The American Dream Now Costs $5.3 Million

Transcript:

On this episode of the Personal Finance Podcast, the American dream now costs $5.3 million dollars

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we are talking through how the American dream now costs $5.3 million. And how is this going to impact you? If you guys have any questions, make sure you join the Master Money newsletter by going to mastermoney.co/newsletter, and don't forget to follow us on Apple Podcasts, Spotify, YouTube or whatever podcast player you love listening to this podcast on.

And if you wanna help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify or your favorite podcast player. Now today, we are diving in to the topic about the American dream, that the American dream can cost people about $5.3 million over a lifetime. In fact, Investopedia just came out with an article talking about this, and that total is a four point one percent from a recalculated $5.1 million last year.

And here's the thing that we're gonna talk about today, is first, there are areas that are massive. The big three, for example, are gonna be home, cars, and retirement together. They're gonna make up nearly seventy percent of the entire total that we're gonna be talking about today. Now, if you just think about those big three alone and seventy percent of your income going towards those big three, well, that is a huge portion of those dollars going out towards things that we're gonna be stealing away from your long-term wealth-building journey.

Secondly is the belief is slipping because a Gallup poll found that sixty-nine percent of Americans still expect to personally achieve the American dream. Now, this is down four points from two thousand and twenty-four. Many people feel as though the American dream is starting to slip through their fingers.

They feel as though it is becoming out of reach. And I want to be the person to help reassure you today that you can absolutely have the American dream. You can have everything that you want in this life if you get your money right. All money is, is it's a tool to get what you want out of life. And so when things like this come out, I'm gonna help you understand how to make the right moves in order to make sure that you achieve your American dream.

Because the question is: Whose American dream is this actually? Whose American dream are we paying for? Whose American dream is your tax dollars going to? All of these are so incredibly important. And when we dive into this, you wanna think through, okay, well, what does that even mean? What does the American dream mean?

Well, let's go to the history of this word really quick because I think this is an important point to drive home. All right? There was a guy named James Truslow who coined the term the American dream in 1931. Now, he did this during the Great Depression at a time when most people felt the lowest when it came to their finances.

They felt the lowest when it came to the opportunity available to them, and they felt as though maybe there wasn't as much to achieve as they once thought there was. And so the interesting thing about this is that What he wrote this about was about opportunity and what he called fullness of life, meaning people wanted to have that fullness of life.

It wasn't something where you have, you know, these massive houses and these fancy cars. Instead, it was something that he was talking about, hey, we just wanna have fullness of life. We wanna have the opportunity to not have to worry about getting food on our table. We wanna have the opportunity to maybe own a home one day.

Maybe we wanna be able to kind of do the things that we want in life, and it wasn't this extravagant thing that I think it has had turned into over the course of the last few decades. Now, a couple of things that I wanna talk about here is your American dream should be very different from the person next to you, every person listening to this podcast, in addition to your parents.

A lot of times, the American dream has become what we call this inherited checklist, this checklist of things that you need to go out and do and go out and achieve because society told you you need to do this. Well, what is a big example of this? The big example is the religion of homeownership in this country, where a lot of people feel as though, "Okay, I need to own a home.

That's how I know I've made it," or, "I need to have this fancy car," or, "I need to have this fancy career in order to know that I made it in this country." And in fact, cars alone can account for one point two million dollars over your lifetime. And assuming this, this is a huge impact to your budget. This is why we call transportation a multimillion-dollar decision, because this can be one of those areas in your life that can cause you to not ever be able to achieve the American dream in its fullness.

And so here's what I want you to think about. I want you to think about what you want out of life. This is called values-based spending. We talk about this all the time on this podcast. This is the way you should be thinking about every single dollar that enters into your checking account. How do I want these dollars to be spent to bring me value out of life?

How do I steward these dollars to ensure that they are going towards the things that I want in life? And this is one of those areas that I think many people get wrong. Many people don't understand that you can actually direct your dollars towards the things you want in life if you have this mindset, if you have a mindset that you know what you want.

