The Middle Class is Shrinking: What That Means for You! #545

It's it was pretty good. Still. It was pretty good. Still. I'm glad to hear that because Giant Ants and the Little totally one of my favorite movies as a little kid. Tall, blazing grass and then that kid comes to Mode Lawn and he had his he had headphones on, right, like a walkman or is that what they're called? It is like a radio auto. Wasn't like a discman yet. Yeah, I think there were still the walgments with the scette tapes. What was the dad's name, the nerdy guy, Wayne's Lensky?

But what what was his What's what's the that actor's name? The actor's name? Oh? Was I think of it? He was so Rick Moran. Yes, oh my god, I'm terrible remembering names, but man, I can picture his face today looking through that magnifying glass and persee to go Children sequel, Honey, I blew up the kids and stuff like that. Those that didn't work out. So that was good. I love that movie. Uh, And in a similar way, I think you're gonna love this episode how the middle classes Shrinking.

We really do have some good news for folks, and hopefully we'll be able to essentially guide you, our listener, through what this means for you, what this means for your finances, and how you should respond to this quote unquote shrinking middle class. Yeah, there's a lot of data that we've used in this episode, but we'll be sharing

with you along the way. But then a lot of practical information about how to kind of think about the fact that the middle class is actually shrinking, Like, there's data showing this, um but what does that mean for or how we proceed through life? I think, Matt, for some folks that can get them like down and discouraged when they see those headlines, but we think there's actually

cause for optimism. We'll discuss today before we get to that I want to mention that I know you you have been your your Is it just Eavy who's taking piano lessons or or Okay, so just for so far, the other girls haven't shown much interest yet they might be getting so we're hoping to maybe enroll both of our girls are older girls in UH in piano classes

in the near future. But we we just got a piano at which they're excited about love messing around on but chopsticks, right, But we found out that actually there's some really good YouTube piano lessons out there, and so until we get to that point, they're the girls are actually just kind of getting familiar with the keys, where they place their hands, some basics of like how to interact with the piano when you've never done anything musically

ever before, just through free YouTube videos. The proper hand position where I pretend there's an egg exactly within your palm, that all that stuff. It's amazing how just like YouTube solves so many problems in education and just um you know, I was using it recently, UH for a home repair that I was working on. It's just like in every home repair, for every home repair. Yes, I'm always going to YouTube and watching repair three videos, and I'm like, all right, I got it. I got a good feel

for how this works. I know everybody at this point knows about YouTube and just the extensive amount of information it's there, about an amazing catalog of just I mean, what I forget. I heard some stats as to the number of hours of YouTube video of footage that is being uploaded every single day, and it's a mind blowing amount of video, which basically means that there is not one single person that will ever be able to navigate the trows of video. But it's nor would you want

to write exactly that. A lot of its garbage, a lot of crap on there. But but it just made me think that there are certain things that we may be forget it or don't even think, Like that didn't even cross my mind. Oh hey, maybe there's great panel lessons on YouTube for free, but they exist similarly like little drawing classes. The girls have done some of those online before on and there's some great art teachers on YouTube.

And I know, you know, I don't want my kids in front of the screen all day, every day, And that's why I was gonna I was gonna ask, how do you feel about them looking at a screen versus being instructed by somebody where that is all that they're gonna do and they're not gonna dally when the ads

play like, oh but that looks really interesting. Yeah, and then there's there's definitely that trade off, right, And so for now it's great and maybe we'll learn some of the basics on YouTube, but eventually we'll do some in person classes. But hopefully it's a good way to figure out some interests as well before you start kind of blinking down the money and paying up for it. That's a good point, that's exactly right. So just word of the wines out there. I'll try to figure out which

videos my kids were watching. Maybe we will post a link to one or two of them in the show notes, so that, Yeah, if your kiddo is interested in learning an instrument, just just know that YouTube's got some good stuff out there kind of at least help them get started. And they gotta watch that tutorial on how to play the theme song from the Office three year olds. Yes, I mean that's the first song every kid, oh, you know, figure out. But Matt Lists mentioned the beer we're having

on this episode. This is Stiegel rattler, But it's the lemon variety. We've had the grape food variety on before its throne, which I assume is French Leon. No, this is Austrians. Yeah, let makes sense. We'll get our thoughts on this one at the end of the episode. And we just got back from the beach and had this is like a classic beach beer and yeah, I never

get tired of it. Well, I will share with you why it is not a classic beach beer for me, but we'll say that for the end of the Well, none of this early on beer talk, like we used to write. Well, by the way, shout out to the listener, Logan, who I met when I was at the beach one. Yeah, so that's always fun and I always appreciate it when folks come up and say hi. It's not every day we get to interact with people who listen to the show, but it's always a blast when we do. Did you

