The Personal Finance Podcast - 15 Mind Blowing Money Statistics (These are Crazy!)

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Starting point is 00:00:56 Find your advisor at IG PrivateWealth.com. On this episode of the personal finance podcast, we're going to talk about mind-blowing money statistics. And I'm telling you, these are crazy. What's up, everybody? Welcome to the personal finance podcast. I'm your host, Andrew, founder of Master Money. And today on the Personal Finance Podcast, we're going to be talking about amazing

Starting point is 00:01:39 money statistics. If you have any questions, hit me up on Instagram at Master Money Co. follow us on Spotify, Apple Podcast, or whatever podcast player you love listening to this podcast to. And if you want to help out the show, leave a five-star rating and review on Apple Podcasts. I can't thank each and every one of you who have left a five-star review. It's been absolutely amazing. And check us out on YouTube as well. We have a YouTube channel at Master Money on YouTube. Now, today we're going to be talking about some crazy money statistics. And some of these are good statistics, and some of these are absolutely terrible. And what?

Starting point is 00:02:15 What matters here is that I want you to take away the lessons of what each of these statistics will teach because understanding numbers like this helps you understand exactly where you are on national averages. Now, do these matter for your personal finance in every situation? Absolutely not. Everybody is at a different position within their financial journey. So don't compare yourself to someone else when we go through these statistics. But at the same time, these are great motivators and these are also great things to know

Starting point is 00:02:44 how to avoid certain things within your finances. And some of these are absolutely mind-blowing. So if you're ready to jump in, we're going to dive right in. Let's get into it. So the first one is one of the coolest statistics out there. And I'm going to explain exactly why, but it's one of the reasons this podcast was created. And it is that 79% of millionaires are self-made. Now, this study has been done over and over and over again,

Starting point is 00:03:10 where a bunch of millionaires have been interviewed from books like The Millionaire Next Store. Dave Ramsey's group did one. There was a bunch of other ones done as well, and all of them arrived right around 79 to 81% of millionaires are all self-made. This is absolutely amazing. And this is absolutely amazing for you, and this is absolutely amazing for me.

Starting point is 00:03:31 Why? Because what this means is that anybody can become a millionaire. And that is why this podcast was created. Because what I truly believe is that anybody can become a millionaire. That's why this show exists. teach you how to build wealth for you and your family. I believe each and every one of you listening can become a millionaire. And not everybody starts at the same place. Let's get real about this. Privilege is absolutely real. A lot of you are going to be starting in a much worse position

Starting point is 00:03:58 than other people. Privilege is there and it's absolutely real. We need to recognize that every single day. No matter where you're starting, though, you can do this. You can become a multi-millionaire by investing small amounts of money over long periods of time. See, there's no such thing as get rich quick in this game. There's no such thing as getting rich quick right away. What we talk about on this podcast is how you can build true, stable, generational wealth for the long run. And this statistic shows that 79% of millionaires are self-made.

Starting point is 00:04:32 And the second fact supports this as well. The average age of people who become a millionaire is 57. So what does that tell us? Because according to the book, the millionaire next door, you can't necessarily tell if a person is wealthy by looking at them. What they found was the average millionaire age was 57. So what that indicates is it takes three or four decades of hard work to accumulate enough wealth to become a millionaire.

Starting point is 00:04:56 This is why you need to understand that building wealth is a long game. And that's why I talk about this all the time. Because even if you don't make a lot of money, you can still invest those dollars and build up generational wealth. was a janitor who died at the age of 94. And when that janitor died, they found out, and nobody knew it, but they found out he had $8 million saved up on a janitor's salary. And what he did was he would buy blue chip stocks over a long period of time. And that portfolio grew and it grew and it grew. Now, what's a blue chip stock? It's big, large companies that have been around a long period of time.

