Are Americans Worse Off Financially in 2025?

Are Americans Worse Off in 2025? (1:08)

Brian: Here’s a question. Are Americans worse off in 2025? I am so excited to talk about this because we love for people to have confidence and feel secure and feel good about their financial circumstance, but a lot of stuff out there suggests that right now today in 2025 as we sit, Americans are actually worse off financially. And so we want to answer the question, is that true? And even should it be true?
Bo: We’re constantly looking for data to just kind of help us read the tea leaves, also just get a pulse of what’s going on. There was a Gallup survey that just came out and we’re going to kind of go over those results. I’ll tell you what I think – it’s not too different than the way I look at the market. I think where the real value is in the trends that have happened really over the last 10 to 15 years just watching the change and is there anything we can read into it on what might be coming our way in the future.

Gallup Survey Results on Financial Well-Being (2:12)

Bo: So the way that Gallup actually outlined this is there were two questions they asked. They said first would you say that you are financially better off now than you were a year ago or are you financially worse off? So that’s question number one. And then question number two was, do you expect that at this time next year you’ll be in a better financial position or worse? So where are you today relative to last year and then where do you think you’ll be next year relative to today?
Brian: Now look we have to share that based upon the way the results came back is that 38% said that they feel like they’re better off. 44% said that they’re worse off. And then there’s this whole section that’s a little less than 20% that are kind of neutral. So what they do is they take the spread between the better and the worst and they come up with a negative 6%.

Financial Mutants vs. Average Americans (3:30)

Brian: Now at first you’re like well that doesn’t sound good. But then like I said you zoom out and you look at the trends and look at what happened post pandemic really from 2020. We’ve been in a state of decline. This is really one of the first years where we’ve actually seen where the better off and the worse off kind of have converging and getting closing closer to each other to the point that it makes me wonder are we headed towards more like that 2008 to all the way to 2020 where things were on the uptick.
Bo: What I like is you guys, you financial mutants out there are different than the average American. We did a poll. We said, “Hey, do you think you’re better off financially compared to a year ago?” And Brian, you haven’t seen this. our respondents, you guys right now out in the live chat, 74% of folks said they are better off today than they were last year, which is a wonderful thing.

Building Financial Confidence Through Planning (5:12)

Bo: But what we want you to do is we want you to always have confidence in where you are financially and we really want you to have confidence in where you’re going financially. So, what are some things that you can think through? How can you approach this so that you feel that way? Even if there is uncertainty out there economically or maybe even uncertainty in your unique financial situation, what are some of the things that you can think through?
Brian: And the first one, this is no surprise. We think that if you can have a plan in place, you are automatically putting yourself far ahead of your peers. Well, remember we always have 40% of new people who are coming in to the show brand new. So that’s why I tell you if you don’t know about the better mousetrap that we’ve created the financial order of operations I’ll make the sounds is your friend. I mean we literally have written the book on how what to do with your next dollar.

Track Your Progress for Success (6:35)

Bo: Well then step number two immediately following that is to track your progress. Am I actually doing the things that I said I was going to do? Hey, I said I was going to increase my 401k contributions this year. When I look at my 401k account today versus where it was last year, has it gone up? Has it improved? Are you actually doing an annual net worth statement to see where am I today?
Brian: Well, and tracking your progress is there’s some great tools out there. We often talk about budgeting plan and cash flow management plans and then don’t sleep on also doing that annual net worth statement and then using that as a great communication tool.

When to Consider Professional Help (7:32)

Brian: But there will reach a point, look, we count on it. That’s why we always say we leave the light on for you is if we train you right and give you all the building blocks of what creates success with money. I know that there will become a point that success will create complications and there will be blind spots.
Bo: We think that a lot of folks there are generally like three times that you might find either one, like you said, the gravity of your financial decisions is so great that you’re nervous that a 10% mistake on my financial situation now could be a big uh-oh. Or maybe it’s just gotten so complex that I don’t know the things that I don’t know. Or maybe I’m just at that stage of life where I’m so busy that the financial matters in my life fall to the back burner far too quickly. If one of those three describes you, then it might be a great time for you to consider completing the abundance cycle, reaching out, checking out moneyguy.com/become a client.

