Shocking Money Stats of The Average American

Most people think they're bad with money, but here's the truth. The system is designed to keep the average American broke and get them blaming themselves for it. And so if you're feeling behind, anxious, or overwhelmed, that's not personal failure. That's the result of a financial environment built to distract you, to seduce you, to drain you. Today, I'm going to show you 13 shocking money stats to prove how rigged the game really is. And then I'm going to help you opt out of it by building your own money machine. A machine that actually serves you. I'm Mel Abraham, a cpa, an entrepreneur and money mentor who's lived through four recessions, rebuilt from each one. I've seen the traps. I've fallen into the traps. I've lived through the traps, and I'm here to help you dodge them. This is building your money machine, where we help you master your money, eliminate financial stress so you can live a life of choice. Because earning more doesn't make you free, but a money machine does. Let's go do this. All right, let's get something straight right from the get go, okay? Most Americans are. Are not bad with money. They're just exhausted by money. They're overwhelmed, they're confused, and in many cases, quietly ashamed of where they stand financially. And I get it, okay? I've lived through four recessions, business failures, you know, multiple cancer diagnoses, bad investments, a Ponzi scheme. The moments where the numbers just didn't add up, and I look in the mirror and say, well, dang it, Mel, that's on you. Okay? So as I walk through these 13 shocking money stats, it's not to scare you. It's to wake you up. It's to equip you. It's to empower you, is to build your own money scene so you don't get stuck in the same trap that the average Americans are facing right now. Now, okay, I'm going to give you the citations. I'm going to give you all the stuff, okay? And let's start with the very first step. This one kind of floored me. The top 1% stat, number one is the top 1% own the game. Okay? Here's what they said. We. We live in a country where the top floor of the financial building has champagne fountains and the bottom floor doesn't even have running water. And I mean, 28% of all the wealth is held by 1% of the people. And it's. It's been said that 60, 67% of all the wealth is held By 10% of the people. That's not inequality. That, that's a money hostage situation. But here's the part that people miss. The gap isn't created by income. It's created by ownership. See, people will what with wealth. They own assets, stocks, businesses, real estate. People without the wealth, they rent everything. Money, cars, homes, time. Here's. Here's what we need to do. We need to start tracking our personal balance sheet every single quarter, okay? Start to shift your mentality from an earner to an owner. To really start to look at things and say, how do I own things that actually create wealth, actually create cash flow down the road? Because if you don't own assets, you don't own peer freedom, period. You just don't. So it's about accumulating assets that can generate cash flows to give you freedom. And that needs to become a priority. Otherwise, you're renting life. Okay? Stat number two, Nearly one in four Americans live paycheck to paycheck. Okay? B of A in a recent study said this. And when I hear this, I think back to the time when my youngest, my son was asked me if we could get a pizza on the way home. And I was too embarrassed to tell him that that credit card was maxed out. See, that wasn't a money problem. That was a system problem. Paycheck to paycheck. Living isn't about laziness. It's about a misalignment between cash flow and priorities and between values and cash flow. And I get it. Cost of living is expensive. I'm not tone deaf to that. But we still have the ability to make choices and decisions. And that's what we need to start doing, is taking control back of our financial decisions. That doesn't mean it's easy. It doesn't mean that we want to. Doesn't mean that. That it's going to feel good if we have to stop doing something or we have to start doing something. So here's what I want you to do with this one. The lessons from this is that it's time to review 60 days of spending. You're gonna find that there's some financial termites in your Midst, okay? Eating 300 to $800 a month if we're not careful. It's not the big things, it's the small money leaks that start to get us. And they don't feel painful until you're drowning in them, okay? And so when we understand that money doesn't care how much you make, it cares what you keep and how much you get working for you. Then we start to look at things and say, how can I get more margin in my life to use that to create freedom down the road? So a bit of discipline today will go a long ways to eliminate a lot of regret tomorrow. Stat number three. Americans save just 4.6% of