5 Reasons Why Millennials Are Financially Screwed (AND HOW TO BE UNSCREWED)

you're building equity and everything is just fine but when things slow down you're going to be the first to pay the price and this money is not going to take you to 85 years old you're going to be broke in your golden years of retirement millennials have more costs than any previous generation what's up everybody i'm justin singh from the minoritymaster.com where money minds rethink rich as a millennial who loves talking about financial education you can say i'm kind of passionate about millennials and money and today we're doing a deep dive into millennials and finances because i put together some of our best clips where i go over why millennials are financially screwed and i'm gonna go over the things that you can do to get financially unscrewed because right now a lot of millennials are struggling financially and i'm gonna be showing you the things that you can do right now that way you can get out of this financial mess and start to build your wealth so let's get into it the media loves talking about why millennials are financially screwed because millennials spend all their money on air pods and lululemon leggings and extra guaca chipotle but there's more to the story than that i mean on one hand we have a higher cost of living that's why your housing prices and your rent payments keep going up we have a higher standard of living and we have wages that aren't keeping up that's a very bad combination when people are trying to save money to buy a home it's very hard for people trying to save money for retirement and it's very hard when people are trying to save money to build their own wealth when the cost of everything around you keeps growing way faster than how much money you're making that might partially be why the average millennial is only worth eight thousand dollars they're still relying on their parents for money they have very little money in their savings and they have next to nothing saved up in their investment accounts let me show you what i mean by looking at some average numbers so you understand the average millennium now i know if you're subscribed to the minority mindset youtube channel the goal is not to be average but for the sake of this example let's look at the average millennial because the average person between the ages of 25 to 34 is currently making a salary of 47 736 dollars a year this is the median salary between people between the age of 25 and 34. and you got to understand this also includes people who are doctors who are professionals who are attorneys making a lot of money so that can kind of skew this number up because you have professionals and you have people who don't have a college degree all kind of wrapped up in this number but the average person between the ages of 25 and 34 is making just over 47 000 a year but you don't get to keep all this money right i mean the irs the government wants their cut and so if you are living in an average tax state so assuming you're not living in new york or california where you have very high taxes you would be paying something like 9 500 a year in taxes on this which would leave you with right around 38 500 i know i'm rounding a little bit here but this is how much money you will be left with every single year assuming you're making an average salary i just cleaned this off to make a little bit easier to see but you have thirty eight thousand five hundred dollars a year to play with which is right around thirty two hundred dollars a month now the first cost everybody's got to pay is you gotta pay for your housing the average apartment one bedroom apartment in the united states is twelve hundred dollars a month so if you're an average millennial you might be living at a twelve hundred dollar a month apartment plus added another 100 or so for utilities that's your gas your electric your water i'll be kind of conservative here so your housing costs right around 1300 a month then you got to pay for your car and the average person has a car payment now if you go out and you finance a brand new car it's going to cost you like 550 a month that's the average price for a brand new car so i'm gonna assume that you're a little bit conservative here and you're going out and you are financing a used car the average payment on a used car is 380 a month add in your insurance and your gas and let's assume that you're paying 450 a month for your car payment your insurance and your gas now in order for you to get this good salary chances are you went to college to get a degree and if you're like the average millennial you don't have tens of thousands of dollars in your bank account to fund your college education so you went into debt with student loans to fund your college degree which is why the average student loan payment is 393 dollars a month then you got to pay for your extra guac at chipotle you got to pay for your avocado toast and you got to pay for your starbucks the average millennial is spending like 140 a month on eating out and then another 185 a month on groceries which adds up to right around 325 a month on food by the way this is assuming that you're not shopping at whole foods paying 11 for organic soy milk then if i like the average millennial you have a smartphone which you're financing and then you got to pay for your phone plan and then all the subscriptions for the apps on your phone like netflix and hulu and spotify so that i'm assuming you are now conservative with this because many people are paying more than 200 a month just on their subscriptions not including their phone payments but i'm going to assume that you're conservative which is why your phone plan and all the media that you're consuming is costing you a hundred and eighty dollars a month by the way i threw your internet costs in here too because no millennial myself included can survive without wi-fi and this leaves me with your health costs this is your health insurance your gym membership and whatever else you're spending on to take care of your health this is costing you on average something like 300 a month let me throw one more cost in there too because if you are a millennial chances are you've heard of people investing in the 401k and if you're trying to get ahead in the investing game let's assume that you're putting three percent of your gross income so not your thirty eight thousand five hundred dollars the gross income the forty seven thousand dollars that you're making you're putting three percent of that into your 401k which is another 120 dollars a month i don't know why i wrote month for these three but not the others but you get the idea if we add all these expenses up your expenses every month are gonna cost you three thousand and sixty eight dollars a month which means you have less than 140 a month every month to pay for your savings to pay for your investments outside of your 401k to pay for your vacations to pay for your birthdays to pay for your baby showers to pay for gifts for your mom and to pay for everything else and this is assuming that you've been smart with your money and you have no credit card debt because the average millennial has something like 4 800 with the credit card debt and i couldn't factor that average credit card debt into this because now if you had an average credit card debt payment then you wouldn't have enough money to even pay your bills believe it or not these are what the average financials look like for the average millennial who went to college to get a good job because they're making a good salary but all their money is going out and i'm being a little bit conservative here because i'm assuming you're not driving a brand new car i'm assuming you don't have 200 in just subscriptions like some people do and i'm assuming that you never racked up any credit card debt and these average numbers will explain why the average millennial struggles to save up for a down payment on a home why it's so hard for a millennial to save up a savings account and why it's so hard for people to start investing their money outside of the 401k because the average millennial just doesn't have a lot of money left over after paying for all these average expenses this doesn't mean that all hope is lost i'll get to that in just a minute but this is where we have to kind of really make a decision because yeah we can blame this problem on society we can bring this problem on the government we can blame this problem on the federal reserve bank but none of these things really solve the issue of what's going on so we got to really understand what is causing this because there is obviously an issue of wages not growing fast enough there's an issue of our cost of living rising very quickly but there's more to it than that there's a little bit of a cultural issue involved here too over the years we've seen a huge growth and people spending money on things that they don't need but this trend has not slowing down it is only intensifying and it is getting even more difficult for the average millennial to break out of the system because of this culture and now all the kind of tools that are coming in which make it even easier for you to buy something now and worry about the price later the average millennial does not have a bunch of cash in the bank account to go out and buy big things or expensive things or nice things or even smaller things nowadays which is why we've seen a huge boom in the whole industry of buy now pay later or as we like to call it here broke now broke later first it was credit card debt because everybody will get a credit card and if you didn't know how to use your credit card the right way then you could easily rack up credit card debt but i think people have become a little bit more aware as to the dangers and risks of credit cards if you don't know how to use it the right way but now it's getting even worse with the growth of these buy now pay later systems companies like after pay and a firm and paypal which allow you to buy now and pay for whatever you buy later have been booming and they expect to do something like one trillion dollars of transactions by just 20 25. the real scary thing about these platforms is that they're so new so most people the average person does not understand the dangers and the risks and the costs associated with them like we do with credit cards because the way they work is you go shopping online you find this new wardrobe you find this new sweater that you want to buy and you go to the checkout page and then it says do you want to pay for this sweater later because now all you got to do is pay for this 80 sweater and three installments and you don't even realize the small interest that you're going to pay on it and so all you got to do is click that button because these platforms just integrate with all these e-commerce stores so you can buy whatever you want and just pay for it later and now everything that you're shopping for everything that you're buying online you're paying a little bit of interest on and you don't even realize it and now everything that you're buying from your clothes to your furniture and maybe even groceries you're financing now anytime you make money your money is immediately going out which leaves nothing for you because you got to pay for all the stuff you bought last year today you know we're a culture that really drives and thrives on emotion where right now if you want something you gotta have it and when you gotta have it you gotta have it now you know that means financing it and worrying about the cost later because this is kind of the mindset that we have it's the instant gratification mindset where we want something we want it right now and we're not going to save up the cash to buy it when we can afford it we're just going to buy it right now and worry about the price later because who cares about our finances next year we'll worry about it then couple that with the instagram social media flex culture where when people see somebody else on instagram having nice things they wanna one-up them because when you see your cousin bundy driving around with this brand new beamer or this brand new gucci scarf what do you wanna do you wanna go and get a brand new beamer or a better gucci scarf and how do you pay for it well you finance it so on one hand we have this cultural spending issue where it is cool and it is normalized to spend all their money on nice things and to go into debt to having nice things because that's just what everybody does and if you don't do that you're a weirdo and then on the other hand we have this shift in our economy and the job