Starting point is 00:05:31 He back then bought companies like General Electric. He bought companies like Walmart. And what happened was his portfolio grew to a massive amount because he just kept consistently investing small amounts of money over time, over and over and over again. And I'll link up the article about him in the show notes because it's a really, really great article. And you can do the same thing. With patience and persistence, you can build generational wealth slowly over time because the average age of people who become a millionaire is 57. So what that tells you is, just accumulating wealth is persistence and patience and investing

Starting point is 00:06:06 consistently. Number three, 70% of families lose their wealth by the second generation. Now, this is one of the really sad stats because 90% lose it by the third generation. Now, that's another goal of this podcast, is to teach you so that you can teach your children and your children's children how to build generational wealth and how to preserve that wealth. Because the reason why we do this is we want this wealth handed down from generation to generation to generation. And one of the families that have preserved their wealth, the greatest, was the Rockefeller family. And if you don't know who they are, the patriarch of the family was John D. Rockefeller.

Starting point is 00:06:44 And he was one of the early oil tycoons in the early 1900s. And he became the richest man in the world. But what he did was with his children was he would give them an allowance. And if his children could not tell him where they spent each and every dollar of that allowance, he would not give them their next week's allowance. And what this was teaching his children was how to know exactly where you're not. your money is going. That's something we talk about all the time on this podcast is knowing where your dollars are going. Because if you have control over that and you increase your income over time, you're going to be absolutely unstoppable. So teaching your children and teaching your grandchildren

Starting point is 00:07:21 how to build generational wealth is so incredibly important because 70% of families lose their wealth by the second generation. So you did all this work to build up generational wealth but forgot to teach someone how to fish. So that's why it is so incredibly important to pass this knowledge down to our children over time. The fourth one is just 39% of Americans have enough cash to cover a $1,000 emergency. And 40% of Americans have less than $300 in their savings account. So bank rate did a study in 2020 and 41% of respondents said they could afford a surprise $1,000 bill, while 40% said the same in 2019. So that means the rest of the population

Starting point is 00:08:06 could not afford a $1,000 emergency. If you've never listened to our episode, we talk about the stairway to wealth. It's the order to put your money in. And we have a downloadable PDF that I will even link in the show notes as well that you can go grab that will walk you through the stairway to wealth.

Starting point is 00:08:23 But the reason why the stairway wealth is so important is because number one, the first thing that you do is you build up a cash buffer so that when things happen in life and you have an unexpected expense, that you are okay and you have the money just there. See, there's power in just having the money there. And if you build up this cash buffer and something happens, you don't have to be stressed out. You don't have to worry.

Starting point is 00:08:47 Guess why? The money is just there. And this eliminates stress within your finances. It eliminates anxiety within your finances. Imagine not having any worry or anxiety about finances anymore. That's what emergency funds do. That's what these cash buffers do. They protect you from life, from medical bills, or your car breaking down, or unexpected expenses, or home repairs.

Starting point is 00:09:09 All of these fall into this category. So make sure you check out the stairway to wealth because it talks about what order to put your money in so you don't fall into this statistic. Number five, 50% of Americans carry credit card debt. And the average credit card debt balance is $6,270. Now here at the personal finance podcast, we have absolutely no problem if you're using a credit card. If you're responsible with that credit card. What I have a problem with is if you are carrying credit card death month to month. See, when you get a credit card, you need to be paying off that credit card every single month with cash.

Starting point is 00:09:45 If you cannot do that, then you should not be buying any more things until you can pay off the credit card with cash. Because credit card debt is one of the worst financial situations you can get yourself in. because the interest rates are astronomical, and it puts you completely behind in building generational wealth. People who build wealth do not get into credit card debt. Credit card debt is a silent killer, and it will absolutely destroy your wealth.