quiz him make sure he listened to the most recent episodes. Yes, you clearly have not been listening, sir, Right, what's your problem? Dude? Go back and hit play. Uh No, I did not not do that, but um yeah, Logan seemed like a cool dude. Nice, nice meeting the logan. But mat, let's get onto the subject at hand. We are discussing the middle class. Let's do it's shrinking and what that means for our listeners. And uh, it made me think, as we're kind of thinking through this episode, that it's never

fun to be in pain. Like nobody's like, who just hurt my back working out? Or um, yeah, all right, I sprained my ankle when I was going for a round the other day. Nobody talks like that, nobody thinks that way. But it turns out, though, of course, that pain is actually a good thing for us, right, because if we didn't feel pain when those things occurred, we're more likely to do more damage to the wounded area

if we don't take any action. Right. Um, so yeah, if it's pain, if there's some sort of pain free wound that you got, you might break your ankle instead of just braining it. So there are some things that appear on their surface to be bad, but they're actually good. And like when we're talking about the middle class shrinking, I think a lot of our listeners might instinctively have

like a sour reply. It might be like, yeah, of course I know that, like things aren't good, right, and but I think we've been primed to maybe receive crappy headlines, shrug our shoulders in disappointment, move on about our day, and just kind of think the worst. But we would say that the shrinking middle class is actually, in large

part a good thing. And so let's talk about that today, Matt, How how a smaller middle class isn't all bad, and how actually our listeners can do something take that information

and do something positive with it. That's right. Yeah, I mean we're not doctors here by by any means, but like like what you said right when you twisted an ankle or something like that, what it makes me think of is like there's an immediate pain, which is probably a really healthy thing to get you to stop what it is that you're doing, right, But then after that, like what immediately happens is that your ankle swells um And I think like that's how we're trying to to

kind of present how we're going to talk about the middle class today, because this sort of like that prolonged pain that we're trying to address here. Because again we're not experts, we're not doctors, but it seems like that that is the first step that our bodies take towards healing. Uh. And so this is this is why we're making the argument that we think, uh, shrinking middle class could potentially

be a sign of overall health for our economy. But yeah, if it does feel like the middle class is shrinking, then it might feel like that you are getting squeezed to one end or the other. Uh. And so if you buy into the narrative that the middle class is hollowing out, you're going to be more likely to be upset by an economy that isn't working for the majority of Americans. Because a healthy middle class creates a more stable society with less crime, with a healthier economy, and

you know, with greater levels of innovation. After all, the rise of the middle class is one of the main reasons our country is what it is today. So shrinking middle class should be concerning, right. Well, it's not that there is no bad news out there, right, but we actually think this is more good than bad. And that's because the majority of folks leaving the middle class are actually being bumped up into the upper income stratosphere. Folks are leaving the middle class to join the ranks of

upper class earners and we feel this is good news. Yeah, so let's start with some definitions, Matt, because it's it's kind of hard to define the term middle class, you know are we talking about because well, there's there was no technical set definition of what that means. It just depends on who it is that you're reading, what research

you're coming across, and at whatever. Identify middle class, but exactly they might be pupper middle like upper class or something like that, and they like to think that they're a person of the people, but in reality, now you're rich. Um. But yeah, are we talking about education, income, living arrangements. The definition it can mean different things to different people based on who you're talking about, and you know, based

on what methodology you're using. But just let you guys know, are jumping off point for this episode was a recent Pew Research Center study and this is the kind of stuff that Pew has been tracking for decades. We'll link to it in the show notes so you can pour

over it yourself if you'd like to. But the definition that we're going with states that the it's it's gonna be income based, and it states that the average middle class family earns between fifty two and a hundred and fifty six thousand dollars in dollars, which um, you know has changed a little bit because of recent abouts of inflation. But that's true. I'm here. I mean, they can't, like on a dime, update the information, update the research to

reflects but it has changed. Yeah. And when you think about middle class lifestyle and it being based on income, well, I think it's a reasonable measurement, but then it might leave out let's say, some of those firefolks who have one five million dollars net worth, but they're not actually currently bringing in income to that extent, right, But yet lower income folks are then considered folks who make belowty

dollars on the income scale. Upper class folks exceed that hundred fifty six thousand dollar amounts um and and a few, like we said, releases this information regularly and and really what they're attempting to measure is what's happened over the past fifty years when it comes to income mobility. And I think while we're gonna find today is that while it seems like the headlines tend to focus on a middle class that shrinking, after we dug into the info.

