Gen Z Is Giving Up On Their Financial Future

A recent study found that 73% of young Americans want to enjoy their money now instead of saving money for the future. And that stat honestly makes me nervous. Why is this? Why are so many Gen Z and young people giving up on their financial future? Well, in this video, I'm going to break this concept down and then I'm going to give you three financial steps you can take to take control of your money. But first, yes, your feelings are valid. The economy is tough. How many of us have parents telling us, just cut back on avocado toast and soon you can buy a house? No, that's actually not true. Today I want to back up everything I'm saying with data. Take a look at this chart. Housing is historically unaffordable right now. In fact, the last time housing was this unaffordable was in 1985. To put that in perspective, 39 years ago, the top movie was Back to the Future. Actually, that is correct because that is one of the greatest movies ever created. The top song was Careless Whisper, another great. Actually, the 80s were way better than how we're living right now. This was amazing. Michael Jordan was named NBA's rookie of the year and a McDonald's hamburger cost just 64 cents. So yes, the economy is tough. And yes, you're right, buying a house is incredibly unaffordable. And in fact, I want to take you back in time and show you what housing looked like for your parents. Forty years ago, a house would cost roughly 2.5 times your annual income. Today, the median house costs six times your annual income. That means about 40 years ago, a person making the median salary, which was about 30k, would buy a house costing $81,000. In current dollars, that house cost 250k. Today, the median income is $75,000, but the median house costs over $450,000. That means housing costs have almost doubled in price from 40 years ago. Oh, Granny Smith apples. If you cut back on buying three Granny Smith apples a week, you'll be able to save money for a house. No, that's not how it works. What this means is that housing is historically unaffordable. You cutting back on Matcha is not going to change anything about being able to afford a house. But there's more. The other thing we're worried about, inflation. Let's take a look. I want to show you three areas of our economy that have actually undergone rapid and sustained inflation. First, the cost of a college education has soared. Next, the price of a new car has wildly outpaced inflation over the last decade. Even rent prices are growing faster than income, which is creating the biggest divide in. In decades. So, yes, inflation is real. And what we can see is that there are forces working against us. The surprising way that people are dealing with this financial pressure. Let me tell you what they're doing. Some people have simply said, I'm giving up. They're basically saying, I don't believe that I'm ever going to be able to afford a house. I'm never going to be able to send kids to college. The American dream for me is dead. So what are they doing with their money? Well, they don't believe in the American dream anymore, so instead they're taking their money and they're spending it. They're spending it on fun stuff like clothes, travel, going out, food delivery. Honestly, I get it. If I believed that I had no future, that I would never be able to buy a house, that I was going to be drinking tap water for the rest of my life, and the only joy in life would be having a Netflix subscription so I could watch Ramit Sethi's how to Get Rich. And I teach people. I wouldn't feel too good either. And it actually gets worse. A lot of people are starting to subscribe to these forums and Reddits and Twitter follows, where all they see is doom and gloom over and over again. Some people are even getting their news from the mass media. The mass media which tells you that the economy is always horrible. Hmm. I wonder why. It turns out that a lot of people genuinely believe we are living in the worst economy in American history. Do you? If you believe that, I want to actually show you some real data on how this is one of the best economies in history. Yes, I said it. And I'm going to show you exactly what I mean. Today we are making more money than our parents did. A lot more. Next, while everybody's complaining about inflation, wages have actually been growing, in fact, growing faster than inflation since February 2023. This reminds me of all these people who complain about the price of eggs, the price of lumber. Oh, my God, I'm losing my mind. Gas is so expensive. Lumber. How are we gonna build a house? Lumber. But then when the price comes down, nobody ever brings it up again. Hey, where did all you egg fanatics go talking about the yolk, the price of chickens. Oh, what they're gonna do, how they're gonna hatch, or the hatchlings, where they. Where'd you all go when the price of eggs collapsed? Where'd you go when lumber came right back down to where it was. Nobody ever talks about when things get better. We are simply addicted to talking about when things go bad. And then there's just simple numbers we can look at. Right now, more people are investing in the stock market than ever before. And that's important because the stock market is where real wealth is created. And you can start investing today. You can start investing if you make minimum wage. You can start investing if you make a little bit more than that. You can start investing on one income, two incomes. You can invest the same way that multimillionaires do. And I want you to. You probably haven't heard about these stats. You probably didn't know that wages are up, that inflation is down. In fact, a lot of you hate me right now. Who are we kidding? You're probably closing this video. You're leaving comments like this. Oh, Ramit, you lost me when you said the economy's good. That's because when you are addicted