Starting point is 00:10:10 And the stats are horrendous. Generation Z, the average credit card debt, is $2,047. For Generation Y, it's $4,315. For Generation X, it's $7,700. For baby boomers, it's $7,500. I mean, this is a lot of, absolutely out of hand. So what we have to understand here is that eliminating credit card debt is

Starting point is 00:10:31 extremely important. Now we tell you exactly when to do that in the stairway to wealth as well on that same printable that we talked about in the last one. So check that out because we can tell you when to pay off those high interest debts like credit card debt. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure it reaches the right candidates. And it makes a huge difference. Sponsored jobs on Indeed get 45% more applications than

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Starting point is 00:11:41 So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy. Clothes don't fit anymore and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows. with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're building. And that's where PolicyGenius

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Starting point is 00:13:52 32% of Americans saves nothing for retirement in 2020. Now, skipping years is sometimes necessary. If you lose your job or you can't make an income, then sometimes you may have to skip a year or two. But making it a habit means that you will never become wealthy. And that is what you have to understand here. You can skip a year maybe once or twice throughout your wealth-building journey, but you can't keep skipping years consistently.

Starting point is 00:14:17 So understanding this and making sure you're saving for retirement now, because now is the best time to save for retirement. It is the only way that you're going to be retired. So you have to start now. You have to start right away, even if it's a small amount every single month. Get the ball rolling. Which carries into number seven.

Starting point is 00:14:35 22% of Americans have less than $5,000 in retirement savings. So here's the thing that people have to understand about retirement savings. Is that every million dollars that you accumulate in retirement means that you can draw down 40,000. safely. And this was based on a study called the Trinity study. It's called the 4% rules, which you talk about as well. We have an entire episode on how this works. I'll link it up of this show notes. But what you have to understand here is that you're going to have to accumulate a large amount of wealth so that you can retire and live off that money.

Starting point is 00:15:10 You can't rely on Social Security. You can't rely on somebody else to bail you out. There's no retirement loans. You have to do it yourself. That's what we teach on this podcast is how you can build wealth, how you can build generational wealth, and be able to save up enough money so that you're comfortable in retirement. And along those same notes, 56% of millennials don't have any money saved for retirement. And if you're a millennial, you have to understand you are in your investing golden years. If you're in your early 20s or your mid-20s, every dollar that you invest today is worth $80. So you have to understand how much your army of dollars can work for you if you start to put them to work right now. Number eight, just over 70% of Americans' retirement

Starting point is 00:15:56 plan is just to keep working. This is another one of those money saving stats you don't want to have to read because this is going to lead to a pretty tragic circumstance. I know that each and every person listening, even if you love your job, you do not want to work every single day of your life. If you have to work for your entire life as you get old, as you get frail, as you get fragile, as you have health issues, your mind is going to work. to change. So you want to make sure that you're preparing for your retirement, and this is not your backup plan is to keep working.

Starting point is 00:16:25 And that's what we teach in this podcast is to create freedom for yourself so that you can pursue the work that you love and have control over your time and how much you have to work with that work that you love. Number nine, cars are absolutely terrible investments. And here's why, because they depreciate significantly. And here is the stats on why cars are terrible investments. So after one minute, the moment you drive a car off the lot, it loses 9 to 11% of its value the moment you drive it off the lap.

Starting point is 00:16:53 So with a $30,000 vehicle, you're basically throwing away $3,000 right out of that car window right when you drive off the lot. And after one year, research shows that the car will lose another 20% of its value right after you bought it. And after five years, it loses another 15 to 20% of its value. So after five years, a brand new car will lose 60% of its value. This is absolutely insane. and it's going to kill your wealth if you're continuously buying cars all the time. That's why we talk about on this podcast, buy something slightly used because it already takes

Starting point is 00:17:27 that big depreciation hit. And that way, you've already taken the worst part and the biggest money loss out of the equation. So just to show you this, that same $30,000 car, white when you drive it off the lot, is now worth $27,000. After one year, it's worth $24,000. Two years worth $20,000. three years worth $17,000, and after five years it's worth $12,000. So if I told you, give me $30,000, and in five years I'll give you back $12, what would you say? Absolutely not.

