The majority of people will tell you that the reason that they’re broke is because their boss isn’t paying them enough money, according to finance guru Jaspreet Singh in a recent YouTube video. “But there’s one more piece to this puzzle that most people are completely overlooking.”
In his video, Singh explains that between 1971 and 2023, something changed when it comes to money. “In 1971, household income was about $10,290; whereas in 2023, that figure jumped to $70,784. An increase of about 688%,” he noted.
When you look at car prices between 1971 and 2023, the cost used to be $5,000 compared to now at $42,000 — an increase of 840%. Houses during that time were at a low of $30,000, while today they’re priced at $484,000. “That is an increase of 1,600%,” Singh said. Finally, he pointed out that a year’s college tuition back in 1971 would cost you $400 compared to now — where it costs $9,300. That’s an increase of a ridiculous 2,300%.
Here’s Why You Feel Broke
As seen above, Singh shows that household income has grown almost 700% over the last 50 years, but the other expenses have grown faster. “And here’s the kicker, in 1971, household income was primarily determined by one person’s income,” he added. “But in 2023, household income is determined by two people’s income.”
He asks us to fast-forward from 2023 to 2073 and imagine what’s going to happen by then. “When we project forward, that’s when things begin to look scary,” he warned, implying that if we apply these same percentages to the future, it’s not pretty.
He also pointed out that while we can’t know how fast all these expenses will continue to rise, it’s a sure thing that they’ll continue to grow faster than incomes. “It’s becoming exponentially more important for people to become financially educated,” he explained, because the alternative will mean you’re following the system.
How Financial Literacy Can Help
Most people have two incomes now to help support the family, said Singh, yet these two incomes are struggling to buy a car, to buy a home, to pay for college or put money away for retirement.
Compared to our parents’ or grandparents’ generation who could pay for all these expenses with one income alone, he notes that the difference comes down to money. “Our money has changed over the last number of years.”
And while he notes this is a broad, systemic, nation-wide problem, he can still offer advice on how to deal at the level of your household so you can protect yourself financially.
“This is why financial education becomes so important,” said Singh. “Because the people who understand money are going to be able to win in this system. And the people who don’t understand money, well, those are the people who are going to pay the price.”
He continued, “Our economic system is made up of three different players.” He breaks it down like this: You have the businesses — the entrepreneurs starting businesses, the investors who are owning a piece of the businesses, and then you have the consumers.
“Everybody is a consumer. Rich people, middle class people, poor people,” he continued, noting how it plays out. Consumers go out and spend money at businesses, and while businesses benefit, so do investors.
Why Building Wealth Comes Down to Investing
“Our economic system is designed to create inflation,” Singh noted. And with that, businesses are benefiting more because all these new dollars are going into them. This in turn, means that that money is going to investors as well. He explained that asset prices are rising higher than incomes.
All of this to say that people need to stop just being consumers and start being investors or entrepreneurs. Not everyone is meant to be an entrepreneur, says Singh, but he emphasizes that “every single person in the United States needs to be a business owner.”
Clarifying, the money guru explained that this doesn’t mean you need to go out and start, operate, or manage your own company. “But you need to start taking the money and owning a piece of the businesses,” he added. “And the way that you do that is by taking some of your income and becoming an investor at the very least, because that means now you are putting your money to work as opposed to just spending all of your money.”
“Most Americans are just consumers,” Singh observed, noting that this is why you end up broker and broker and feel even poorer without understanding why — even if you’ve done everything right by getting the right job and trying to live within your means.
Figuring out how to build your own wealth then, according to Singh, involves becoming financially educated as a first step, and then using your knowledge to invest.
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