market because so many millennials have already racked up so much student loans to get a degree to get a job where nowadays many people don't even need that degree to get that same job paying the same amount of money our economy and the way our economy works is really starting to go through a shift right now because many people are realizing that college does not have the same value that it did before now obviously college is important especially for certain professions like if you want to enter the stem field if you want to become a doctor a lawyer an engineer you got to go through college but a lot of people are starting to realize that if you don't know what you want to do out of high school maybe you can go and get a job or go and take a year off doing something else and learn without going to college or maybe go to community college and so you have this whole kind of batch of millennials that went through college because that was just kind of the thing to do if you don't know what you want to do just go to college and when you're 18 you kind of just sign a life away with an unlimited amount of student loans because people didn't understand the dangers and the cost of student loans and only now are we really starting to see that and this really became amplified during the 2020 pandemic because people are paying tens of thousands of dollars to go to these prestigious schools where now you can just take oliver classes online and when you go into your classes online you're still paying 40 000 a year as you would as if you were just sitting in the classroom and people are starting to realize that that makes no sense and so this is kind of really starting to make a shift in the college culture where is college important when will it be important and at the same time you have so many companies that are dropping their college degree requirement because they understand that you're going to have to learn the skills at the job and i can tell you this from my perspective too because i'm an employer but more and more employers are now not looking for degrees they're just looking for what you know what you're passionate about and what your skills are in and so if you can learn how to do something and be good at it because you're passionate about it now you're just as qualified as an employee who got a degree i really think and i hope that we see a big shift in our college and higher education this decade because millennials have been so fed up with student loans and on the other side of things people are wondering why are they paying so much for college when you can attend the exact same classes online from your home couple that deep-seated spending culture with that changing job culture with now an economy where the cost of living keeps going up and up and up and this puts millennials in a really tough space i mean don't even get me started about what retirement is going to look like when it comes time for millennials to retire because pensions are no longer a thing for millennials social security is drying up and millennials for the majority of people are only investing their money in their 401k when your 401k was never intended to be your sole investment or retirement account and many millennials are not even doing that now while this might not sound like good news for the average millennial the good news is you do not have to be like the average person i mean if we just come back and we take a look at some of these expenses you can cut some of these expenses down that's one of the first things you got to do one of the easiest ways to keep more money in your wallet to keep more money for yourself is to cut down some of these expenses live in a smaller home live in a studio apartment do what you got to do share an apartment that way you can save half of this money right there your car stop financing your car what i want you to do is find a used car that's a good working condition and buy it with cash five thousand dollars can buy you a pretty decent working car then your student loans you got to pay off your student loans so there's nothing you can really do there with your food stop paying for extra guac at chipotle what i want you to do with your food is now go to the store buy yourself an 83 avocado and make your guacamole at home then when it comes to your phone and media stop financing your phone stop putting everything on a payment plan and cut out some of the subscriptions that you don't use because chances are you got at least one subscription that you're paying for that you're not using then with your health you got to take care of your health not much you can do there and with the 401k continue to invest your money but if you at least make some of these cuts you're going to have a little bit more money every single month that way now you have some more money to put towards your savings and to put towards your regular investments once you work on reducing these costs then what i want you to do is work on this income maybe you can get a raise at your job maybe you take on a second job or maybe you add in a side hustle or side business that way you can create more income but here's the thing as you start to make more money do not fall into the trap of you make more money and then you start increasing your costs for a little while start making more money here keep your costs the same and put all of this money towards your investments that way now you're working to create more income you're working to build your wealth and you're adding more money to that that way you can really build this freedom because if you don't start taking care of it now somebody that means you is going to pay the price later and that's why you want to be smart now start cutting down some of these expenses so you have more money and then work on increasing this income that way you have more money going to actually build your wealth because if you continue to live paycheck to paycheck with no money left over every single month you are going to pay the price later and you don't want to deal with that so start taking care of it now before we get into the next clip if you do want to learn more about money management and investing you can download our free pdf when you sign up for our newsletter so if you want to learn more about that i'll put the link to that pdf in the description below millennials really dealt the short end of the stick because between 1970 and now wages have gone up by around 70 which is good news but do you know what has gone up by more than 70 since 1970 your rent costs your housing prices your college costs and your standard of living wages have been going up but wages aren't growing fast enough to keep up with inflation and to keep up with the rising cost of living that's why somebody who's graduating school today and enters the workforce getting an average job does not have the same buying power or the same financial ability as your parents or your grandparents did when they entered the workforce even though they might not have gone through as much schooling as you did but if you stick on the idea of home ownership homeownership is the american dream that's why everybody keeps telling you to buy a home your parents your uncles your bank the government wall street banks will do whatever they can to get you qualified for a mortgage so they will lower their down payment requirement and they will try to look around your student loans that way they can get you qualified for a mortgage same with the government the government wants you to be a homeowner so the government will try to create as many programs as possible to give you assistance that way you can go out and buy a home and wall street loves it when you go out and buy a home because now they're going to get these mortgages and they're going to chop them up and sell them and sell insurance on the same mortgages and create this whole system and whole industry around buying and selling the mortgages that you took out in good times no one sees anything wrong with you buying a home that you can't necessarily afford because everything is going up home prices are going up so you're building wealth and you're building equity in your home you are living the american dream you are a homeowner and at the same time banks are making more money because they're selling more mortgages wall street is making more money because they're turning around chopping up these mortgages and turning them into other financial instruments and the government is happy because now more people are buying homes more people are paying property taxes and everything looks good but when you have a lot of people owning a home they can't afford to own a home and the economy slows down that's how you get a repeat of 2008 because if the economy slows down and home prices go down now you have a whole bunch of people that are underwater on their homes because they had no equity in their homes so they have no incentive to stay in their home and keep paying this mortgage so people just walk away doesn't everybody start selling their homes because they're trying to get out while they still can and that's when you see banks starting to foreclose on people because when you have no equity in your property and you're under water then people have much less incentive to continue paying a mortgage on a home that they'll never be able to pay off now look i'm not saying that being a homeowner is bad or that we're about to see a repeat of 2008 i'm saying that if you cannot afford to own a home you should not go out and just buy a home because you see everybody else buying a home and because it's your bank offering you incentives and because see the government offering you incentives because if you go out and you stretch yourself too thin to buy a home that you cannot afford you might be the one paying the price if things turn around let me show you exactly what i mean let's start by taking a look at the average finances of the average millennial so the average millennial has less than 5 000 dollars in their savings account so that is that way i believe 58 of millennials have 5 000 or less sitting in their bank account which means you have a lot of millennials with a big fat zero in their savings accounts and when it comes to investments the average millennial has something right around 23 000 in their retirement account or investment accounts this is money that might be in a 401k or an ira this is just the money that you put aside for your retirement on the flip side of things the average millennial has something like 18 000 of auto loan debt car payments car loans the average millennial has something like 30 some thousand dollars worth of student loans because you gotta get that degree and the average millennial who has credit cards has something like five thousand dollars worth of credit card debt all these things added together leaves the average millennial and actually most millennials fall into this category with less than 100 left every single month to invest to save to put aside to spend to do whatever with the average millennial is living paycheck to paycheck and most millennials do not have an extra 100 every single month to put aside for their dreams or anything else now i already made a video where i talked about why the average millennial is financially screwed and what you can do about it so if you want to watch that video i'll link it for you in the description below but what you got to understand here is there's a lot of factors leading to this i mean obviously we have wages that are not keeping up we have a higher standard of living we have all these extra costs that people before us didn't have like student loans people in the generation before us didn't have to go into debt thirty thousand dollars to get a job paying twenty five thousand dollars plus the generations before millennials also didn't have to deal with all this money printing by the government and the federal reserve bank which dilutes the value of your dollar and previous generations also got retirement handed to them in the form of social security and pensions while millennials did not so there's a lot of factors leading to the fact that millennials are struggling financially and they're having to put off their home buying decisions because they don't have the money for a down payment this is where you're gonna see more and more programs created to help millennials in this situation become home buyers and so you're gonna see things like banks lower their down payment requirement it's already down to like three or three and a half percent and there's a good chance you might see this come down even more over time because