It just feels like the whole story is rarely told. But we thought that maybe like the full set of data and kind of um talking about its implications can

be helpful to all of us. Yeah, it can be helpful to the narrative and the words that we use and the attitudes that we carry with us, because in reality, when you look at peuse data like it does show that the median income for the middle class has actually grown over the last fifty years, but it just hasn't grown as quickly as those who are upper income earners. Middle Class incomes have grown over the past fifty years, whereas upper class incomes have increased at a rate of

sixty nine. But the thing is this makes sense if you consider that the very fact that income mobility exists like that means that individuals who may have previously been in the middle class, they have the ability and they have the opportunity to increase their incomes by a significant factor right where where they're actually leaving the middle class behind. They're not just migrating upward with the middle class, they're

kind of boosting themselves into a completely different class. Uh. And so if you consider where that nearly difference between the upper and middle class might have come from well, there's I think there's a very good chance that that

increase came from earners leaving the middle class. I think that's very true, right, because as we've seen the middle classes getting smaller, but more and more of those folks who left the middle class have gone to into the upper class, like into the upper stratosphere of income than have gone down into the lower income. There's not like an uber elite uh upper class that where folks have dropped down from there into the upper class like the All the folks that have been going into the upper

class have been getting there from below basically exactly. And so yeah, even though you you just mentioned matt attitudes of our beliefs, right, I think that's such an important part of this and how um just seeing some of those headlines could sometimes make a sour on the American experiment or just kind of how we feel about our

life or our lot in general. And the reality though is is that almost all of us are thing better than our parents did, right, as evidence by like a more widespread availability of healthy foods at cheaper prices, more affordable consumer goods, and and even better tax policy. But even though those things are true, consumer sentiment is often negative, right, Our attitudes are like we we just can consistently think

that things are getting worse. And there was this recent Wall Street Journal article and the title was consumers say that is the worst economy ever, And that was based on a consumer sentiment survey from the University of Michigan that that they put out I think on a quarterly basis, and uh, or maybe it's monthly, but attitudes and believes they just don't always line up with the reality. And so just to think that is the worst economy ever

would be an overstatement of incredible proportions. And uh, it's obviously it's not all sunshine and roses. We're gonna get to that in a little bit. But it's important for us to have a proper perspective on what we're actually living through and the aortunities that exist. So we want to talk about those opportunities, but we will get a

little bit pessimistic to lead things off. We'll talk about we'll talk about the downsides of a shrinking middle class and and some of the headwinds that middle class Americans are facing. Right now, let's get to our thoughts on some of those things. Right after this alright, we're back. We are talking about how the middle class is shrinking, and you know, before we before we die, like explain all the wonderful ways that this is gonna be a good thing for you. There are some fair arguments for

why so much of our country is feeling pessimistic. Inflation, for one, is obviously impacting everybody, uh, and it's threatening to undo some of the gains that people at the bottom end of the income spectrum have realized over the past year or two. We talked about gas prices not too long ago. Although they are coming down now, they have significantly cramped a lot of budgets, but prices at the grocery store. That affects lower income folks in a

larger a as well. And some of the more disturbing research showed from p that lower income earners, they've showed actually the least amount of growth at just forty five percent over the past fifty years versus the fifty and sixty from the middle and upper class earners. That's right, Yeah, So so we're yeah, Inflation obviously is is a reason

that people feel past ms. The last year has has been a real gut punch for a lot of people when it comes to their personal finances and long term inflation in specific segments of the economy is taking a toll as well, Matt, because healthcare costs as a percentage of GDP is through the roof right when you look at over the last thirty forty years, and and no political solution seems to have made much of a dent in staid. You just have to choose not to go to the doctor like I do, or just kind of

chance it. That's my approach, right, which you know is not something that I can recommend. Can look at this share on the on my back. That's what I like. My doctor friends, I have very few of, uh, Like one of my friends he's an ophthalmologists and and so he I know he doesn't know anything out these things. But you know, I still gotn't take a look mine like you look into his life, like you don't see

anything weird? Right, right, exactly, I'm good, I'm good. Right. Well, I mean the same thing is true when it comes to the staring cost of college, which we're actually going to talk about on the show next week. But there are at least in that regard ways for for folks to avoid at least some of that increased cost by

taking a savvy approach, which we're gonna discuss. But it's of course it's a legitimate problem impacting a lot of millennials gen z ears and even their parents right taking on parent plus loans and the media price of a home talking about something else negative was two point two times income in nine and it's six point three times income in That's that's a big jump, and it's probably gonna it's gonna be even more matt because of you know,

recent home price appreciation and now rising interest rates. But homes have gotten a lot nicer. There's that's something doesn't get talked about a lot. It's just cost more money for a lot of people. That means a lot more space. Um next are amenities and stuff like that. But it's still a meaningful issue, and it's one worth mentioning. It's

certainly adding to the negative attitudes. Although I think someone could easily make the argument that well, with that nicer house, isn't isn't that nicer house a part of achieving that middle class lifestyle? Isn't that a part of the middle class or a part of the American dream. I think that that could be the case. But it's also true that more households are living on two incomes than they

were fifty years ago. Of single income households were considered middle class half century ago, but only thirty seven percent are now. Uh. And so single folks, especially single parents, are finding themselves in any more precarious financial position, whereas married folks are finding it easier to move up the income scale. So the economy is working for a large chunk of folks, but your family status is proving to

play a large role in your financial security. Yes, so the data from pre really is mixed in a lot of ways because we are seeing a shrinking middle class, but that has led to a bigger rise in in families being in that upper upper class um strata where their income is at least six figures if not higher. But I think for a lot of folks math they feel like everyone is falling behind, But it turns out that some segments of the population are actually doing really well.