And so I want you to first understand the skill of spending. And so if you don't know what this is, or you have never sat down and made a list of the things that you want in this life, I encourage you to do so tonight. I encourage you to do so after you finish this podcast. You can take out the notes app in your phone, and you can list out all the things that you want in life.

And maybe some of these feel as though they are way out of reach, that you're never gonna be able to achieve them. But I want you to write all of them down, and I want you to then order them in the highest priority to the lowest priority. When you do this, when you start to write this stuff down, all of a sudden you're gonna say, "Okay-" The top priority is the number one thing that I want to go out and achieve, and I am gonna start to work towards that.

It could be a number of different things. Maybe you just wanna be debt-free. Maybe you just wanna hit your retirement goals. Maybe you wanna finally buy that house with a little bit of land on it. Maybe you wanna buy the fancy car because you're a car person and you absolutely love cars. Maybe you just wanna be able to afford going out to eat and not having to worry about the price whatsoever.

Maybe you want to, you know, do this or that. Doesn't matter what it is. What I want you to do is write out the list of things that you actually love In addition, what do you love spending money on right now? What are some of the things that you really enjoy doing? What would you like to do more of? Maybe it's having-- spending more time with your family or your friends.

Maybe it's, you know, having the ability to be able to, to go to special workout classes. What do you love to do right now? What do you enjoy doing right now? Make sure you also have that list. And then I want you to think about ways that you spend frivolously or things that you wanna cut out on purpose.

Let me give you an example of this. Last night, I took both of my sons to Target. We went to Target for one specific thing. I had to pick up a bottle of shampoo. And so we went to Target to pick up a bottle of shampoo, and I walked out of that store with seven different things in my basket. And I had football gloves for my kids that they asked for.

I had a different football that they wanted because they're starting flag football. I had all these different things that we compiled into this basket. We went and intended to go to Target for one thing. This is the perfect example of me spending money randomly on things that I truly do not value, on things that were frivolous, on things that I should have been more conscious about how I was spending those dollars.

Now, this is a very small example, and it's a small example of not being intentional with your money. But in the most part, I was not happy with that purchase when I walked out of that store. In fact, when I walked out of that store, I was like, "Man, I should just turn around and take all this stuff back."

But it was just one of those areas where this can happen to any one of you out there. And so I want you to think through all of those different things. Maybe you eat out too much. Maybe you DoorDash too much. Maybe you go to too many concerts that you really don't get the value that you're used to out of.

Maybe you spend too much on gym memberships that you really don't go to. Maybe you spend too much on your car. Maybe you have too big of a house and you've realized it. It could be a small problem, and it could be a big problem, but I want you to list all of the areas that you're spending a lot of money on currently that doesn't bring you value.

Now, what I don't want you to do is come back to me and say, "Oh, I don't like spending on my electric bill." Well, guess what? I think you really like to have heating, air conditioning, and the lights on. So that's something that you absolutely value. Or maybe you're gonna come back to me and say, "Eh, I don't really like spending money on my mortgage."

I think you like having a roof over your head, and that is something you value. So be realistic when you're doing this exercise because this is something intentionally that is gonna help you long-term be able to be better with your money, and that's what we want to do here. In addition, I want you to think through those categories, and if there are dreams that you have, I want you to put down, "Hey, this is a must.

This is something I absolutely want to do in life. It is a bucket list item. I wanna make sure I get this done." An example of this is maybe before you die, you wanna travel to thirty different countries, and you know all thirty of those countries. This is a must-do. I would just start planning intentionally for that, okay?

Then I want you to have a second category. This would be nice to have. Maybe a nice to have is, you know, something, something for me, for example. Let me give you an example of one of my nice to haves. I would love at some point in time... I grew up on seven acres on a somewhat remote location where I was able to have, like, chickens and, and different things like that all the way up until I was the age of ten, 11 or 12.

I loved that experience. And one of the cool things I would love to do one day is buy a house with some land on it and have the ability to be able to raise chickens or have the ability to be able to just be in a remote location where the kids can go out and play and run around in the woods and all those different things.