young people are struggling to be able to buy a home now this sounds nice because now you can buy a home with a very little down payment but you have less equity in the game and same with the government the government's working hard to create new down payment assistance programs and home buyer assistance programs to give millennials essentially free money that way you can go out and buy a home this is where everybody says if you can go out and buy a home with little to no down payment why in the world would you not buy a home because when you're renting now you're paying someone else's mortgage but if you buy a home now you can get this mortgage and now you can build this equity in this property and now you're building your wealth while you're paying your housing payment versus when you rent you're just building someone else's wealth when you're buying a home with little to no money down then yeah it's really similar to renting because you don't have to put down a huge down payment and you also don't have that much skin in the game now when you're paying this mortgage payment your money is going to hopefully build you equity in this property because somewhere money is going towards your principal but if things go wrong where if home prices go down a little bit and now you're underwater now if you're not able to make a mortgage payment either because you lose a job or because you have to refinance and the payments go up whatever you cannot make your housing payments anymore now moving out becomes a much bigger mess let me clean off my whiteboard and show you what i mean so let's say we're talking about you living in this lob-sided 200 000 home if you wanted to buy this home and you put down three and a half percent that means you're putting down seven thousand dollars as your down payment and you can take out a mortgage for 193 000 now because you're only putting down three and a half percent you're going to have to pay additional fees like pmi and then on top of your mortgage you also got to pay property taxes and insurance but add that all up and if you can get a good interest rate you'll be paying something right around 1200 a month to own this property now this is for buying if you went out and you rented this property this would probably cost you something like fifteen hundred dollars and so in this case it makes sense okay why in the world would you want to rent when you got to pay more money when you could buy the property and own the home while building your own equity in this property the first part to the answer is really more of an economic answer because if something were to happen in the real estate market or the economy her property values went down 20 percent so now they came down to 160 000 this home is now worth this instead of that now this might seem really weird because people think that real estate prices always go up but we know that's not the case remember 2008 but assuming let's say real estate property values went down and your property value goes from 200 000 to 160 thousand dollars now you're underwater and let's say now you want to leave the property you can't sell the home because you bought this home and you owe in the beginning 193 000 so if you don't have enough equity in the property then if you sold a home you're gonna have to give the bank a big check at closing and chances are you don't have the cash do that because if you did then you would have put some more money down so you can't sell the property which means if you wanted to get out of this property it is going to be very hard and this is what causes a lot of people to start walking away from their homes and so now you would just lose the 7 000 down payment on top of that have to deal with a short sale or a foreclosure and if you go through a foreclosure it is a very painful process and you're going to see a credit score dinged and it's going to stay on your records if you're renting this home when you need to get out you have a whole lot less to lose you just got to negotiate with your landlord about how you can leave and then you don't got to sacrifice your down payment you might lose a security deposit here but you also don't have to go through a whole foreclosure process but now if we dig a little bit deeper what you're going to see is that this actually isn't a very fair comparison because people don't look at buying and renting the exact same home because some person is going to look at this and they're going to say wow i can qualify for this home and a mortgage where i only have to pay 1200 a month for this property versus i can afford to pay 1500 a month through renting it here and so what happens a lot of times is this person thinks wait why don't i just go out and buy a little bit of a bigger home because i have extra money that i can pay towards my monthly payments and so instead of paying 1200 a month for their mortgage they go out and buy a bigger home a 250 000 home or a 300 000 home that way they can stretch this as far as possible to 1500 if that's what they can afford to pay because we all know that your home is an investment and home prices never go down and if you're buying a bigger home now you're just building equity and a bigger property so now you're going house hunting and looking at properties with a real estate agent and they're looking at you like why would you want to buy this 200 000 home when you can buy a much bigger home and the banker is going to want to get you approved for the biggest mortgage possible because that's what gets them the biggest commission as well and so now you're going to be stretching yourself thin because you're going to be looking at the numbers like this i would have paid 1500 a month for rent so i might as well pay 1500 a month for my property my mortgage my insurance and my taxes because that way i'm getting the same size home and now at least here you own something where you're building equity but there's another cost to owning a home because when you own a home you're also responsible for all the repairs and all the maintenance and so when the ac goes out you have to pay four thousand dollars to fix that when the furnace goes out you gotta pay forty five hundred dollars to fix that when your roof breaks you gotta pay ten thousand dollars to fix that and if you remember the chart i was showing you before almost seven out of ten millennials don't have a hundred dollars left over in their bank account every single month and so now when you're a homeowner you have homeowner responsibilities and if something goes wrong and the ac goes out and you have to pay to fix that but you don't have the cash to fix that what happens well now you gotta refinance and get another loan on your property or you're gonna have to put this on your credit card again when times are good this works just fine because now you don't have to put down a ton of money for your down payment and instead of paying rent you're building equity in your own property but as soon as things go bad what often happens is many things go bad and then you're going to be the one to pay the price because you couldn't afford to own the home in the first place because now if property values go down now you're paying a mortgage on a property where you're under water on and you're gonna feel kind of like you're drowning because you're gonna feel like you'll never be able to catch up because it'll seem like property values keep going down and at the same time your ac might break or your furnace might go out and now you have this five thousand dollar cost that you don't have the cash to cover and if the economy is slowing down then there's a chance that you might lose an income stream in your home and i not only do not have the cash to pay your regular payments you don't have the cash to cover your ac and your underwater on your property so what happens well these are the people that are the first to walk away from their homes because they have the least to lose look banks the government and wall street want everybody to be a homeowner because that's how they get paid i want you to be a homeowner when you're ready and when you can afford it because now even when things go wrong you are going to be able to sleep at night because you can afford the home that you live in so i want you to be a homeowner but i want you to be a smart homeowner the way you do that is first when it comes to down payment the first thing is you got to have 20 now i know this is hard 20 that's 40 000 on a 200 000 home but if you have a 20 down payment now you have some serious equity some serious skin in the game so even if the economy slows down i realize that prices go down you are okay and also when you have a 20 down payment you don't got to worry about paying higher fees like pmi and other things like that that banks charge on you when you don't have a big enough down payment because now banks understand that you are a qualified buyer so not only are you going to save money on your mortgage payments because you don't have to pay pmi but you also have more equity in your property already the second thing you got to look at if you really want to be able to afford your home are your monthly housing costs this is your mortgage payment and everything else if you really want to be able to afford your home you want this to be less than 25 of how much money you're making every single month and remember when we're talking about your mortgage cost and rent there's more to home ownership than just your mortgage costs you have your mortgage costs you have your property insurance you have your property taxes and you have your maintenance so these are things you got to factor into your costs because comparing your rent to your mortgage is not comparing apple's apples you got to understand all the costs that are involved in owning a home and when you're a homeowner you also have the responsibilities of being a homeowner so you got to make sure you understand that you got to afford the monthly payment okay just because you can qualify to own a home does not mean you can afford it then a good economy yeah it's great it looks like property values are going up you're building equity and everything is just fine but when things slow down you're going to be the first to pay the price and you don't want to be in that situation you want to be a timeless homeowner where you don't got to worry about losing your home and you don't got to worry about how you're going to make your housing payments you want to own your home the right way meaning you want to be a smart homeowner so you got to afford the down payment and you got to afford the monthly payments and finally the third thing you got to have if you want to be able to afford the home you live in is you got to have some savings a minimum of three months worth of expenses saved liquid in your savings account this is not money in your stock account or your investments accounts this is liquid in your savings accounts that way if things were to go bad if you were to lose a job and the stock market crashed you have money to fall back on that way you don't got to worry about how you're going to pay these mortgage payments because you have savings to cover that if you don't have savings then when things go wrong when your ac breaks when the furnace breaks when your roof goes out you're not going to have anything to fall back on because the thing you got to understand about only homes is things break and you don't want to have to go into debt when that happens so you want to make sure you're protected by having some savings so you can fall back on it when things go wrong this is where we really started to hit a dilemma because people want to be homeowners naturally but at the same time it is very hard to be able to afford a home like this because it's very hard to save up 40 000 when you can only put aside 100 a month so there's two things you got to do to be able to afford your home first is you got to spend less money okay if you are spending a whole bunch of money on things you don't need maybe you have a bigger apartment or a bigger home than you need right now or maybe you're spending a lot of money on accessories and an expensive lifestyle that you don't need start cutting down on things that you don't need that way you can save up money for your down payment on the flip side you got to also work to earn more money maybe that means taking on a second job maybe that means starting a side hustle maybe that means asking for a promotion or asking for a raise these are things that you can do right now to start adding some more income into your financial system because you need to have some extra