their income. Okay, it's crazy. This was a stat that came out just in August of this year. Let me put this in perspective. If your money life was a diet, this would be the equivalent of you eat 100 calories and you save a Tic Tac, okay? A single tick. Not even the tack. Okay, here's, here's what I mean is that when I, when I wrote the book building your money machine, one of the recommendations in the wealth priority letters, I want you to get to 20 to 25% of your income being invested and being built, being saved for the Future. This is 4.6%. It's nowhere close to that. But why this matters so much is not the amount, it's the habits we're creating. See, small savings don't grow wealth. Habits grow wealth. And so when we turn around and even start small, which I want you to do, but then we automate it and we look for opportunities to incrementally increase it. I call it the 1% rule. If you start at 4.6% in the next quarter, push it to 5.6%, then 6, then 7. And over time, you get yourself closer and closer to that 20 to 25% mark. And every time money hits your account, you automate it so it's automatically moving into savings, moving into investing, and goes somewhere that is going to work for you so it doesn't get distracted where you go, oh, Amazon's calling, okay? Wealth is a percentage game, not a paycheck game. And so when we get our paychecks, we need to do the right percentages to get them to work for us and do it on automatic so you remove all the friction from it being done. Out of sight, out of mind. Stat number four. 30% of Americans can't handle a three month emergency. This is from the Federal Reserve. Now, now, I learned this the hard way at a time that in when cancer hit in 2019, two surgeries, immunotherapy, the emotional tornado that, that came with the idea of you have cancer. Now, I can promise you this. When life punches you in the mouth, money doesn't solve the emotional pain. But having money lets you focus on healing instead of just surviving. I don't know what it would have Been like if I didn't have the money machine in place, if I didn't have the liquidity in place, if I didn't that in place where I could focus solely on beating the demon called cancer. Because I don't know what have happened if I had to work for my living during the day and fight for my life during the night. It's important, no, it's imperative for you to make this a priority to create that at least a three month emergency fund. It's the first floor of your money machine. It's the foundation of your survival. This isn't to build wealth, this is to protect it. Okay, so what's happening here is to realize that the lesson out of this is that your future self is counting on you to build stability today. But it's going to take some discipline to do that. Stat number five, credit card debt in this country has gone to almost $1.3 trillion. Okay? Trillion dollars. The average credit card balance is over $7,300. Here's the deal. People aren't overspending on luxury vacations and yachts. No one at Target is buying a yacht. This debt is groceries, it's gas, it's bills, it's everyday life. Coming in at 24.9% APR. Okay, this is a problem and I get it because. Because cost of living has gone up, inflation has got a hold of us and it becomes more challenging. But what's happening now is that we can't even make ends meet and we running our daily life on credit. Which means that the balances are piling up, the delinquencies are getting worse. This becomes a problem. So the thing to do here, if you find yourself in this space is one, you need to get yourself on a debt payment plan. Okay. If you want to get a debt payment plan in place, you can get my debt breakthrough calculator. It's totally free. Go to melabraham.com no debt. But here's the thing. I need you to stop using the credit cards and going deeper in debt. That's 1, 2. I get you on a debt payment plan to get it paid off over time. You're either going to use an avalanche method which is starting with the highest interest rate first. It's the thing the way I like it or the snowball method which starts with the smallest balance first. I just care that you get a method and stick with it. Commit to the path. Get yourself out of debt. Get rid of the insidious element of debt as much as possible because you can't build a money machine on top of a money fire and your money is on Fire. At 24.9% APR. Step stat number six, the average new car payment is $745 a month. This is crazy. Okay. You know that there was a time where $745 a month was a mortgage. Okay. That, that you start to look at things, your entire wealth, building opportunities, driving off a lot in a dep. Depreciating asset. Cars should be transportation, not financial aspiration. Okay? This is, this is a challenge, but yet we start to get into it. And, and the solution that the industry has created was will finance your vehicles for seven or eight years. When you're