit card companies every single month.

Beyond that, we have a few other things that we can improve on. Americans are spending on average 133 a month on apparel. If this sounds like you just go and take a look at your closet and evaluate how many of these clothes you actually wear on a regular basis. If i were to guess you probably have the same few shirts and pants and jackets that you wear 90 of the time, or maybe i'm just projecting myself onto you, because that's what i do.

But if that sounds, accurate, stop shopping or, at the very least, cut down your shopping by 50. That would equate to another 65 a month in savings, and finally, we have another one vices. This includes things like lottery tickets and so on now, even though this one is only 64 a month, unless there's some sort of hidden benefit here that i'm not understanding most likely, this is bad for you and it's a waste. Now i understand the occasional glass of wine or drink with friends or the occasional lottery ticket just for fun, but really consider how much value you're getting out of this and whether or not this is actually adding to your life.

Even if you're able to cut back on this by just 20 a month that does add up that means between everything i just mentioned it's possible for the average household to begin saving 1257 a month with very minimal effort relatively easily just by cutting back slightly on Existing expenses and i'm sure for a lot of people watching just having an extra 1200 a month left over every single month, would be a game changer for you and in terms of how much you can invest, it really begins to add up if you were able To keep up that savings for 35 years and invest 1257 dollars a month into a broad index fund averaging an eight percent return with dividends, reinvested, adjusted for inflation. You would have over three million dollars at the end of those 35 years. You could literally be a multi-millionaire in the future, just by slightly cutting back on some of your expenses today and that's all on a household income of 63 000 a year, and i would argue that everything i've mentioned so far is not too unreasonable. It's not too extreme, and it's not too out of the ordinary.

These are really just solid, long-standing financial habits that you could begin implementing today and doing this is going to add up to a significant amount of money in the future. Even if you were just able to save this amount up for 25 years, it would still turn into a 1.3 million dollar nest egg and continually grow at 96 000 per year, even if you never contributed any more money. So, even though, yes, the middle class is financially ruined as long as they're living paycheck to paycheck, thankfully, it doesn't always have to be that way and with a little adjustment, you could try to work out of it with some of these methods that i just mentioned Here so with that said, you guys thank you so much for watching. I really appreciate it as always, if you guys find this helpful, make sure to destroy the like button subscribe button and notification bell also feel free to add me on my second channel, the gram.

Stefan show i post there every single day - i'm not posting here. So if you want to see a brand new video for me every single day, make sure to add yourself to that. And finally, if you guys want four free stocks use a link down below in the description, because weeble is going to be giving you four free stocks when you deposit a hundred dollars on the platform with those stocks potentially worth all the way up to one thousand. Six hundred, so if you want to get the offer before it expires, use the link down below, let me know which ones you get.

Thank you so much for watching and until next time.