cash that way you can afford the home that you live in i can't predict the future but chances are you are going to see more and more incentives created that help young people especially millennials be able to afford a home because millennials not being able to afford a home normally is a big problem and it's going to slow down the banking industry it's going to slow down wall street and the government's not going to be happy about that so chances are you're probably going to see more programs created to help millennials buy homes now while these sound good on paper you got to understand that these things do have costs and you don't want to be the one of the people that's paying the price of this cost you got to understand what's going on and be smart with your money because it's not your banker's job to be smart with your money it's not your real estate agent's job to be smart with your money it's not wall street's job to be smart with your money unless you're paying them to do that but even then it's not wall street's job and the government doesn't do the best job at taking care of you this is why you got to be smart with your money and understand what you can afford and when you're ready to be a homeowner because you want to be a timeless homeowner where you don't got to stretch yourself too thin and start living paycheck to paycheck just because you're a homeowner and you don't want to ever worry about having to lose your home [Music] retirement is a really weird concept personally i hate the whole idea of traditional retirement where you work from the age of 21 until 65 or 67 and then once you hit that age then you can quit your job finally and then do nothing until you die well i guess some people look at retirement as the time when they'll finally be able to travel and finally be able to go enjoy the world and enjoy their lives but why do you want to start enjoying your life when you're old this is one of the reasons why people say those who retire early die early because when you're sitting in retirement with nothing to do except watching reruns on tv all day every day you feel like you have no purpose i would much rather like to see you change the whole idea of retirement from working this job that you hate for 45 years so you can ultimately quit and do nothing to doing something that you love and then when you hit retirement or financial freedom that now you can kind of scale back while continuing to do what you love while spending more time traveling and spending more time with your family if all you know is your job and this is what you're looking forward to day after day after day then when you hit retirement it is going to be a very sad day because then you're not going to be able to go back to your job and you're going to feel like you have nothing to do like there was an uncle of mine who used to be an engineer and he worked this engineering position for decades and as soon as he retired he immediately started having all these health problems because he was doing nothing except sitting on the sofa and watching tv all day long and so he went from this healthy person to immediately becoming this old person like almost overnight because he started having so many physical health problems he went into depression and it created all these problems just because he hit retirement and had nothing to do now while that issue is kind of like what do you do in retirement and how do you live your life the second issue is the financial side of the issue because cnbc has made it clear that millennials are financially screwed when it comes to retirement well at least people that don't understand money that is the whole idea of retirement strictly financially speaking is you can now live life the way you want without having to worry about money because you have built up this nest egg these savings or this investment or whatever this income or this nasdaq that you have created will now be able to fund your life that way you can live your life without having to go to a job in order to get paid previous generations never really had to stress too much about retirement because if you followed the system where you went to school and you got a good job and you put in your time at your job then you were pretty much guaranteed a pension or social security or both so you could be able to live your life and retire kind of without really that much stress with millennials is a little bit different because now you got to plan for your own retirement and if you don't start doing this early you're going to pay the price later on and that's what i'm gonna be talking about in this video but before i get into that i need you to do me a quick favor and smash that thumbs up button below so if you go back to the cnbc article this article is based off of research from an mit economist which says that millennials want to retire by the age of 65. it says that a third of millennials want to retire between the ages of 65 and 69 and another 43 of millennials want to retire before 65. so you have the vast majority of millennials that want to retire at 65 or earlier now you have all these millennials that want to retire at 65 but when it comes to actually planning for retirement and putting money aside for retirement only half of millennials are putting aside more than six percent of their income into something like a 401k or any investment to help actually fund their retirement and only one in five millennials are saving or putting aside more than 15 percent of their income to actually fund their retirement but it gets a little bit worse so what this is saying is that three out of four millennials want to retire by the age of 65. a lot of these people want to retire before the age of 65. but now half of millennials about 50 of millennials are saving or putting aside six percent of their income max so this is like the maximum amount of money they're putting into the 401k while only 20 of millennials are putting aside 15 of their money or more into the 401k so this other 30 is saving somewhere between six and fifteen percent so you have the vast majority of millennials who wanna retire at 65 but now the vast majority of millennials are also saving or putting aside less than 15 percent of their income now when i say saving i don't mean putting this money into a savings account i'm importing this money aside for your retirement into something like a 401k or your other investment accounts 80 of millennials have less than 15 percent of their paychecks going towards their retirement accounts and this article says that if millennials want to be able to retire you got to be saving 40 of your income for the next 30 years to be able to live a retirement where you're living a lifestyle where you're just pulling out half of your final salary before you hit retirement now the reason the economists are saying that this money that you're putting aside towards retirement isn't enough is because they predict that the stock market where this money is going right when you put your money in the 401k is going into the stock market they think the stock market is not going to grow as fast as they used to they say that in the past the stock market used to grow by an average of 10 a year but in the future they expect it to grow somewhere between three to five percent a year some companies like vanguard actually predict that it will be below two percent a year for the next decade that's concerning because if over the next couple decades when people are trying to build their wealth you only see a money grow by two to three percent a year on average then you're not going to be able to build the wealth that people were able to do in the past because in the past people saw their money grow by seven eight nine ten percent a year on average and so that can affect how fast your money compounds because when it comes to compounding your money and building wealth there's three factors you got to look at you got to look at how much time your money is invested for you got to look at how much money is invested and then you got to look at the interest rate you cannot really change too much about the time unless you start earlier but you cannot change the past so the next best thing you can do is start investing your money today when it comes to how much money you can invest obviously you could try to invest more money but it can be hard for some people to invest half of every dollar that they earn and the third thing we can look at is how fast your money can grow and if what they're saying is true where money is not going to be able to grow as fast then that's gonna hurt a lot of people when it comes to building long-term wealth let's take a look at it let's assume that you are making fifty thousand dollars a year and for the sake of this example i'm going to assume that there's no inflation in this world so you are going to make fifty thousand dollars a year every single year until it comes time for you to retire and i'm going to assume that you are investing 15 of every dollar you earn before taxes so 15 of 50 000 means you are investing 75 hundred dollars a year if you can do this and you do this for the next thirty years well over those next thirty years assuming you get a two percent annual return on your money then your money is going to grow to 300 323 000 if you can get a three percent annual return on your money then your money is going to grow to right around 380 000 when it comes time for you to retire now the problem here is if you want to live off of fifty thousand dollars because this is what you're used to this is what you've been making every single year then even if you make three percent a year on your money then this money is going to last you less than eight years when it comes down to retirement so if you're retired 65 you're going to be broke by the time you're 75 and even if you're living off of just half of what you made as a salary so if you're living up for 25 000 a year you're still not going to get 20 years worth of income from this money assuming you don't keep investing your money when it comes time to retire because you move your money into something safer like bonds where you're getting even lower returns if that's the case then this money is not going to take you to 85 years old you're gonna be broke in your golden years of retirement if what economists say is true that millennials are only going to see a two to three percent return on their money over the next few decades then this is very very very bad news for millennials especially because only one in five millennials are putting aside 15 or more for retirement while the vast majority of millennials are doing way less than that now if you are a millennial and you're watching this there are things that you can do that way you can get better returns on your money and i'm going to get to that in just a second but the reason why these economists and these financial institutions are kind of predicting these lower returns in the future is because they think that our united states economy has grown so big that we're not going to be able to grow as fast you can kind of think of our united states economy like a company because when a company is small and is in the startup phase it can grow a whole lot faster than it can once it becomes mature and bigger and older like if we look at amazon for example in the first decade that amazon was in existence they were growing by a hundred percent a year but now that they're so big you're not going to see them grow by 100 a year every single year over the next decade because they're so large there's not that much market share that they can grow by that quickly so the bigger you are the harder it is for you to grow as fast that's why when you invest your money into blue chip stock like a bigger company something like mcdonald's you're not going to expect to see your money double overnight versus if you invest your money into a startup like maybe tesla or peloton you can see your money grow a whole lot faster because these companies have the ability to grow a lot faster because a lot of people are not buying or using their product yet and so they have a whole lot more market share that they can take and so they can grow very quickly so the smaller you are the more potential you have to grow faster if you look at the united states economy back before the 2000s you would see our gdp our economy grow by five six seven percent a year but now we are happy when we see our economy grow by just two percent a year because our united states economy has become so large i mean we are a massive economic superpower and when you become that big it becomes