They're actually vastly improving their their standing in this economy. And the New York Times actually just had an article about second generation immigrants and how second generation immigrants are succeeding wildly, um, and it was just kind of a fascinating article about the ascent of immigrants in this country

in general. You're you're actually more likely to become middle class, upper middle class, and even rich, which is another stratus for The New York Times described just straight up rich, just straight up loaded as a child of an immigrant, if you were like born here in the United States and your family has been here for a while. Immigration has basically always been a good thing for for this

country as a whole, keeping the American dream alive. But I feel like there's just so much interesting data in that math that we can extrapolate. It's clearly more financially beneficial to grow up as the child of an immigrant than to be a third or work generation citizen. And I don't know. A friend of the show, Christie Shennon, who we had on back in episode one eighteen, I think her story is kind of indicative of this reality.

Her parents basically grew up in poverty in China under authoritarianism, and they ended up making it out to Canada, and they well, they had to sacrifice a lot right in order for for Christie to succeed, but succeed is what Christie did. And sometimes there there is that reality that that for some reason, second generation immigrants are able to make the most progress when it comes to the American dream, even more so than folks who have called America home

for for a lot longer. Yeah, it's crazy how the data, I mean, it's incredibly clear. It's almost as if immigrants have the clearer understanding of what's available here in the U. S. Than folks who have, yeah, for generation has been U. S. Citizen. Makes me think of Hamilton's and what you say. Immigrants, they get the job done. And it's just it's true, and the data really really reflects that that immigrants are protecting in the American dream more than more than most

folks who have been here a long time. That's right.

So if disagree with us, take it up with Lemon weel uh okay, let' let's talk about how the middle class is shrinking, because part of what we need to do is really dispel some rumors and sort of like false beliefs about rich folks, because you know, like when we see articles about quote unquote rich people, were usually hearing specifically, not about maybe a millionaire, but billionaires right, like like Bezos Elon, they get their fair share of headlines,

but these fellas are definitely outliers. By the way, Elon has had a lot of negative press, likely um there there are other reasons that he's been in the press, like his his private life is um odd yet to

say the least. But the reality, though, is is that when you hear the word rich, you should have a much broader definition as to who falls in this, you know, within this category, and those guys should probably they probably should be in that completely different camp like the uber super filthy rich that I was talking about, Like there isn't really a separate category for those who are beyond rich.

It's really if you make more than a hundred and fifties six thousand dollars, you are considered over class and technically, within a lot of studies, you are in the same category as Elon and as Bezos, which is funny because yeah, they are the complete outline hydrofoil. But when we talk about rich people, we're we're often pointing fingers at like the super rich, techmobuls um, the hyper rich, right, the

billionaire class. But there's a big difference between just normal, everyday rich, which for a lot of people looks a little more middle class or doesn't feel um exorbitant. And some of those guys who are trying to you know, make us an interplanetary species by firing rockets off into space and you know, taking down bridges to move their

yachts around the world. But yeah, another article actually from the New York Times that ran recently discussed how the majority of rich folks actually make their money, and that was really interesting to me too, Matt, because spoiler alert, it's it's not from building rockets or you know, creating some sort of online business or new found venture that reaches millions and millions or tens of millions of folks.

Most folks that are in the rich category they get rich over time, uh, from owning an incredibly not sexy business, right, mostly from looking like normal people. And according to some some survey data from twenty nineteen, the folks who make up even the point one percent are largely folks that would fly under the radar, right, that are eating at the same same fast food restaurant you might be eating at. Uh, they're eating at the same Mexican place where they handle

the free chips. That's right, that's right, Like they're down with that too. And you know, we're talking about folks who own auto dealerships or smaller regional distribution companies. Uh, the folks who you wouldn't necessarily think of as uber wealthy. And even the author of that New York Times peaks was like, I was shocked to read who the rich are, Like, they're not the people you would suspect. It was helpful

to see. I think that some of the rich people, according to this data, actually have lives that aren't completely abnormal, right, And and oftentimes their wealth comes from creating a business this that employs a lot of the people, that is is doing something productive for the local economy. Yeah. And I think you could even argue that that quote unquote normal life where they have what looks like normal expenses, is a part of what has led to them having

the you know, those larger amounts of wealth. Uh. And so I think that one thing that we can take away from this is that wealth flows to owners. You know, we talked about that in depth back in episode four.