Q&A Session – Cash vs. Market Timing (11:10)

Rebie: Well, I do have a question queued up from Shane W. He says, “In your show, Making a Millionaire, you mentioned that cash can be a wealth builder when used to buy undervalued assets in a downturn. At what point is keeping cash on the sidelines an attempt at market timing?”
Brian: I love this question. This is really a step eight type thing. So if you think about all the nine steps of the financial order of operations is that after you’ve gone through the basics of keeping yourself from making desperate decisions with steps one and four getting the free money from your employer avoiding the high interest debt then loading up these tax favored retirement accounts between the Roth the HSA then loading up those employer plans.
Brian: I don’t think it is market timing to the point. I mean, look, it’s opportunistic, but the 25% is going in automatic for the people. This is more of you’re trying to you have resources that are building in the background like a good field general. You’re trying to figure out how you navigate in the best way possible.

Emergency Fund Strategy After Setbacks (15:20)

Rebie: Kelly P’s question is up next. She says, “Oof, that’s backwards foo. We were on step six, then had an ER and hospital stay, needing us to dip into emergency reserves. Now we’re back on step four. So, what’s the best way to rebuild?”
Bo: I want to pause there for a moment and say, kudos to you guys because one, it sucks whenever we have like an unknown medical emergency and we find ourselves in the ER that stinks. And when that visit actually leads to hospitalization, that’s an awful outcome. But you just by telling me your story let me know that you had an emergency fund in place. And that emergency fund in place was there for the very thing that happened, the very emergency that came your way.
Bo: So now your question becomes, okay, I took a step back in the FOO because of this unknown unknown. I was on step six. I was maxing out my employer sponsored. Now I’m back in step four. How do I get back to where I was? Well, first lean into the fact that you’re back in step four.

HSA as Emergency Fund Discussion (20:55)

Rebie: Robert S.’s question is here. Speaking of emergency funds, if I have an HSA, should I count that as part of my emergency fund? Depending on that answer, I could be doing better or worse in 2025.
Bo: I’m going to say this is sort of this is an interesting Rob. I’m going to put an it depends on this and because it depends on how you’re using your health savings account because there are some different and varied ways that you can use it.
Brian: I wrote down three quick notes is that look, I think it’s a bonus feature that health savings accounts and Roth IRAs can in a really dire emergency, you actually can have more access to resources than you might have originally counted. But I still stand by. And this is the second note. Cash reserves should stand on their own two feet because we’re creating a plan before, this is before the chaos comes your way, before the poop hits the fan.

Market Timing Warning (24:37)

Rebie: Vegas has a question for you. He says, “I did the smart thing ahead of the April 9th dip and sold into cash. When do I know when to buy back in?”
Bo: I’m gonna reframe Vegas’s question. Hey, I got real real lucky. How do I know when to get real real lucky again? I mean, that’s the problem with market timing. Whenever you try to time the market, you got to get it right twice. You got to get your entry point right, and you got to get your exit point right.
Brian: And you know what’s the best way to build wealth is to just set it, forget it, and just be consistent. Always be buying. And that’s why I talked about in the book and somebody put it out on Twitter or X here in the last week where they were quoted me in the book as saying that investing is one of those things where you can actually be bad at it. meaning your timing could be horrible. But yet, if you’re consistent and even buy through the bad stuff that’s going on in the market and the economy, you’re going to look back and even the worst investors can be super successful investors.

High Earners and Savings Rate (30:26)

Rebie: They have a question for you. It says question Brian says is if income is over 200k to not count the retirement match in your savings rate. That’s right. I’m wondering if he can expand on that thinking and the reasons behind that.
Brian: Those who who if you’re blessed or talented enough that you make a lot of money, you get further and further away from that social safety net. that’s also going to meaning social security and protections. You think about pension guarantee protection. All these things are kind of start going away when you’re in this high income situation. And then also what typically happens when you have a high income, you have high expenses.
Brian: So, you know, I don’t want you to live this lavish life, have tremendous success, and you have this false sense that I’m going to be okay because you’re counting your employer match and all these other things, and you’re not adjusting your savings rate with your success.