so much more difficult to maintain that same rate of growth that you saw before and so in order to keep growing quicker you might have to take on more risk i already made a video talking about how our economic system works if you want to learn more about that i will link a video where i explained it in the description below so the whole idea is because our economic system and our economy is so big now we can't grow as fast as we once did because our economy is already so large and so we kind of have to expect smaller returns but just because that's the case for the overall economy doesn't mean that you have to accept these smaller returns because there's other things that you can do with your money to kind of balance this out and get better returns for yourself now look i gotta give you a little bit of a disclaimer here because investing has risks you are never guaranteed to make money when you invest you might even lose money which is why you got to always do your own due diligence and never blindly listen to a random guy on youtube in general higher risk comes with higher potential return so what you want to figure out is how you can get this higher potential return while kind of mitigating your risk one way that you can mitigate this risk is by learning and finding alternative investments that can get you better returns and because you learn and know how to do this you can lower the risk while getting the higher returns one thing that we're gonna see over the next decade is cheap money i mean we have interest rates that hit rock bottom at 2020 and 2021 and they're going to stay low for a long time and so we have this huge influx of money into our economic system and this money has to go somewhere one of the places money can go is into startup companies and so startup companies can borrow money very inexpensively and use this to start and grow companies there's a couple different ways that you can invest in these innovative and growth companies you can go out and find the individual companies to invest in so you can go out and find these startups and you can do the research on them and you can study their financials and you can see who is a good person to invest in who's a good ceo who has a good executive team and when you find a company that you like you can invest your money into it but then you also got to do the upkeep you got to listen to the earnings calls you got to see how much money they're making you got to see how they're innovating because you want to make sure that your money is in a good place i don't recommend this for the majority of people because this takes a lot of work and a lot of time and if you're not willing to put in the work then you are taking on all the risk without mitigating it because when you're investing in startup companies and these innovative companies there's a high chance that these companies can fail because it also comes with more risk the alternative is you can invest in an etf which is a fund that gives you exposure to a bunch of different companies so there are etfs out there that gives you exposure to growth companies and innovation companies so these are etfs that give you exposure to a whole bunch of different companies a whole bunch of different stocks so if one company in your fund goes down then you're okay because this fund will have a whole bunch of other companies but you're getting exposure to a general group of stocks so there are etfs that give you exposure to growth like v u g this is a vanguard fund and there's innovation etfs like a r k k ark again these are just examples i'm not telling you what to invest in but i do got to let you know that i do have some of my own personal money in this arc fund but these are things these are funds that you can invest in that will give you exposure to growth companies up here or innovation companies over here etfs work just like stocks you can buy and sell shares of these etfs right on your stock brokerage and if you go and do a little bit of research so do a google search on either of these etfs you'll see what companies they invest in and what their investment goals are the thing that you have to understand when it comes to investing your money in etfs is your goal here is long-term growth because etfs are not things that you should be day trading these are things that you want to be investing your money in for the long term because you believe in the companies that these funds are investing in so you believe in innovation you believe in growth and you like the companies that these funds are investing in and so you want to own a piece of that fund to help you get exposure to these companies and the key for this to work is you got to keep consistently investing some of your money i say at least 15 of your income every time you get paid into these funds and this is something you got to be doing for years right because we're talking about building this financial freedom and so the goal here is not to see your money go up and a month is to see your money grow consistently over the years now before i get off the topic of these etfs if you do want to learn more about how to invest your money in etfs and how etfs work and how you can find a brokerage to automatically passively invests your money into an etf like this for you every time you get paid that we don't got to worry about it our team wrote an amazing article that will walk you through exactly how to do that i'll link it for you in the description below the third way that you can beat the returns of a slowing stock market is by investing your money in real estate but there's a few different ways you can invest your money in real estate one way is through reits r-e-i-t i'll explain what that is in just a second another way is through crowd-funded real estate and the third way is through rental properties i got to get me a new black marker reits stand for real estate investment trusts and these are things that trade on the stock market now when you invest in a reit you're not investing in an actual property you're investing in a company that invests in real estate so you can invest in reits that invest in apartment complexes you can invest in reits that invest in strip plazas and commercial buildings there are rates for all different types of real estate the interesting thing about reits is that reits are required by law to pay out 90 of their taxable income so the rental profits to the shareholders people like you through dividends and so many times you're going to see reits that are paying out dividends more than three percent a year this is in addition to stock price appreciation which you're hopefully going to get so when you buy shares of a reit you're going to hope that the price of your shares go up but in addition to that every three months or whenever they pay out of dividend you are going to make this passive income crowdfunded real estate is a little bit different this is a way for you to get exposure to physical real estate without having to buy an actual property yourself so what you're doing here is you're investing your money into a fund this is not something you do on the stock market you got to use a crowdfunding service i'll have articles and resources for you in the description below if you want to learn more about how to do that but you're investing your money into this fund which gives you exposure to physical real estate so you might be investing in a fund that gives you exposure to prime time apartment complexes in miami or it gives you exposure to prime time developments in la essentially you're investing your money into something that gives you the same returns that a physical property is giving you the advantage of this is now you will get appreciation and dividends from your rental income and you don't got to worry about dealing with tenants or finding properties or dealing with property managers you're just investing your money into a fund the third way that you can grow your money faster is by investing your money into rental properties especially value-add rental properties so this is my favorite place to invest my money when you invest your money into a rental property you're going to buy a physical property let's say a house and once you own this property you can lease this property out to somebody else so a family can live in your house and every single month they're going to have to pay you rent for living in your property so not only are you getting passive income but if housing prices go up and real estate prices go up your property values are going to go up as well now to put this in perspective if you invest your money into a reit typically you're going to see dividends paying you somewhere between 2 and 10 return a year the higher the dividends the higher risk but these are pretty standard when it comes to reits so somewhere in the two to ten percent a year and this is consistent passive income you're gonna get for just investing your money into reit when you invest your money into crowdfunded real estate you're typically gonna see somewhere between six to nine percent a year at least this is what i've been seeing in the past and i have some of my money in crowdfunded real estate and these are the type of returns that i've been seeing and when it comes to rental properties this is really gonna depend on which area you're in but if you're in a big city you're gonna see lower returns if you're in somewhere like the midwest then you can see much better returns me personally i'm looking for something between seven and eight percent cash flow a year the reason i like this is because this number typically goes up over time because rental prices go up and so you make more money and you own something physical and tangible plus when you own physical real estate you also get tax breaks because the united states tax code gives a lot of loopholes to real estate investors now i know this is not easy this is more work this is going to require effort on your part to learn how this works and actually put in some time and some money to invest here and yeah you're going to go through a learning curve there might be times where you lose money i even talked about my worst real estate deal ever on youtube there are times where you will lose money but these are things you got to go through if you want to be willing to get the higher returns that way you can actually build your wealth because if what these people say is true and you're only going to see two to three percent returns over the next decade or decades on average then it's going to be much harder for you to build your wealth and so this is where you got to really break away from the majority of people i mean that is why we call ourselves the minority mindset where now you are taking care of yourself and your finances because you do not want to run into a situation where you have to rely on someone else like the government that way you can be able to live your life this is where financial education is so important because most of us are never taught about the different ways that we can grow our money we're just taught to go to work and invest our money in our 401k but if that's not working or if it doesn't work in the future you got to know how to start planning your money today that way you can live the life you want when you want [Music] people love to rip on millennials for being bad with their money but there's a lot more to what's going on with millennials and money than just millennials blowing all their money on extra guac at starbucks i mean we all know that jeff bezos became the richest person in the world because he skipped out on a hundred billion lattes and save that money in his bank account what's even more interesting is that millennials on average are making more money than any generation before them but at the same time millennials have less wealth than any generation before them like millennials own something like three percent of the net wealth while baby boomers when they were younger they own something like 21 percent of the net wealth in this country and this divide between the haves and the have-nots is just accelerating and getting bigger and what you'll see is this divide is actually just between the financially educated and the financially illiterate but i'll get to that in just a minute but even newsday reported that in the mid 2000s people that were under 35 then had more wealth than people did today who are under the age of 35 and this is adjusted for inflation so what happened between the time when baby boomers were young and now and even more so the mid-2000s and now which is making it harder for young people and millennials to