Starting point is 00:17:58 And that's what you're doing here with car dealerships when you're buying brand new cars. Now, if you're making a great income, you're making a ton of money, you have a business that's thriving, and cars are your thing, more power to you. But if that's not you and you're trying to build wealth and you're just struggling to get by, then new cars are not for you, my friend. Number 10, 25% of Americans actually are in the field of study that they went to college for. Now, this is something that is incredibly interesting because 25% of Americans are actually working in the field that they went to college for. I mean, 75% of people who ran up student loan debt are not in the field that they ran up the student loan debt for.

Starting point is 00:18:35 So this is a major problem. One of the biggest things that you can do is make sure that you pick the right major for you early on. because another study found that 75% of wealthy people are working in their field of study. So that's a very telling statistic right there. So 25% of Americans are actually in their field of study, but for wealthy people, 75% of them are actually in their field of study. So making sure you choose the right major early on is extremely important. Now, some of the top majors to earn more are engineering, accounting, finance, business,

Starting point is 00:19:09 construction, economics, computer science, mathematics, All of these will help you earn more. And specifically, if you want to pursue fire, sometimes it's better to pursue a profession that will allow you to make more money and retire in 10 years than it is to pursue a profession that is around your passion. Now, your passion can be your side hustle, but look for the professions that will allow you to earn a little bit more

Starting point is 00:19:32 so that you can retire that much earlier and invest those dollars. Number 11. The average American saves less than 5% of his or her disposable income. This is from a study that the LA Times did. So this is a major problem. And the reason why this is a major problem is if you've ever seen our savings rate chart, which I'll link it up in the show notes, if you save 5% of your income, it would take you 66 years to retire.

Starting point is 00:19:59 And this is one of my biggest beefs with the traditional financial wisdom. Because if you got a 5% rate of return and invested those dollars, it would take you 66 years to retire. And the conventional wisdom says, well, okay, go ahead and save 10%. Well, if you got a 5% return at 10% income savings rate, then it would take you 51 years to retire. If you save 15% of your income, it would take you 43 years. So this is why we talk about saving at least 20 to 25% of your income to start out.

Starting point is 00:20:29 Now, how do you get there? There's a bunch of ways to get there, but the major way is to grow the gap. So to increase your income and at the same time, reduce your spending. And this is how people who achieve financial independence and that can retire early, they do both of these to increase the gap between those two so they can invest more dollars. And it's so incredibly important to make sure that you can do that. Number 12, a Market Watch report found that half of American households currently live paycheck to paycheck.

Starting point is 00:20:57 Now, we have an episode talking about how to combat against living paycheck to paycheck. And if you are living paycheck to paycheck, I know how difficult that can be. Maybe you're single parent or just a person in a bad situation or you're just not born with privilege. and you have to live paycheck to paycheck. But this is one of the reasons why this podcast exists, because I'm here to help. And what I want to do is walk you through exactly how to get out of this. So make sure you check out that episode

Starting point is 00:21:23 where we walk through how to get out of that paycheck to paycheck cycle so that you can break that cycle and you can change your family's financial future because it only takes one person to do that. Why not let it be you? The next one, 41% of Americans are afraid to run out of money. Now, what we teach on this podcast and the lessons that you will learn throughout listening to this podcast will take that fear right out of your mind. The reason why is that you're going to start to build up an emergency fund.

Starting point is 00:21:49 You're going to have a big cash buffer and you're going to start investing your dollars and you're going to see that money grow. And over time, you're going to accumulate a large sum of money just by doing very simple steps day in and day out. And we want to take that fear out of your mind, that anxiety out of your mind, that stress out of your mind because that's what money is there to do. It's actually there to reduce your stress and make your life a little bit easier. And what happens is a lot of people who are not good with money, it does the opposite. It makes their life so much harder because it brings unwanted stress and anxiety. So imagine not being stressed or anxious anymore about your money. That's what we're here to do.