financing a depreciating asset like that over seven or eight years just to make the payments makes sense. Then you know you can't afford it. And in fact you are upside down in that vehicle from get go to the end and that becomes a problem. Here's what I would tell you. Do you cap your car payments at less than 10% of your take home pay, less than 10% of your take home pay, and you also extend your driving for a longer period of time? We drive our cars for a minimum of five years, usually seven to eight years. Okay. And, and I try not to finance my cars for any more than three years to three and a half years. No, seven years, no eight years. Now that's going to limit the kind of cars you get into. But if we're trying to build a money machine and have true freedom down the road, then this is the thing you need to do to make that happen. Now today I don't finance vehicles. Today I buy them cash. And I don't buy necessarily cheap vehicles, but I have a system in place that allows me to do that. So when your car is costing your freedom, that's a problem. All right? So we need to look at that. And it's a staggering stat to be spending that kind of money on a car. Okay? Stat number seven. The medical debt in this country exceeds 220 billion with a B dollars. Okay? Now here's the thing. I'm not going to get into the whole medical system and the health insurance. It's a disaster in some senses. Okay? But when we start to look at medical debt, medical debt is actually one of the top reasons people declare bankruptcy. That's a problem. It doesn't care if you're responsible or not. It doesn't care how much you make. It doesn't care if you've got goals. And what happens is that we have Medical needs. When I got diagnosed with cancer, I, I got hit with a lot of bills and I needed to have the capacity, the liquidity and that emergency fund to be able to take care of those bills if I wanted the good care, the wonderful care that I got to allow me to get through what was probably one of the worst cases of cancer that my surgeons have seen. Okay, in doing that. So this is why having a protection system matters so much with wealth. When we talk about the framework, the money machine blueprint framework, it's earn, it's grow and it's guard. We have to guard it. And insurance is not sexy, but neither is bankruptcy. So what do you need to do? 1, I want you to know all your deductibles for all your insurance, medical and other insurances. I want you to know what your out of pocket max is and make sure that you have money in that emergency fund that can at least take care of the deductibles and your co pays to cover you in case that you have a medical emergency. Also know this many medical debts are negotiable, so don't be afraid to negotiate with them in doing that, but build a buffer for health shocks because we don't know what's happening. It's not like I planned for the cancer. It happened. One medical bill can destroy 20 years of good financial behavior. Protect yourself. Okay, stat number eight. This one's a big one. Student loans $1.6 trillion. 42.5 million borrowers, 3.6 million people owe over $100,000 according to Yahoo. Finance. That's crazy. See, here's the thing though, and I have a hot take on this, but degrees can be powerful. But the debt without a plan is a ball and chain. See, it's not a matter of going to college just to get any degree. And it doesn't matter what it costs to get there. Just like any other investment, your degree process is an investment. It's an investment in your future. And that investment, just like other investments, will have a return on investment. In other words, you're going to make money off that investment. The question is how much? And so we tell people that if you're going to take out student loans, you only take out max 18 months of your first starting salary so you don't end up in a situation of taking out $200,000 in student loans for an art history PhD. And now you are a curator at a museum for $27,000. That's disastrous. Now I don't fault people for it because most of these kids coming out and going into College at 18 years old do not understand it. In those, those blood sucking financial aid offices. Yes, I said it. Are out there saying, don't worry, we'll finance it. You don't have to worry about it until after you graduate. But they don't do the math behind it. And who gets stuck carrying the albatross when they're on the day they graduate? This student does. Okay, now I get it. You know, there's this hope that maybe there's forgiveness and all that, but hope is not a good strategy. Forgiveness is not a good strategy. It's a gift if it happens. But this whole thing, you need to look through the eyes of investing. And if you have the student loan debts, then I'm sorry for you, but we're going to have to put a plan in place to try and get them paid off. And if there's a forgiveness down the road, great, but we can't plan for