build wealth and if you're generation z are watching this you might be reading these news headlines thinking wow i'm even scooter which is why it's important for you to watch this video but what's going on what happened what caused this well if we just focus in on the last couple of decades which is when we really started to see this divide accelerate a few things happened first we saw some major recessions like the 2008 recession and the 2020 pandemic intercession were both once in a lifetime recessions that millennials were lucky enough to live through twice and to kind of combat these recessions we saw massive quantitative easing which means money printing you'll see why that matters in just a minute and during this time in the last couple of decades we saw a massive increase in the standard of our living because technology boomed and with all of this also came cheap debt so let's jump into this what's really going on and what can you do to build your wealth but before we get into that i need you to do me a quick favor and smash the thumbs up button below and a quick word from response to repo if you are interested in investing in stocks weeble is giving you free stocks for opening a free account and investing with them if you want to learn more and see how you can start investing and get your free stocks i got the link to how you can do that with weeble in the description below but there's a couple kind of like hidden costs of a recession that most people don't think about when they think about the cost of a recession the first of which is a changing job market because if you spent a number of years working a certain position and now this recession comes in and it wipes out that position now you're kind of like starting over in the marketplace trying to figure out how to have a career and how to make money like just take a look at what happened after the 2020 pandemic you had entire industries that were obliterated like the retail industry was hammered the hospitality industry was smacked and the travel industry was hit so hard where now people that were working in these industries or were getting experience in these industries now we're having to start new career paths somewhere completely different where now they have to start kind of as an entry level again so if you're a young person and you come out of school thinking i want to be in the hotel industry and you start working in the hospitality industry trying to learn how hotels work and then this pandemic and this recession comes in and this entire hospitality industry gets smacked now you might have lost your job and now you have to look for a new career and now you're starting off somewhere brand new now of course there's winners and losers when this happens like any time you see a recession happen you see winners and losers like when a market crash happens you see a lot of losers people lose money when they panic sell on the bottom but it also creates a lot of opportunity for people that think different when they come in and they buy at the bottom because now you get to buy assets for dirt cheap just like that when the job market changes you see winners and losers when the 2020 pandemic happened the clear winner was the tech industry because everybody was home and they're spending a lot of time on their computers and their ipads and their cell phones and so the tech industry boomed because everybody started doing everything digitally that's why they say more millionaires are made during economic crashes and recessions than any other time because recessions allow people to think different the opportunity to come in and find the opportunity and seize it but at the same time they also hurt the people that don't think different the people that kind of just follow the traditional path because they don't see that opportunity and so now when you have multiple major recessions happen the people that think different that have the minority mindset are able to thrive because they find the opportunity but other people that don't necessarily see that opportunity or are on the wrong side of the equation just because they work in a certain industry or a sector they get smacked and then they have to pay the price so on one hand you have this changing job market that just gets accelerated when you go through a recession and some people just were not ready for that i mean not everybody can work in the tech industry and some people just didn't want to but now because of what we saw happen in the 2020 crash and because of the changes that happened after the 2008 crash people had to change their careers massively and this completely changed the job market the second thing has to do with quantitative easing in order to combat this recession we saw a whole lot of money printing by the federal reserve bank and the government in order to stimulate the economy when the 2008 crash happened and our economic system was on the verge of collapse the united states government worked with the federal reserve bank to fund the biggest bailout in the history of the world which meant they printed hundreds of billions of dollars to help stimulate the economy now when that happened it was absolutely mind-blowing to think that the government could fund these hundreds of billions of dollars with the quantitative easing then when the 2020 pandemic and recession happened the united states topped that with a multi-trillion dollar stimulus plan which means over this like couple decades you saw trillions of dollars printed by the united states government and the federal reserve bank and this cash was injected into our economy now on one hand this sounds great because it stimulates the economy it gets businesses going it gets money into the hands of people so now people have money to spend it gets the economy going and our economy looks like it's going back to normal but this is probably one of the biggest reasons why you see this kind of divide in wealth between young people in the mid 2000s and now because the value of our dollars have been diluted because of all this money printing that has happened between 2008 and the 2020s we all go to school to learn how to be productive members of society and the extent of financial education that most of us get is to not spend all of our money and to save some of our money and then we get a job and then we're just told to invest our money in our 401k but this financial education or this lack of financial education is a big reason why you're starting to see a bigger divide between the haves and have-nots because the majority of people are going to work every single day just so they can save a little bit of money but what people are starting to really realize now is that your savings don't have as much buying power as they used to every time more dollars or what you and i call money is printed the value of each dollar that you have and the value of each dollar that you work so hard to earn goes down a little bit this is what inflation is as more money is printed the value of your dollars and your money gets diluted and so now you need more money to go and buy groceries you need more money to go on a vacation you need more money to have a place to live and so as more and more money is printed the value each dollar that you save the value each dollar goes down which makes the cost of living go up and at the same time the majority of people don't understand this they don't see this happening so what do they do they continue working hard at the job just to save a little bit of money and these are the people that are becoming poorer because of the system and they don't even see it happen because you're not using your money in a way to build your wealth your money is just sitting in the bank and it's getting eaten away by inflation and so yeah you thought you saved ten thousand dollars which sounds great but ten thousand dollars today doesn't stretch as far as ten thousand dollars did 20 years ago so now you have the price of things constantly going up because dollars don't have as much buying power as they did before and the majority people don't understand this so the majority people keep going to work to save some money but they don't realize that when they do that they're just shooting themselves in the foot because your money is losing value your money is a liability in the bank because it is slowly getting eaten away by inflation while the people that understand what's going on take the extra dollars and they convert it into other assets which are things that grow with inflation or they grow into things that make them more money so the majority people think they're doing the right thing by saving their money but they're actually the ones losing in the system because everybody else who was using their money the right way is becoming wealthier while the majority people are becoming poorer so not only do you have people lose a big chunk of the life savings who sell during a recession but you have a constantly changing job market you have all this money printing which causes increasing inflation which makes it harder for people to buy things but you also have an increasing standard of living because over the last couple of decades we saw this boom in technology and so now not only do people have your basic cause of a home and a car but people also have a fancy laptop a smartphone a smartwatch your airpods and you got to have your lululemon leggings with that too this point opens up a whole new wave of debates because people say okay you are a middle class person today and maybe you don't have a lot of money in the bank and maybe you don't have a lot of investments or assets or wealth but you do have a nice home and your home has ac and you have a nice car and your car has a touch screen in there and you have a nice laptop and you have a nice phone and so you have nice access to all these nice things which increase your standard of living but you don't have kind of wealth compare that to somebody 50 years ago who didn't really have all these things the middle class person 50 years ago might not have had a nice car or a nice home they wouldn't have a touchscreen or any technology so even though you're middle class and maybe not as wealthy as people were a couple decades ago you still have a better standard of living personally i just think that's a dumb argument of course i would rather be middle class or poor today than middle class or poor 50 years ago but i want to know how can i have the nice things and have the wealth this is what financial education is all about understanding how to use your money and so now we have already these higher costs of living but we also have this higher standard of living because now you have the majority of people especially young people that now see everybody else have the airpods everybody else has the macbook and the iphone and the nice car and so everybody has to go and buy these things because they feel like they need to because everybody else is doing that they used to call this keeping up with the joneses nowadays is keeping up with the instagram flex and so everybody wants to have the nice things because we have this higher standard of living but when you don't have money to buy these things to begin with it keeps you in the cycle of just not being able to build any wealth because all of your money is constantly going out because you got to have all the new things and if you don't have the money to buy that well don't worry because it's fueled with the help of cheap debt so cheap debt is another byproduct of recessions because when an economic recession happens then the federal reserve bank will come in and they will cut interest rates on debt that way borrowing money is cheaper as a way to stimulate the economy because when the federal reserve bank lowers interest rates people are more likely to go out and buy a home they're more likely to buy a car because it's cheaper to borrow money and they're more likely to put more things on the credit card because it doesn't cost as much as it did before might sound silly if you're financially educated but it's reality the numbers show that it's the same with businesses when debt is cheaper then businesses are more likely to borrow money and reinvest this money back into their business because now they have more money that they can borrow at a lower cost and so when you have this cheaper debt what happens well people are more likely to go into debt now again this can be good or bad if you're using this debt to buy assets which are things that make you money then it's not so big of a deal because now you can borrow money for cheap and use this money to