Starting point is 00:22:28 So the more you work on doing these steps and the more you work on building wealth, it's going to absolutely change your life. Number 14, a Gallup poll found that one-third of Americans, or 32%, maintain a household budget. Now, budgeting is so incredibly important when it comes to wealth building. And I've noticed that our episodes where we talk about budgeting are the worst performing episodes of all of them. Why? Because nobody wants to talk about something boring like budgeting. So let me tell you something. I've got a solution for you, my friends. And the way we do this here at the Personal Finance Podcast is we talk about reverse budgeting first.

Starting point is 00:23:03 Now, what's reverse budgeting? It's a very simple system where you're not getting into spreadsheets. You're not going line by line at them on every single thing. What you do with the reverse budget is every single time you get paid, you save your money off the top, and then you spend what is left over. So say, for example, you want to save 25% of your income. We're going to save that 25% of your income off the top, and you're going to invest those dollars and put them towards your emergency fund or that kind of stuff.

Starting point is 00:23:28 And then the rest is the money that's left over. You can spend that on your expenses and your bills. That's how the reverse budget, It works. And it's so much easier because, listen, I know you're not going to budget for the long run. I know a lot of you guys don't want to budget. But if you want to optimize and save every extra dollar, then a regular budget, a line-by-line-line-at-a-budget would be much better.

Starting point is 00:23:47 Now, the reverse budget is for people who know they just won't budget. You know yourself. You've tried budgeting 45 times and can't do it. So if you know that about yourself, then a reverse budget is perfect for you. But if you're more systematic and you're part of the 32%, then a line-by-line-line budget is great for you as well. So everybody should have some form of budget, whether it's the reverse budget, which takes almost no effort or the regular budget. Both of those put together, you should have one of the two combos there.

Starting point is 00:24:12 Because a budget is not something that is restricting. A budget is extremely freeing. Here's why. Because you understand where your dollars are going so you can allocate your dollars exactly where you want them to go. Budgets create freedom for you because your dollars are going where you want them to go instead of just frivolously flying out the window. And that's what you have to understand about budgeting is actually freeing for your dollars because you're putting them exactly where you want,

Starting point is 00:24:37 where you value most, and it changes the way you see your money. And then number 15, this one is super interesting. 35% of millennials have posted something to Instagram to make them appear more wealthy. So the pressure to be perceived as something or not is at an all-time high. And as we know, acting rich and being wealthy

Starting point is 00:24:56 are two very different things. Check out episode 53, where we talk about the difference between being rich and being wealthy. And basically, here's what I'm going to tell you about that. Don't act rich until you are. Early on when I started to build wealth, I was pretty frugal. Now I'm not that frugal at all, and I can spend pretty freely. But early on, I wanted to tighten the ropes up so I can get a control on my money and start to get my dollars to work for me. And that's what you have to do early on, is you have to save more, spend less, and invest the difference. That's what you have to do early on. And as time goes on and compound interest starts working for you and you start to build

Starting point is 00:25:31 more wealth, then you can start spending more freely. Now, I'm not talking about constricting yourself to rice and beans every day. I still want you to spend money on things that bring you value because that's what money is there to do. So you can spend it on things that bring you value. What I am talking about is get a good baseline set up, get your first 100K and then you can start building from there. Don't act rich until you are. Listen, I hope you guys enjoy this episode about the different crazy money stats out there. If you have any questions, hit me up on Instagram at Master Money Co. That's Master Money CO. And follow us on Spotify, Apple Podcasts, or whatever podcast player, you love listening to this podcast to. And if you want to help out the show, leave a five-star

Starting point is 00:26:10 rating and review on Apple Podcasts. And check us out on YouTube at Master Money on YouTube as well. Oh, one other thing is Apple Podcasts and Spotify now have notification bells that you can hit. And when you hit that notification bell, you'll get notified every time we have a new episode. coming out. So it's really cool if you're trying to get your finances together. Make sure you hit that notification bell so you know when the new episodes come out every single week. Thank you guys so much for listening. I appreciate each and every one of you and we'll see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play.

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The Personal Finance Podcast - 15 Mind Blowing Money Statistics (These are Crazy!)

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