That's why we're so big on investing in the market, right, owning these little slices of a wide array of American businesses, because even if you are unlikely to start the next Amazon or the next Tesla, there are still many avenues to making a great income landing yourself within the upper class of American society that doesn't involve moving to Silicon Valley or marrying rich people. Right. Yeah, that's if that's your your main avenue to moving into the upper crust

of society, just marrying someone who's loaded already. Um, more power to you. But uh, that you don't have to do that, is what we're saying. That doesn't have to be your only year one avenue, right, it's they're still the possibility for lots of folks without going to those links. Um. It's also important to note math that being rich is

an always evolving phenomenon. So something like one third of Americans are actually going to be included among the top five percent of income earners for at least one year during their working life. Super cool stat. Yeah, a very cool stat. So often times we say rich folks and we point a finger there. Um, But it's not like the static group of individuals who continued to pad their Scrooge McDuck like vault with more gold coins, Right, that's usually kind of the way we think about people who

are considered rich in our society. But but there's a chance, a decent chance, that you, dear listener, will be included in that group for at least a portion of your career, even if it's just for maybe a few years during the time when you're your peak earning abilities. Um. But you also found that the bottom quintile of Americans is more than likely to experience upward mobility, while only seven

percent experience downward mobility. So the reality is that there is a lot of upward mobility potential in our society still, even though, Matt, I think a lot of times, um, the way we discuss these things, there's a prevailing attitude or belief that that's not possible. Well, the stats tell a different story, right, that the people from who are in the lower class can move up, even if it's not easy, and the folks who consider themselves middle class might at least for a stretch of time be be

in the upper class. Our class structure, income levels, they're not some sort of never changing, set in stone sort of reality. Right. Yeah, there's a lot of mobility, and we need to keep that in mind. Um let's let's take another approach here too, because if you've listened to the show for any length of time, you know that

that we believe that riches aren't everything. Right, It's it's okay if you're never a part of that five percent that are that is going to be in the you know, top point one percent, because we believe that joy is found in a whole lot of things that are not

related to money at all. And so it's not our goal in this episode to push all of you, how the money listeners out there, to figure out how to make a million bucks every year or even more than a fifty six thou dollars if you love what it is that you do, earning a lot less than that while still being able to save and invest more power

to you. Uh So, for instance, most teachers, they will never be categorized in that upper income at Chalange, but most are pretty passionate about their work and they love educating the next generation. There's a level of fulfillment that I've heard many teachers express that that makes up for a smaller paycheck. Uh And we've got some teacher friends who love to take full advantage of those summers off.

So I say this because it's important to point out that making a conscious choice to spend your days doing something awesome, at least something that's awesome to you that you feel is fulfilling, is going to be way more important than getting rich according to what the world is calling rich at the very least. But on that note, we would not have an episode here for you without

some more practical advice. So we have some specific tips, uh, some strategies to change your economic position, some different ways to increase your income. We will get to all of those right after this break. All right, we are back from the break, still talking about shrinking middle class, but how it's not all bad. And I like what you said kind of right before we went to the break, how there are a lot more things that matter in

this life than just money. Right, And so somebody might hear the beginning of this episode and think like we want everyone to get rich and sacrifice whatever it takes in order to get there. That is certainly not the case. So I'm glad you, especially your friends and family, right, Yeah, don't don't throw them by the wayside in order to make more money. But relatively speaking, you know, when we're

looking at the data from PEW. We want we do want our listeners to be represented in and included in the population that's moving up, right, that's finding more financial security. We do whose incomes are are largely growing. Um, But how do you ensure basically that you're you're on the winning side of a shrinking middle class. Let's talk about that now. The first thing we would say, uh, that there are a few steps we think you should take, or that most people should take. One is to to

change your mindset. And that might sound a little woo woo or something like that, but uh, it's important for positive thoughts. Yeah, and there's like like definitely some like bad advice right headed in that direction where it manifested. Yeah, that that's just kind of ridiculous. But but there is a reality that you have control of your life and

that we don't live in a cast system. And I think sometimes knowing or seeing some of that data, but then but also recognizing that you have more control than

you think, how that can help. And there's more income mobility in this country than in most places in the rest of the world, although the Scandinavian country countries are are actually better than us in that regard, but we talked about the fact that almost Americans are going to be in the top five percent of income earters for at least a year, right, And I think that that should actually be encouraging, right to help people realize that they are in the driver's seat of their own life. Right,

they they aren't stuck. They can make progress. And I think knowing and believing that is is part of the key to finding the motivation to change your lot in life. Makes me think of this Netflix movie I watched with my wife a few months back, Matt called White Tiger. I don't know if you it was a book too. I think my wife read the book okay, um, and