to hearing only bad news, you start to become out of touch with reality. I. I know these comments because anytime I say something positive about the economy, I get a bunch of doomers crawling out from their depressed basements telling me I'm wrong when all I'm trying to do is share an innocent little chart and then go back to eating my chicken and rice. Guys, things can be good and bad at the same time. Housing can be historically expensive and our wages can be up. In fact, that's exactly what's happening right now. By the way, little tidbit you may not know. Guess whose wages are going up the most? Low wage earners. That means that wages are going up most for the people who are earning the least. And if you don't believe me, go look at any window at any McDonald's. You see what they put up there? It says now hiring. That's because they can't find enough people to work there, so they are being forced to raise wages. Now here's my message to you. We cannot just sit here and surround ourselves with with boomers telling us the economy is amazing. But we also can't surround ourselves with doomers who are telling you that your life is over. That's not true either. We need nuance to live a rich life. So if you want to be smarter than the people around you, you need to look beyond the surface. You need to understand what is truly going on. Before I continue, make sure you're subscribed to this channel, so you're not going to miss out on any of my money tips. Now, let's talk about how to get ahead with your money. There are three key steps I want you to do. Step one, make your money work for you. Yes, you need to be mastering the fundamentals when it comes to your money. You're not going to wait for a macroeconomic shift. You're not going to sit around debating investing because of geopolitics. No, you're going to control what you can control. That means every single month I recommend you invest at least 10% of your money and it's happening automatically. Investing is where true wealth is created because time and compounding are on your side. Invest Next. You're saving 5 to 10% towards a three month emergency fund. That emergency fund is a safety net in case anything happens like layoffs. You're also saving for a vacation, down payment, whatever is important to you. Next, you're paying your credit cards automatically and in full every single month. That's because you're too smart to be paying the credit card company's interest. Next, your fixed costs are below 50 to 60%. That includes things like housing, transportation, groceries and bills. I will acknowledge that because housing is so expensive right now, it's sometimes difficult to hit this number, especially in high cost of living areas. That's why you want to pay close attention to your fixed costs. And the last one, my favorite one of all, you are spending the rest of your money guilt free. If you want to travel, you want to go out to restaurants, you want to do self care, you can do it guilt free because you know that your money is automatically being saved and invested without you having to do anything. The only rule I have for your guilt free spending is you're not allowed to spend it at Chili's because Chili's the restaurant is disgusting. Step number two, get comfortable coming up with your own point of view. I think the rarest thing in the universe is for somebody to have an individual point of view. I have my own point of view and it's taken me 30 years to come up with it. Right now it's cheaper for me to rent than to buy. So I rent. I spend extravagantly on the things I love, which included a multi day wedding and nice clothes. I know you frugal freaks online think weddings are a complete waste of money and you prefer to wear a stretched out Cisco t shirt from 2000 for that's your prerogative if that's your rich life, such as it is. Fantastic. For me, I like to spend money extravagantly on the things I love as long as I cut costs mercilessly on the things I don't. I want the same for you. Those are just a couple examples of my point of view. I really encourage you to create your own point of view. For example, you might love spending money having an amazing sushi dinner once a week. Or you might want a relaxing massage once a month because it helps you with your health. That's great too. But in order to do that, step one, you got to make your money work for you. Step two, you got to come up with your own point of view. And step three, do not allow yourself to fall into the vortex of doom. You know you're in the vortex of doom when you see comments like this. I'm taking my debt to the grave. Must be nice. What's the point? I'll never own a house. 7% returns in the stock market. LOL. Where can anyone get that? Anyone get that? A simple index fund. Listen, I get it. It's gratifying to feel that indignance, to feel the resentment, to feel the rage running through your veins. They us. I can't get ahead. Feels good, right? Maybe they did. Maybe the boomers stripped us of walkable cities. Suburban NIMBYs aren't allowing any housing supply to come online. Meaning housing is historically unaffordable for you. Okay, they did that. Let's not give up. Let's win instead. Let's create our own rich lives. Let's know our numbers. Let's create our own point of view. And let's banish the vortex of doom so we can live our own rich life. So please do not become a doomer. I know it's tempting. I know everyone else is doing it, complaining about the price of lettuce. But please don't. It is the wrong way to go. Yes, we need more affordable housing. Yes, we need education and childcare to become more affordable. Yes, that's why I vote. And that's why you should too. But we also need to take responsibility for our own rich lives. I hope this video challenges your perspective on saving for your future and it inspires you to take control of your money. Now check out this video to watch more.