make you more money so for the financially educated is a good thing but for the financially illiterate this is not so good thing because now if you don't have to pay this much money in your debt it seems a little bit cheaper and now when you can get this debt cheap and you have this higher standard of living what happens well now you're gonna go take out all this debt and you're gonna go buy a whole bunch of liabilities things that don't make you any money because it's cheap the debt is cheap this is one of the reasons why you have 20 some year olds and 30 some year olds drowning in debt at such a young age because debt is so cheap and so people don't see the cost of it as much because it's easier and cheaper to go out and borrow money all these roads lead back to a lack of financial education because if you're not financially educated what happens well when a recession happens you lose half your life savings when you see this quantitative easing happen you don't even see it happen your money keeps sitting in your bank account and your money is getting eaten away by inflation you have this increase in standard of living and you see everybody else buying all these nice things so what do you do you go out and buy it too and how do you afford it well with the help of cheap debt if you're financially educated then just everything flipped you see a recession happen this is an opportunity for you to come in and buy assets at a discounted price you see this quantitative easing happen and so now you move your money to something more valuable like assets that will go up with inflation or that will pay you you see this increase in standard of living in this cheap debt and you see this and now you're not the one that is paying for the airpods and paying for all this technology with cheap debt you're the one buying the assets you're buying shares in companies like apple you're buying shares in companies like amazon you're buying shares and assets that are going to go up because you see how people are spending their money and if you are going to use debt you're going to use it to buy things that are going to make you money like income producing real estate real estate investment properties not just a home free to live in but real estate as an investment that you can rent out to other people because now you can use this cheap debt to create passive income for you like if we take a look at the average millennial the average millennial has something like 30 000 worth of student loans then the average millennial has something like 18 000 worth of car loans auto loans and on top of that the average millennial has something like 5 thousand dollars worth of credit card debt that's tens of thousands of dollars of debt that millennials are working hard to pay back that the majority of people before them baby boomers didn't have to pay like even if we look back just a few decades ago student loans were unheard of people weren't going into debt to go to college and if you were it wasn't 30 000 worth nowadays when you're 17 or 18 everybody's going to college and most people are financing this with student loans and we don't have financial education in high school and so people don't really realize what the cost is and you're 17 or 18 and you're signing this paperwork and you don't even realize that you're signing a financial life sentence because of your student loans i'll talk about cars in just a second because this is really interesting but if you look at the credit card side of things you have this whole new industry of banks and credit cards catering just to people who are brand new to college or brand new to the workforce and if you don't understand how your credit card works which is a lot of people if you don't have financial education and you get this free piece of plastic where now you can spend as much money as you want well now you come out of college or you're in your 20s and you have thousands of dollars with the credit card debt but you don't realize it's going to take you years to pay back even when i was at my freshman orientation at college all the local banks there had stalls where they were giving away all this free stuff like lanyards and balloons that way you would want to come there because when you're college kid anything free is attractive and all they want to do is sell you on their free college credit card even when it comes to auto loans young people nowadays are way more likely to go and buy a car through a loan than people did in the previous generations because either a people don't have the money to go out and buy a car with cash or b they don't want to buy a car they can afford with cash because now they can get out an auto loan and buy a much nicer car the shifting trend in buying cars only with a loan is not good for people buying a car because now you are paying interest to buy something that doesn't make you any money and that's losing in value because your car is going to depreciate in value like a rock but at the same time it is great for financing companies and car companies which is why all these car companies are so excited because they're seeing this boom in auto loans because young people don't have the money to buy a car with cash so they're making so much money because now not only are they selling you a car but they're also selling you the financing on your car again while this all sounds like bad news and it is bad news for the average millennial and it's going to be even worse news for the average generation zer and the next generation after that but it doesn't have to be all bad if you understand money and you're financially educated because then you can understand what to do with your money that way you're not getting abused by the system you're the one benefiting from the system like we just talked about the first thing you got to do is you got to understand your money and you got to understand that if you're saving a little bit money not investing it but you're saving it your money is getting eaten away by inflation you got to have some savings you gotta have some money in your bank account as an emergency savings fund that way if something bad were to happen you have some cash to fall back on but now you gotta understand that if you really wanna build wealth you gotta convert your extra cash your extra money into something that's gonna make you money assets stocks now you can own a piece of the company where everybody else is spending money and you can own real estate real estate is a hard asset that will also produce you income and so now you got to understand you got to get the shift of just keeping your money in the bank to not owning the assets that are gonna produce you with income and value once you start to do that your mindset's gonna change because before what probably happened is anytime you have money in the bank you're probably thinking all right what can i do with this two thousand dollars what location can i go on what kind of new car can i get what upgrades gonna put in my car and you're always thinking in terms of products now what you're gonna start doing is you're gonna start thinking in terms of assets because what might happen is you might start investing in real estate and you might see that you're making 300 in profit per unit that you own and now you're thinking wow this is 300 that i'm making completely passively and if i can just have 10 units like this then i can make 3 000 a month passively if i can have 100 units i can make 30 000 a month passively in profit without me doing anything and now you're going to be kind of getting this wheel spin and thinking what do i got to do to get 10 units or what do i got to do to get 100 units so you're going to be doing everything you can to do that and that's where you got to understand that you got to stop blowing your money on everything that's not making any money and really start focusing on the things that aren't making you money that means you got to start buying assets instead of liabilities this is where you're going to shift how you spend your money and now you're going to stop blowing the money and a whole bunch of things that you don't need and you're going to start using the money to actually build your own wealth now when you do this at this point you're gonna think i'm making great money for my investments and my assets how can i supercharge this how can i make this grow even faster now you're gonna try to look for other ways to earn more money maybe you're gonna look for a promotion at your job maybe you're going to look for a second job maybe you can look for a side hustle maybe you're going to start your own business and so now what you're trying to do is you're just trying to fuel your financial system because when you don't have the financial education you're going to be doing the four things that i talked about on this whiteboard before i wiped it off you're going to be losing all your money in recessions instead of looking for the opportunity you're going to be the one that's spending all your money on these liabilities instead of being the one that is using your money to buy the assets that way when other people spend money you make money you're going to be the one that's going into debt to finance lifestyle instead of being the one that's using debt to make you money i know it sucks we should have all been taught this back when we were in school but we weren't and so now this is where you have to be the one to get financially educated because no one's going to do this for you and no one's going to tell you how to do it well i mean we do talk about this on our youtube channel all the time so if you haven't subscribed to our youtube channel yet make sure you do that but this is right now you got to go out of your way to get this financial education that way you can make the changes for your finances that way you can build your own wealth before we get into the next clip if you do want to learn more about money management and investing you can download our free pdf when you sign up for our newsletter so if you want to learn more about that i'll put the link to that pdf in the description below the american dream is to be a homeowner and the dream of every media company is to rip on millennials as much as possible that's why there's no shortage of people talking about millennials and home buying nine out of 10 millennials say that they want to be homeowners newsflash they're not to put it in perspective millennials own about four percent of all real estate in america and when boomers were the same age as millennials today they owned about 32 of all real estate in america on top of all that when millennials do go out and buy a home most of them end up regretting their home buying decision millennials really started buying homes during the 2020 recession because interest rates were slashed which made mortgage rates cheaper which made owning a home a little bit more affordable a lot of people say that millennials don't want to buy a home because either they're bad with money or because they want to travel so they don't want to settle down or they just don't want to own a home but that's not exactly true there's three reasons why millennials are not able to buy homes as early as their previous generations first is the financial side of things because millennials have more cost than any previous generation our standard of living is so much more expensive than any previous generation if you're a millennial you got to have the newest smartphone whether it's an iphone or android and if you have an iphone you got to have the airpods and if you got the airpods you got to have a mac and now you got to shop at lululemon and you got to have your subscription services for your fancy clothes every single month and your food delivery services and then on top of all of that you gotta pay for extra guac coupled the higher standard of living with the higher cost of being a millennial as somebody who went through a lot of schooling from college to law school i can tell you that education is not cheap that's why there's more than 1.6 trillion dollars worth of student loans outstanding and that's why millennials are paying 393 dollars a month on their student loans 393 a month could buy you a house 90 000 bigger partially because the interest rate on your mortgage is cheaper than the interest rate on your student loans why are your student loans more expensive than your mortgage well you got two potential reasons either society values home ownership higher than they do your education so they subsidize your mortgage more than they do your education or your lender thinks that it's a riskier investment