it's literally about this young Indian entrepreneur and uh. For him to get to the place he got, it was a lot harder than almost any path that any modern day American has has to take to get to that middle or upper class. So I think it's helpful maybe to see stories from other people in other countries and realize that while it's not necessarily easy, um, it is one of those things that is more widely available than in a whole lot of other places where you could

be living. Yeah, I mean it kind of goes back to the immigrants as well. When you come from a country, when you come from a system that does not foster financial or income mobility, I think you are able to come to the US and see the opportunities here. I forget the name of the comedian. There's a he's he's a Chinese guy, but he talks about how there's just so much great stuff going on in the US. Ronnie Chain. Yeah,

that's yeah, yeah right, and and uh. He was explaining how the word for America basically means like I think it's the beautiful land, the beautiful country, or something like that, like when you translated directly, because of so much of the promise that is here in our country, and we fail to see that a lot of times. But it is good to be reminded of that from talking to folks who are from other countries who have escaped those systems.

But another way that folks can get ahead is by prioritizing your education, something immigrants have also done who have come to the US. Because p has found that there's a growing income gap between Americans with a bachelor's degree and those who do not have one, And it is important to note here that it doesn't necessarily have to

be a college degree here that we're talking about. That's the It's definitely the traditional path for a lot of folks, and it will make a lot of sense as a way to move up the income scale, in particular if you're able to keep that debt to a minimum. But it certainly feels like it is the most replicable way to increase your income. Uh. And that's proven out to by the facts, by the data. Right, Yeah, And you're right, education is a crucial component here when it comes to

moving up the socioeconomic hierarchy. Right. But but p was also looking over a long time arising here fifty years and interestingly enough for actually seeing more signs over the past decade that entrepreneurship and blue collar work can be more lucrative these days for for a lot of folks, and that path often allows you to avoid taking on

a boatload of student loan debt. Again, we're gonna talk about kind of some of these things a little bit more in next week's episode, but check out our conversation with about blue collar work with Ken Rusk back in episode two seventies seven for for more on that. But for folks who are more inclined to work with their hands. There's more of a chance than at any time in recent history that you can make a substantial income while avoiding some of the debt and time and opportunity costs

that goes along with a college education. But still education, even if it's not higher education. Even it's not going to a university or something like that or getting a master's to there are all sorts of other ways that you can educate yourself, especially now, like for free or or for cheap that can have an outsized impact on your ability to to build your wealth. Yeah, that's right.

Another way you can move up that ladder gradually is by investing, because obviously increasing your income is great, but we still see stories all over the place about folks who are making six figures who are still living paycheck to paycheck. Uh, And so we wanted to highlight this

because a high salary does not equal a robust savings rate. Uh. Pew wasn't really measuring net worth in their study, but we think of that actually as an even more compelling metric, because when you're investing money with every paycheck, slowly but surely, that's gonna have a significant impact on your ability to build wealth and gain financial freedom. Again, we're not saying it's easy, but you really can do this. This, this really can be done in any of the three income classes.

It feels like this truly sort of democratic technique that is accessible to to everyone, and it's more accessible now than ever with the abundance of four one K plans of low fee invest through some of those low cost brokes. You don't have to know the guy, you don't have to don't have to like make a phone call and what you figure all of this out. A lot of it is automated, either through your workplace or if not, it is incredibly easy to set up with somebody like

Fidelity or Vanguard, and there's these low cost funds. But also you can get started for a dollar right, whereas before you used to have at least at least a thousand bucks for a number of years right to get started. And now it's like it's democratized, really um and you can buy those low cost index funds and you can

just get build wealth over time solely but surely. Yeah, it's interesting, actually so, and it's important to say that we're building wealth because by investing that's not necessarily going to increase your income, right, it's like almost the inverse. So that is true. By increasing your income, that may, however, potentially allow you to invest more, and that truly is

the ultimate goal that we're striving after here, right. Uh. And so by increasing your income, like, we just don't want to get the means mixed up with the end. And it's important just to have these things and within the right place. Yeah. Well, and and to your point about getting there gradually by investing that you can grow your net worth even on a smaller income. Well, there's the occasional story that comes out right about somebody who did have a small income but over the decades was

able to amass a small fortune. And um, there was a story a few years back, um in in CNBC about a janitor who died with eight million dollars in in his investment accounts. And it's one of those things where I don't necessarily think of that as a good thing that you would focus so dang heavily on investing for your future that you don't you're not able to actually like use some of those funds now to further

your enjoyment in life. Um. But it's also it also helps to prove what you were just saying that that that a little bit by little bit, even on a small income, can amass into something meaningful. Yeah, that's right. He was a janitor and before that he was working at a gas station, and so it's not like this guy had some sort of large windfall. It was him literally spending less than he made in investing the difference.