it. Okay, but I've seen brilliant people delay marriages, delay kids, delay homes, delay businesses, not because they couldn't afford it, but because they could barely afford the interest on the student loans. Okay, here's what to do if you're in trouble with it. Get yourself on an income based repayment plan. See what, what things you can do in, in doing that. And if you're, if you're able to qualify for some other plans like a PSLF or anything, begin that process to try and get yourself in place. Remember this, at the end of the day, the education should elevate your future, not mortgage it. And right now we're mortgaging it if we're not careful. When I look at this stat, it's crazy. Okay, stat number nine. Stat number nine is that the median retirement savings for those under 35 is $18,880. Okay, this is a study that came out by Vanguard and, and people, people will look at this and say, well, they wonder why retirement feels like a myth. Well, here's the truth. You don't need millions to start. You need momentum. But the first dollar invested is the most important than the thousandth because you're setting and establishing a habit, a choice, a decision, a behavior that's going to serve you the rest of your life. And so it is important. This is why I tell people, I don't, don't wait till, till you earn more. Start with whatever you have. I don't care if it's $5. Develop the habits as early as possible and then continue those habits to build money momentum. As you go through it. So what do you do here? Well, one thing I want you to do is I want you to follow the wealth priority ladder in chapter 12 of my book. But in the nutshell, I want you to first off, max the employer match. If you are in an employment where they have a 401k and they're matching it, get that free money. Do not leave it on the table. If I walked into your home and dropped $100 bills on the floor, would you pick them up? Absolutely. You would. Now if I dropped them on the floor and say, you can have those if you put your 100 on top of it first, I bet you would do that too. But yet we don't do that. When the employer says, just put money in and I'll match it, match it and then increase your contribution. Remember, I want 20 to 25% of your income going into your future. So increase your contribution. Every raise, take 50% of the raise, put it towards the contra towards the increase and the other 50% into your life so you're not just eating it all up. And then treat retirement like a mandatory bill to your future financial freedom. Make it a priority so it is automatic, each and every paycheck, each and every time you get money. Because the way I look at retirement is it's not, it's not an age, it's not even an amount. It's a math problem and a transition to a life of choice. And I want that for you as early as possible. That leads me to stat number 10. Financial literacy is stuck at 50%. This is the what's called the PFAN index. And nerd wallet talks about this. But imagine for a moment driving a car but only understanding half the rules of the road. Now imagine that that road is on fire and you're blindfolded and your co pilot is a TikTok financial advisor. Okay? This is why you feel behind, because you were never given the tools, you were never given the rules, you're never given the understanding. Financial literacy is the path to your financial freedom. So we need to learn that language. And it's not complex. It just may be different. It may be challenging at first because you've never done it. But then again, when we first tried to tie our shoes, that wasn't easy either. Wealth creation is a learnable skill. So here's what to do in this is learn the big five. Budgeting, debt, investing, risk, taxes. Okay? Budgeting so you know what you're doing and what your money's doing for you. Debt so you don't allow it to destroy what you're doing with your money, but to use it strategically to build wealth investing. So you create your money machine that gives you freedom, risk. So you don't take on inordinate amount of risk because you think that it's going to go to the moon. And you get caught in a Ponzi scheme like yours truly did and taxes. Because if you're partnering with someone that wants to take 30 to 50 cents of every dollar coming your way, I want to minimize it. Okay? So the lesson here is this. You don't rise to the level of income. You fall to the level of your understanding. So let's raise your understanding. All right? Stat number 11. Buy now, pay later is. Is that use is exploding. 86.5 million people used it last year. Okay? 86 and a half people. Buy now, pay later is like financial fast food. It's infinitely convenient, great, but zero nutritional content. Okay? Convenience kills whether it's fast food or Buy now, pay later. Here's the shocker. 