Why Americans Are Bad With Money

February 21, 2020

The average person, unfortunately, isn’t too good with money. 78% of American workers say they’re living paycheck to paycheck, and 60% of the population wouldn’t have the savings required to pay an unexpected $1,000 expense. The United States is one of the wealthiest countries in the world and has a high standard of living, so why are there so many people that have trouble paying their bills and getting ahead with money?

High Spending Rate

It’s no secret that many Americans have trouble keeping their spending under control. The average person spends about $18,000 per year on non-essentials. The top non-essentials Americans spend money on include eating out, alcohol, subscription boxes, cable, apps, and online shopping. If people cut back on discretionary spending, they would undoubtedly be doing better financially. They’d probably even be able to come up with $1,000 if they had an emergency.

We think people should enjoy themselves, and spend money on things they enjoy. However, you must enjoy your money responsibly. If you’re living a lifestyle you can’t afford, you must make cuts to improve your financial health. Sacrifice a little bit today for an abundance in the future.

Fear of Budgeting

We don’t talk about budgeting often on the show, but everyone needs a budget starting out. Think of a budget like training wheels; it’s necessary for you to learn how to ride a bike, but only temporarily. There are many free tools out there for budgeting – you can use apps, software, or tried-and-true spreadsheets.

At a certain point, it will be time for the training wheels to come off. Eventually managing your money will become second nature, and you won’t need an app or a spreadsheet to tell you what you can or can’t afford. Until that time comes, though, don’t be afraid to use a budget to your advantage.

Big Spending Mistakes

Costly financial mistakes can keep you broke. The average American household owes $8,398 in credit card debt, and the average credit card interest rate is 17.30%. 1 in 3 Americans who trade their vehicle in for a new one are underwater on their car. 38 million Americans spend more than 30% of their income on housing, a sharp increase from 16 million in 2001.

These mistakes aren’t small. Credit cards, cars, and houses can completely derail your financial life, and “mistakes” like buying coffee everyday or eating out too much don’t have nearly the same consequences. Over time, small vices like eating out more than you can afford add up, but their impact is incremental and spread out over time. Buying a car or house that you can’t afford has immediate and lasting consequences, and will have a ripple effect throughout your entire financial life.

Practicing deferred gratification can be a cure-all for many money woes you may be experiencing. Get in the habit of postponing a little bit of happiness today with the hope of much greater happiness and abundance in the future. If you haven’t already, stop making mindless purchases. Consider what value an object will give you before purchasing; if it just gives you brief, momentary happiness for a few hours is it truly worth it? Depending on the stage of life you’re at, that answer may be yes. If your answer is no, your future self will thank you if you defer a little bit of happiness until tomorrow (or the next day, or the next…).

Our most recent show, “3 Reasons Why Americans are Still Broke,” is available to watch on YouTube below. Bo and Brian discuss what mistakes many Americans are making money, why that’s (unfortunately) not likely to change, and what you can do to set yourself apart.


Most Recent Episodes

Dave Ramsey vs. The Money Guy: Which Strategy is The Best?

Dave Ramsey has an incredible legacy of helping folks get out of debt and take control of their financial lives. We agree on a lot of things, but there are a few points of contrast. In this episode, we’ll discuss differences between The Money Guy Show and Dave Ramsey...

Top 4 Financial Mistakes We Saw This Year! (2022)

We saw some wild financial mistakes this year during the bear market. From making extreme changes to portfolio allocation, chasing the hot dot, and using too much leverage, we’ll talk about some of the biggest financial mistakes we saw in 2022 in this episode.   In...

How Millionaires Build Wealth! (With Dave Ramsey)

Join us for a very special episode as we welcome personal finance radio host and influencer Dave Ramsey to The Money Guy Show! There’s so much misinformation out there about building wealth. We had the pleasure of having a great conversation about how millionaires...

Do These 4 Things with Your Finances BEFORE 2023!

There are unique financial opportunities available at the end of the year - especially this year with the market down. In this episode, we’ll talk about what you need to do with your money BEFORE 2023! In this episode, you'll learn: What you need to do with your money...

How to Win When the Financial World is Burning!

Lately it’s felt like the financial world is in chaos, with rising interest rates, a falling stock market, and high inflation. Let’s talk about how to focus on what you can control and how to minimize the time spent worrying about what you can’t control. In this...

Financial Advisors React to RIDICULOUS Money Advice on TikTok!

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

Loss Harvesting: Why Wealthy People Love It (And You Should Too!)

Tax-loss harvesting: what is it and should you be doing it? In this episode, we’ll cover everything you need to know about tax-loss harvesting, including whether it makes sense for you, how much it could save you in taxes, and how to eliminate the downside of loss...

The Market is Crashing! (Where Should You Put Your Money?)

The stock market has not had a great year so far. You might be asking yourself, “Since the market is crashing, where should I put my money now?” In this episode, we’ll discuss how to invest when the market is dropping and how to make the most of your money. In this...

Will Rising Interest Rates Tank the Economy?!

The Federal Reserve is raising interest rates to combat inflation, and many are concerned about how it will affect the economy. In this episode, we’ll discuss what rising interest rates means for your wallet and how to make the best of it. In this episode, you'll...

How to Be Wealthy By Age! (Can You Catch Up?)

How much does it take for you to meet your retirement goals by age, and what are some common traps your peers fall into? Learn more about how to be wealthy, mistakes to avoid, and exactly what a little extra saving can do for your retirement income. In this episode,...