Another route we think that you should consider when it comes to ear any more money is to take the path of entrepreneurship. We think that you should consider working for yourself because in a lot of profession like, there's going to be a cap to what it is that you can earn. We we talked about teachers earlier on how they are a lot of them are finding some fulfilling work. But you are getting rich teaching at your

local elementary school understatement. And that's right. But let's say that same teacher starts a YouTube channel, or maybe they start selling lesson plans on teachers pay teachers, which is a great resource if you're the kind of person who likes to put together a curriculum, or even be like that piano teacher Joel that you mentioned on YouTube, because you know, if if you're a piano teacher and maybe you are earning fifty bucks a lesson, that's pretty great.

But teaching the entire world can actually provide more income per hour spent working than you would be able to find otherwise. Yeah, and there's just more ability now than before to kind of take something that you're passionate about or something that you're skilled in and kind and turn it into a source of income um on a bigger scale. But let's talk about something else to Matt. Another another thing that you need to do if you want to be a part of the positive shrinkage of the middle class,

and that is gives a great of spending injury. But we're gonna call this positive shrinkage positive shrinkage. I think I think it's accurate right based on the day that we're saying that the shrinkage is leading to larger upper class, which is great. But the I think developing a sense of grit right is something else that would be helpful.

You know, we actually did a whole episode back in the day about about how grittiness is one of the biggest indicators of your ability to improve your personal finances and the same thing is true if we're talking about improving your income getting more disciplined, is that the crux of ensuring that you're making progress, whether it's waking up earlier or reading more, you know, dictiving your habits to ensure that more of your money is going towards savings

and investments. That's a huge part of changing your lot in life. And uh Socrates matt He said that the free individual is free only to the extent of his own self mastery. And I know for myself, I have at times been overly lazy, and I have missed out on opportunities because of it. Um and and yeah, I don't know. We little changes and positive new habit formations. They often start small, but they snowball into real progress

over time. It's it's just like what you're talking about with investing, how a little bit can make a big difference. It seems like nothing at the beginning, but those baby steps they have a huge impact over the decades. And the same is true with the habits we with how we spend our time and with and with what we're consuming.

How that can help us or hurt us. It can help us achieve what we want to or it can actually take us further away from what we're trying to achieve, right and aside from how it is that we can increase our incomes and and find ourselves advancing our station in life, I think it's good to point out to that the fact that like life is is pretty good right now. Like we're not trying to gloss over everything

and say that everything's fine. Go back to your work, but think about how it is your grandparents grew up, um, because do you have it worse than they did, you know, backt seventy years ago? Uh? Like, seriously, do an honest assessment for a minute, because my guess is for almost everyone listening, your life is much better than their's, at least in terms of the creature come that we get to experience on a daily basis when we're guests Morgan Household.

He talks about how we think of the nineteen fifties as being the the economic glory days. But if you had the chance, would you actually want to live back then? Because I highly doubt it. Would you step in a time machine transporter that would take you back there if it meant you couldn't return too unlikely? I know, I wouldn't I probably not. I mean honestly even just like yourself.

But like the like small pieces of technology that we use on a daily basis, I think oftentimes are what are keeping us from thinking, oh, yeah, that that is a life that I would actually went to experience, because by basically every standard, the vast majority of Americans are better off now than they were back then. Uh, expectation inflation.

That's actually a major reason why folks are less happy and why they assume that they are much worse off when statistically speaking, things are a lot better for the vast majority of folks. Yeah. Our friend Jack, who writes over at Young Money, wrote recently in a similar vein, and he basically said, life is the that it's ever been. Rates of extreme poverty have been plumbing. Right of the

world's population is literate. It was only just like rattled off this laundry list of statistics will link to that article show notes even something as simple as a COVID vaccine like me that did not exist modern miracles a hundred years ago, sure, and the ability to develop it so quickly in the type of technology right that in the brain power that it took to be able to

create that. Um, there are so many reasons, and I think when you put it in those dark terms, would you go back to would you trade your current life for for that life? Uh? In all likelihood the answers now. And it's so it's our belief that the American dream is is still alive and you're not only able to accomplish it by working seventy plus hours a week grinding as hard as you possibly can. It's it's not just for folks with a fancy education or for people earning

six figures. In our uber connected age, it's it's easy to, I think, get down and out at about idiotic politicians, income inequality, and and the negative headlines that tend to dominate the news. And while the real world has real problems, many of us are far too focused on the things we can control. We're maybe buying into the negative sentiments

on Twitter. Uh. Instead, we would say, let's turn the majority of our focus to things that we can influence as individuals and in realize that we've got more say over our futures then we often like to think. And some of these stats are actually showing us that a shrinking middle class isn't actually nearly as bad of a thing, and it actually might be a better thing than you'd