Student Loan Prioritization Strategy (33:10)

Rebie: Paul’s question is up next. He says, “The wife and I are 26. We make 160K. I’m saving 15% to retirement and 15% to home. His wife’s parents took 60k out in parent plus loans at 5 to 7 and a half% for her and expect us to pay. We’re making minimums. When should we prioritize this?”
Bo: I think Paul, one of the things that I’d want to do to really be able to analyze the absolute best decision is I want to see what the actual loan amounts and actual loan rates are cuz some that are at 7% may be less acceptable. But for a 26-year old, someone in their mid20s who’s trying to save for a house and has a huge wealth multiplier, something down around 5% may be okay.
Brian: And we’ve detailed, we talked about risk premium and other things in the past. I think for somebody in their 20s, you know, over 6% would probably be higher interest debt. So, you could go knock out those 7 and a half%. And then naturally by the time you reach your 30s we scale that number down because the older you get the more you need to derisk.

Pre-Retirement Portfolio Strategy (39:48)

Rebie: L Baker has a question for you. It says, “I’m seven years from retirement and always had a modest salary. I max my HSA and Roth plus catchup each year, but I don’t make enough to max my 403b. Do I still need a taxable account? Am I stuck on FOO step six?”
Brian: Once you hit 25% of your savings, you know, and by the way, if you make under, you know, 100,000 for a single person, 200,000 for a married couple, you get to count your employer match in that 25%. Once you do that, you can move on to step seven. And that’s where El Baker, you’re going to figure out is what do I, you know, in step seven, when will I need this money?

Vehicle Purchase Planning (43:29)

Rebie: William P’s question is up next. It says, “I would like to pay for my next vehicle in full and plan for that to be in 10 years. Should I accumulate that money in a high yield savings account or a taxable brokerage?”
Brian: Well, I mean, he’s given us some breadcrumbs there. I mean, now look, we always say I think the average American discounts the fact that anything you put into the financial markets is supposed to be assets you don’t plan on touching for 5 to seven years at a minimum. Now, you’ve run it through a different filter. And the fact that you said this is 10 years away because it’s 10 years in the future. You’ve now passed, you can put a big check mark next to is this something that’s 5 to seven years beyond in the future. And since the answer is yes, now it’s going to be a balanced approach.

Portfolio Diversification Strategy (47:05)

Rebie: Jay-Z has a question for you. The Jay-Z from the chat is asking, “Is it still better to have a portion of a small cap fund in your portfolio if you have a long time horizon or just allocate the portion to that portion to a large cap growth fund for the plus 10year time horizon?”
Bo: Here’s what we do believe when it comes to portfolio construction, though. We like diversification and we like when you invest dollars, you spread it out across a number of different asset classes, both risk on asset classes as well as risk off or risk reduced asset classes. Well, even inside of that risk on asset class, you might want to hold different types of risky investments.

Catching Up on Retirement Savings (50:11)

Rebie: Okay, we have a question from Jareth M. It says I’m 36. I make 80K per year. I have 65K in my 401k, 17K in my pension, and 6K in my HSA. I get a roughly 3 to 5% pay increase year-over-year. Mathematically, I do not think I will hit the three times my earnings by 40 marker. Any advice?
Bo: And when it comes to personal finance, when it even comes to questions like this, for all of us, there are really ever only two levers that we get to pull. Lever one is we figure out how we can spend less money. How can I get my expenses down so that I can get my savings rate up so that I can save more towards that goal? That’s lever one. Level two is how can I increase my income if I can’t cut my expenses?
Brian: But we have an illustration called how much you should save or what 25% can do for you. And look at this. I mean, you can compare and contrast. Look at the 35-year old and then the savings rate. This is assuming when you started from zero, so you’re above and beyond this to a point, but still it will show you why somebody who starts out who’s 35 years of age, if you’re going to have any chance of success, you’re going to have to be saving beyond 25%.

Closing Thoughts and Resources (55:22)

Rebie: Now, remember, we’re going to be here every Tuesday, 10:00 a.m. Central, talking personal finance. But just because we turned the cameras off today, that doesn’t mean that you have to stop learning. You can go to moneyguy.com/resources. Check out all of our free stuff. Just start there. We’ve got tons of calculators helping you know what type of house you can afford, what amount of car you can buy, what your wealth multiplier is.
Brian: It is amazing how often the financial order of operations came up today and it just shows me that there is a better way to do money. And we have tried to lay it out there so you don’t have to reinvent the wheel yourself. We’ve kind of already curated it. We’ve told you what to do with your next dollar.
Brian: I’m your host Brian Preston. Mr. Bo Hansen, Money Guy Team out.