to invest in your education than they do to invest in your home so they have to charge you a higher interest rate for you to get an education because they don't know if they're going to make their money back now look financial planning plays a part and there is a severe lack of financial education in the world which is why i made a video going over everything you need to know about buying a home that way you can make an informed decision and i'll link that for you in the description below but 50 of homeowners under the age of 36 say that student loans delayed their home purchasing decisions just one generation ago it was almost unheard of for somebody to go into debt six figures to get a job paying five figures nowadays you see it all the time people going to debt a hundred thousand dollars to get a job paying 40. but it's not just student loans there are 4 800 more reasons why millennials are late to buying a home because the average millennial has 4 800 worth of credit card debt and what's worse than having credit card debt while having more credit card debt between 2015 and 2019 the amount of credit card debt that millennials carried went up by 40 percent so now you have a higher standard of living and you have a higher cost of being a millennial and you have wages that are not keeping up add those three things up and now it takes you a whole lot longer to save for a down payment let's say you want to buy a 400 000 home now if you are in california this 400 000 is going to buy you a closet but for the sake of this example let's say you're in the midwest somewhere where 400 000 can buy you a very nice home with a yard and a lot of nice space so you're buying yourself a nice home and if you want to get a conventional mortgage where you put 20 down that means you're going to have to put down 80 000 for your down payment well the average salary for millennial is 47 000 this is how much money you're making but you don't get to keep all this forty seven thousand dollars because the irs wants to cut after paying your taxes you will be left with right around thirty eight thousand dollars to spend and save now let's do the math the first thing you're probably going to want to do is save about 117.50 a month for your 401k so this is about three percent of your income every month going into your 401k pre-tax i'll put another 1500 a month for your living expenses so this is your rent your utilities your parking 500 a month for your car this is the average monthly car payment in america but i'm going to say you're paying 500 a month for your car payment your gas your maintenance and your insurance 500 for your monthly services this includes things like your phone plan because everybody likes financing their phones nowadays your gym membership your health insurance your netflix your monthly close subscription and another 400 a month on your groceries your food and your basic shopping if we take all these monthly costs and we put them annually this is gonna cost you thirty six thousand two hundred and twelve dollars a month assuming no birthdays no vacations and no emergencies if now you save every extra dollar that you have it is going to take you 40 years 40 years to save up 80 000 that way you can finally buy this four hundred thousand dollar hole now obviously there are alternatives there are ways for you to spend less money you don't have to necessarily spend all this money on services and there are ways for you to earn more money so there are ways that you can shorten this but if you look at the finances of an average millennial this is why it's so hard for people to go out and be able to buy their homes not to mention the fact that i did not include any student loans or any credit card payments here this is why almost 3 out of 10 millennials get financial assistance from their families to afford a down payment on a home while only 14 of boomers had to do the same thing but there's one more side to this coin right now we've been focusing here how much money you make and what your expenses are but we haven't looked at this home values because we have stagnant wages expenses that keep going up and home prices that keep going up too the blue line is home prices the orange line is rent prices and the red line are wages you can see that back in the 60s and 70s everything was kind of aligned but then as time went on the gap kept getting bigger and bigger wages went up but not as fast as rent and nowhere near as fast as home prices and home prices just kept going higher and higher and higher which is why you keep hearing people say that home values are rising faster than wages so on the financial side of things it is harder for the average millennial to be able to buy a home because you have a higher standard of living you have a higher cost of living you have stagnant wages and you have home prices that keep going up that's partially why joe biden keeps saying that he wants to give first time home buyers fifteen thousand dollars free as a credit that way you can use this money towards your down payment to buy a home now if you're subscribed to our channel you understand that there's no such thing as free money and there's a big cost to free money but i've already talked about that so i'm not going to go over that again in this video which is why if you have not subscribed to our channel yet make sure you do that but if you look beyond just home values and expenses renting is more convenient than owning a home there's a big myth out there between the true cost of buying and renting a home if we go back to this 400 000 home or closet in california if you wanted to buy this it would cost you something like 1300 a month for your mortgage after you put down eighty thousand dollars if you wanted to rent the same home it's gonna cost you something like fifteen hundred dollars a month so if you see this a lot of people are gonna say why in the world would you rent the home because it's cheaper for you to buy and when you're renting the home you're just paying somebody else's mortgage and you're building no equity but you're not looking at the whole picture when you're paying 1500 a month to rent this home that's all you got to pay you don't need to put down a huge down payment in order to rent the home and you don't got to pay any property taxes and you don't got to pay any hoa fees and you don't got to worry about maintaining the home that's the homeowner's the landlord's job if you go out and buy this home it's not like you can just pay 1300 a month the very first thing you got to do is put down a down payment if you get a conventional mortgage you're gonna have to put down eighty thousand dollars if you go out and get a fha mortgage or get one of those mortgages where you can put down less money well you have to put down less money but now you have a higher interest rate and you're probably gonna have to pay pmi so now you have higher fees on the back end and you don't have as much equity in the home so the first cost you have to factor in is the opportunity cost which you could do with this 80 000 if you didn't use it as a down payment on this home i mean if you have 80 000 in this situation you can invest this money in the stock market you can invest this money into a rental property that way now you can get passive income so there's other things that you can do with this 80 000 that you cannot do here because when you put this 80 000 in your home this money gets tied up and now you can't put this 80 000 in the stock market or use it to buy an investment property that's going to pay you with passive income because you're using it as a down payment on your own home so that money gets tied up in your property as long as you're living there second when you're the homeowner you got to pay property taxes this is in addition to the monthly mortgage payment you have to make to the bank and when you're renting that's already included in your rent so that's an additional cost you have to factor in when you buy the home when you're the homeowner you're also responsible for maintenance and upkeep of your home which means every 20 25 years you got to put on another 20 000 dollar roof every fifteen twenty years you gotta put in a four thousand dollar furnace every 15 20 years you got to put in a 2000 ac every time your window breaks you got to pay for that and when you're the homeowner you're also the one paying for upgrades because when you want to have a nicer kitchen you got to pay for that when you want to have a nicer bathroom with a walk-in tub you got to pay for that yes in this situation you are building equity in this home but in this situation you have extra costs that you're saving by not owning a home that you can use to build equity and a whole bunch of investment homes or you can use this extra cost that you're saving to invest in other companies that you're building equity in so buying a home isn't always cheaper not to mention the fact that a lot of people when they go out to buy a home i'm saying it's a personal experience because i used to be a real estate sales person lots of people want to buy a home that they cannot actually afford that way they can show all their friends that they own a really nice home so if you're stretching yourself too thin to buy a home are you really saving money here before i go on to the third thing i made a very in-depth video where i showed you how you can calculate if it's cheaper to buy or rent a home so if you want to watch that video i will link it for you in the description below and third millennials are just starting their lives later which is pushing them to own a home later during the baby boomer generation college was almost like an exception not the normal now with millennials college is the normal not the exception and so people start work later and they're settling down later in 2018 60 percent of people between the ages of 25 and 34 lived with their partner or a spouse compared that to 1967 where 80 percent of people between the ages of 25 and 34 lived with a partner or their spouse back in the day people were settling down and starting families a lot earlier than they were today and so naturally people are putting off their home buying decisions with it now before i end this video there's one more thing that i want to mention when it comes to millennials and money because there's a whole media world out there that is focused on ripping millennials for being bad at their money now here's the reality are the majority of millennials bad with their money yes but so are the majority of baby boomers and so are the majority of generation xers the majority of people are just bad with their money but on the flip side you have a minority of people even minority of millennials that are able to buy their dream homes with cash without getting a mortgage the difference between somebody who's good with money whether we're talking about a millennial or not and somebody who's not good with money isn't just how much money you make it's what you do with the money you make this is what financial education is so important you need to know how to spend your money you need to know how to invest your money and you need to know how to grow your money the right way that way you can focus on building your wealth this is unfortunately not something a lot of us are taught in school which is why you're going to have to go out of your way to learn how to do these things i guess what i'm trying to say here is that you should not let stigmas limit what you can do financially there's a whole world of opportunity out there and you gotta break out of the bubble and see where the opportunities are if you enjoyed this video here's a video on building wealth that i think you'll love and while you're at it join our free finance and business newsletter and as always keep hustling the more you have the more you can do so if you want to be able to help more people you got to understand how wealth plays a part in that because if you have the money and you have the resources you can do a whole lot more good for yourself your family your community and your surroundings

Channel: Minority Mindset

Views: 84,721

Rating: 4.9538941 out of 5

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, MONEY MANAGEMENT, wealth, build waelth, become wealthy, investing, investing 101, investing for beginners, investing in stocks for beginners, investing in real estate, real estate investing, stock market investing, passive income, how to invest, how to become wealthy, retirement, retire, make money, etf, passive investing

Id: uduNgNT3o6A

Length: 83min 24sec (5004 seconds)

Published: Sun Apr 18 2021