like to think. And I think we would say that the vast majority of Found Money listeners can participate, can change their trajectory right by changing a few things about their lives. And um, we're again not easy, but I think it's refreshing to kind of dig into the data and see that there is actually a lot of positive news to behold, and that more of us can and are likely to participate in, like the economic progress of

our country than maybe I think that they will. Yeah, I mean, I think another part of it too, is like you're talking about some of the negative aspects that

we become transfixed and you know, obsessed with. What's cool is that as we are able to develop ourselves as individuals, we can then eventually have impacts not only on on our finances, but the finances of our families, of our friends, and then eventually, yeah, our cities, our states, our countries, and hopefully uh far off down the road, there will be less problems. There will be ways for us to combat some of the things that seem to take so

much of our time. Now. It's just I feel like so many, so many of us, myself included, at times want there to be answers and quick fixes now, especially on a large scale, when in fact, what we need to do is focus more on the local right, not only just developing ourselves, but then finding ways that we

can look to improve our communities as well. Yeah. Yeah, So when we do that, I think we're we're gonna more tangibly see the progress right in our own lives and the lives of people around us, And that just provides more encouragement. And then all of a sudden, you your beliefs and your attitudes have completely transformed. You feel at least great about the things that you have been

accomplishing at home. When you think about the grand scale problems that you have basically zero influence over, um, it just makes you feel small. Um. But when you realize that there are other ways that you can impact people directly, it's empowering. So hopefully, Matt, this runs counter to a strain of pessimism. I feel like we're seeing um in

our in our country right now. And again, it's not that there aren't negative things, but there are a lot of good things too, and they're you know, by tuning out some of those negative things. You're just life experience gonna be better. All right, that's true. Man, Let's at least now mentioned the beer that you and I enjoyed during this episode. Just one other by the way, Uh well, no one. Other evidence of the reality that things are

getting better is our abundance of beer voices. If you look back just twenty five years ago, how many how many craft breweries were there in the United States? A hundred maybe max? Not enough? Yeah, now we have an abundance, which is but but we're drinking. Not that Stiegel is necessarily a craft brewery, although it is fun from time to time to go with one of these larger producers who make a really good beverage. Uh and this is

a lemon rattler by Stiegel. I will go ahead and kick it off by saying that this sort of tastes like carbonated alcoholic lemonade, which I think can be a dangerous thing because like, you don't really it doesn't feel like you're having a beer, doesn't really feel like you're having a drink. It is quite delicious, quite refreshing on a hot summer day like we are experiencing at the moment. But I will say at times, I feel that Stiegel's

rattlers can get a bit sweet. Uh, And for me at least, that's one thing that's like, I'm literally more of like a bud Light bud Light lime guy on the beach. I will drink those beers and I would, honestly for every five listeners just lost a lot of

respect for you, Matt Hey. I think there's a lot of folks out there who would be like, yeah, I could, I could handle a bud Light lime when you're sitting out there on on a beach, because you and I like we've tried, we've we've tried having nicer beers out on the beach, and honestly like, the more basic you can go with the flavors, the more refreshing in the

baking sun. You don't want some sort of ten per central ip a. You don't want something that's got a whole lot of complexity, Which is why I told the understand why this is also very refreshing out there. But for me, I mean, they don't put nutrition facts on beers, but I really would love to know the grams of sugar that are in this compared to something like a bud lightline because that's what I was drinking last week out on the beach, and I did not get tired

of him. I'll say that, Okay, all right, well we're back in the real world now, Bud, So put those put those in the back of the fridge. I literally won't buy them again until next time until I up the beach. So I thought this was it was bright, but it also was laid back enough that and that it can be enjoyable and you can have a couple, which is nice and like to me, this ab allows

you to do that. Yeah, this is the kind of beer that for Seltzer fans like they should try this, right, because I think it's like a better ocean of a fruited Seltzer um a fruited Rattler. So yeah, the Stiegel Rattler grape fruit is probably my favorite, but Lemons like a close second. Raspberry not not as good in my opinion, But it's a great beer. It's my like summer go too, and then I don't drink it for like ten months.

Something great to pick up doll gets USU or you're sitting pool side and swing by the grocery store pick up one of those four packs. Yeah, you probably won't regret it, no doubt, But Joel, that's gonna be a buddy for this episode. Folks can find our show notes up on our website at how to money dot com.

While you're there, go to Ford Slash Newsletter, where you can also sign up for the best personal finance newsletter in the world, does drop every Tuesday morning, chock full of actionable advice and interesting, helpful little tidbits to help you along your way to helping you climb that class ladder. If that's something you're interested in. Again, don't let that

become the goal. But that can be the means to the goal, right like that can be a means to an end as we all are striving after more options and financial different levels of financial freedom. Yeah for sure. All right, that's gonna do it for this episode. Until next time, Best Friends Out, Best Friends Out, M M.