Is the American Dream Still Possible? This Money Expert Weighs In
Written by
Choncé Maddox
Edited by
Jenna Klaverweiden
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For decades, the American Dream has symbolized financial stability, homeownership and the promise of a better life for the next generation. But for many people today, that dream feels out of reach.
In a recent video, financial influencer Vincent Chan took a deep dive into the numbers to explain why it’s harder for many people to “make it” in the U.S., and what steps you can take to improve your financial situation despite the challenges.
Why It May Feel Harder To Achieve the Dream
Chan broke the problem down into three main reasons: rising costs, reliance on debt and economic uncertainty. Together, these factors have shifted financial milestones that used to be common, like buying a home in your late 20s, much further out of reach.
At first glance, today’s median household income looks promising. Chan noted that it was $80,610 in 2024 compared with just $21,650 in the 1980s. But the story changes when you look at housing, education and childcare.
- Housing: In the 1980s, Chan explained that the median home cost 2.2 times the median household income. Today, that number has doubled to 5.2 times income. In practical terms, it takes far longer for the average household to afford a home.
- College: Tuition at a private college cost about three months’ worth of income in the 1980s, per Chan. Today, it’s closer to six months’ worth. However, Chan noted that the value of degrees is declining as more people earn them and new job opportunities open outside of higher education.
- Child care: In the 1980s, child care took just 1% of median income, according to Chan. Today, it eats up about 16% per child per year, making it one of the biggest burdens for working families.
Another reason people feel stuck is debt. Chan explained that interest rates on credit cards are hovering between 21% and 24%, some of the highest ever recorded. He also cited a Ramsey Solutions article, which noted that the average American owes over $6,700 in credit card debt.
Chan pointed out that this debt burden is particularly devastating for younger generations. Instead of investing or saving to build wealth, they’re often left covering bills and paying down interest.
Why It’s Not Just About Individual Choices
Chan stressed that today’s financial challenges aren’t just the result of poor personal choices. Systemic issues, such as wage stagnation, wealth inequality and policy uncertainty, play a big role.
Still, Chan emphasized that acknowledging systemic issues doesn’t mean giving up. “It means we need to find a way around it,” he said.
Practical Steps To Get Ahead
Despite the uphill battle, Chan shared actionable ways to improve your finances.
Keep Housing and Transportation in Check
Chan said the rule of thumb is to try to keep your rent or mortgage, including taxes and insurance, under 30% of your gross income. This ensures room for other expenses and savings.
You can also try to keep car payments under 10% of your gross income and look for ways to reduce related costs, like insurance. According to AAA, some ways to save on car insurance costs include bundling with other policies, increasing your deductible and using low-mileage discounts.
Build an Emergency Fund and Invest
Next, Chan suggested setting aside an emergency fund of three to six months’ worth of expenses to protect against unexpected costs.
Once that’s in place, he advised contributing regularly to a Roth IRA. According to Fidelity, some advantages of Roth IRAs include tax-free growth, no required minimum distributions and tax flexibility in retirement.
Lean Into Community
Chan highlighted the value of family and community support, which is something he experienced growing up in a multigenerational Chinese household. Sharing resources, housing or responsibilities can ease financial stress and provide a safety net that’s harder to find in an individualistic culture.
A few things to consider when saving and budgeting in a multigenerational household, however, is diverse financial needs, short-term goals, shared costs, long-term financial planning and financial literacy, according to J.P. Morgan.
Consume Better Financial Content
Not all financial advice is created equal. Chan warned against “toxic” money experts who promote guilt-driven budgeting or extreme frugality. Instead, he suggested focus on learning strategies that empower you to live well, not feel deprived.
Budgeting, when done right, should give you the freedom to say yes to opportunities and experiences, not just force you to cut back.
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