Are you getting richer or poorer? If you’re not sure, let me help you out.
Do you have enough money to cover a $1k emergency? Did you know that 35% of Americans have less than $1k in savings and 34% have no money saved at all?
There’s an explanation for this, but it might not be what you want to hear.
Wage Growth Goes to Highest Earners
One of the big problems in today’s economy is wage growth – or lack thereof. Overall, today’s average hourly wage ($22.65) is the same as it was in 1978, after adjusting for inflation. This means the number of dollars you earn is higher, but it doesn’t buy you anything more than it did back then.
So, in relative terms, the saying is true: “the rich are getting richer, and the poor are getting poorer”. The rest of this article will make that point even clearer.
Costs are Skyrocketing
College has been viewed as the great equalizer for opportunity in America. Unfortunately, the costs are making that dream more prohibitive than ever.
Since 1987, the average cost of an college education has increased from $39,643 to $103,616. That $63,973 is good for a 161% increase after adjusting for inflation!
If that isn’t bad enough, let’s consider another necessary cost: rent. Between 1960 and 2014, inflation-adjusted rents increased 64%, yet real household incomes increased by 18%!
And don’t even get me started on healthcare costs. Keep reading to find out why the rich really keep getting richer.
Why the Rich Get Richer (and You Get Poorer)
With the top income earners getting all the wage growth, they can more easily navigate the increased costs we all face. The key to their ability to build wealth, however, is the fact that they find ways to save and invest their money.
Here’s how the statistics break down:
- The average American (bottom 90% of income earners) saves about 4% of their income… which is bad.
- Earners in the top 10% to 1% save 12%… which is good.
- Earners in the top 1% save 38%… which is excellent.
The truth of the matter is that you’re not going to build wealth if the money you earn isn’t working on your behalf. Having enough money put aside to cover emergency expenses is the first step. The big step toward getting richer is investing your money and letting compound interest do the heavy lifting.
It’s Time to Get Your Money Right
Would you take 30 minutes out of your day to learn key principles and lessons that will change the way you look at money? I bet you would!
The Money Master is a completely free resource that is timely, effective, and filled to the brim with information that you need to turn your finances around. We partnered with Cofield Advisors to teach you how to take the next step with your finances in terms that you’ll understand.
You don’t want to keep getting poorer, do you? What is there to lose? It’s free!
Get started today by clicking HERE.
All opinions expressed on this blog are solely those of Home at 30 and are in no way affiliated with any other organization or institution. The purpose of this blog is to give general education and information about investing, wealth, careers, and college; It is not intended to be professional advice.