72% of low income Buy now, pay later users said it was the only way they could afford the purchase. That's not convenience, that's desperation with a payment plan. What that means is that unless we're trying to put everyday living on Buy now, pay later programs, then we can't afford it. We shouldn't be doing this. Okay? Buy now, pay later, no matter how they want to name it, no matter what they want to say about it, it is debt. Treat it like debt. Treat it like the parasite and the napalm that it is. Avoid it unless it is absolutely necessary. Because the kind of interest rates you're going to pay will destroy you. Cannot get ahead of it. Okay? So the lesson here is if you're borrowing from your future for the present, your future will always be poorer. So let's be disciplined now. Let's not have the regret later. Stat number 12. 45% still can't cover three months of expenses. The Fed said this in 2024 after the global shutdown. You'd think the lesson would have stuck, but nope. We're still one crisis away from a financial cliff. Now, I get it. Cost of living has gone up, inflation has eroded. That. But that doesn't mean that we should just give up. This is a time for us to do some things that are very deliberate and very disciplined. One, I want you to prioritize getting to three months worth of expenses. You got to get that in place. Otherwise any slight pivot is going to destroy you. Then I Want you to push to six months. Then the money machine that you start to build over time, you'll get it to cover your life forever. That's what ours does. That's what my clients do, is we're building a money machine that's going to fund our life. So. So there isn't an emergency. That's going to be an emergency because we're covered for it. I want that for you. It doesn't happen overnight, but it happens over time with the right behaviors, the right habits, the right choices. All right, leads me to stat, number 13. That last stat, and this is a new one that just came out. And that is 401k hardship withdrawals are at record high. Almost 5% of participants in a 401k plan tapped it for a hardship withdrawal. This one breaks my heart. Not in a judgment way, but in a. I understand the pressure that people are underway. Okay? When you pull money from your retirement to survive today, it means the system failed you, your income system failed you, your protection system failed you, the buffer system has failed you, and you've probably beaten yourself up about it. Okay? And. And what we've done is, is we did all that hard work to get it into the 401k, and then we stripped it away. Okay? This is why it's important to build those emergency reserves. This is why it's important to build the right behaviors and the discipline in our money flow and making sure that we're not just putting things on credit cards or living beyond our means. Look, the bottom line is this. Wealth is a simple equation. Money in, money out, the margin in between. The excess is used to build the machine. We have to manage the in, maximize it. We have to minimize the out, minimize it. And we have to optimize the middle. The stuff we're investing the margin. So when your retirement becomes your ATM, your freedom becomes collateral damage. Let's not draw that 401k. And the way to prevent it is to get smarter well before it ever becomes necessary. All right, Those are the 13 shocking stats. Not to guilt you, not to scare you, but to show you exactly why average American. The average American is struggling and why you don't get to be average. Not anymore. Pick one of the things to fix this week. Whether it's automate savings or cutting debt or building emergency buffer, the 401k contribution, increasing it, tracking your net worth. Just one. Start with one, then add another in a few weeks and another in a few weeks. Because here's the thing. It's all about choices. It's all about decisions and it's all about behaviors. And you can earn as much as you want, but without the right decisions, the right choices, right behaviors, you still can end up broke. There's plenty of people that have earned hundreds of millions of dollars and have nothing to show for it and no freedom, just stress. Because earning more doesn't make you free. A money machine does. Let's build yours the right way. Let's not become one of the stats here. I hope you found this valuable. I hope that this helps you. I hope that it gives you at least a light. If any of these applied for you, applied to you at all, let me know which one you're going to tackle first. If any apply, let me know what you thought. In the meantime, also make sure you're subscribed and share this with a friend. That would mean the world to me. It'll keep the channel going and keep everything moving forward. And our mission to help help a million families find the path to my to financial freedom. All right, thanks for being here and I can't wait to see you on your path to financial freedom or in the next episode. Until then, always, always strive to live a life that outlives you. See you in the next one. Cheers.