And I loved that about my childhood, but it's a nice to have. I'm not gonna extend my budget for that. I'm not gonna extend my finances for something like that. It is a nice to have, so that's why I put it on that list. And then not for me. Thinking through some of the things that maybe are some of your dreams, but in the short run, at least right now, this is something that's probably not gonna happen, so you put it in the not for me category.

I think these three things, if you kind of go through this exercise over and over and over again, I like to do this on a quarterly, sometimes I do it on a yearly basis just for a reset. It helps remind you of your goals, and it helps remind you of your values, and it's super important to make sure you think through and intentionally spend your dollars.

Because if you don't do this stuff, if you don't understand what you value, then you're gonna be living someone else's American dream. You're gonna be living someone else's dream that is not yours if you are not intentional with spending. And so building that skill of spending and having the ability to be able to understand what you want your dollars to do is really Really important.

Now, one thing I want you to note too is if you decide that parts of the American dream are not for you, that doesn't make you a failure whatsoever. If you look at a house and you're like, "That looks pretty expensive. There's a lot of maintenance costs. There's a lot of taxes. There's a lot of insurance that I have to deal with, and I really just don't wanna deal with it.

I would rather just rent for the rest of my life," that is completely okay. I want you to understand that it's okay. The American dream is this just checklist that people feel as though they have to check off each and every single box. In my generation, a lot of people felt as though they absolutely had to go to college no matter what, or they would never make good enough money.

Now, there's people graduating from trade school who are making more than people who went to college. And so there's a lot of different things just like this where maybe you feel the pressure, maybe you feel the anxiety that you have to do certain things because everybody around you is doing the same exact thing, but it's not what you want.

It's not what you value. I want you to know that it is A-okay to not want those things, to not value those things. You do what you want when it comes to your dollars. This happens a lot even when people give to charities, or they give more to causes that they truly believe in. People will come back and say, "Well, why are you giving your money away?

Why don't you put it towards something else that you really want to do?" But if it's something that you value, and you know that that's where you want your dollars to go, then you do you. Trust me, this is one of those areas that once you get really good at this, it is going to be really, really freeing to see how your money grows in the direction that you want it to go.

One of the big things for me is I value flexibility. I value freedom. I value convenience, and so I spend more in those areas. I make sure I allocate more dollars to those areas so I can do more of what I love to do, things like helping you all building businesses. Those types of things are really, really important to me.

And then driving home, this again, that these are your top priorities, and these are the things that you want to focus on. Now, in this episode, we're gonna be getting into a lot of different data sets. We're gonna be talking through data that Investopedia found through all of the different things that they have been doing as well.

So this is gonna be a fun-filled episode, and the funny thing is this just came out, so this is one of those areas that I think is really powerful and really impactful for your wallet. So let's dive into the categories of the American dream. If that's something you're into, let's get into it. All right, so number one is owning a home.

So this is up seven point seven percent from previously, where it costs one million two hundred and seventy-five thousand seven hundred and eighty-two dollars on average to own a home. So this starts with the median existing single-family home right now is four hundred and twenty-one thousand five hundred and thirty-three dollars, and they found this from the NAR twelve-month average in August of two thousand and twenty-six.

And a thirty-year fixed rate average at six point three two percent and a twenty percent down payment plus years of principal and interest comes to around eight hundred and thirty-seven thousand dollars. This means that you're paying nearly twice the purchase price just for this specific cost alone.

But once you factor in things like property tax, which on average was zero point nine percent, insurance, which is about three thousand fifty-seven dollars per year, maintenance and utilities, this adds up to four hundred and thirty-eight thousand dollars on top of the amount that you paid just in principal and interest.

And so that estimate also leaves out things like HOA costs, things like PMI. So for many buyers, the real lifetime number on owning a home is even higher. And so for many of us out there When we're thinking about homeownership, and we're thinking about how much we could be spending on homeownership, this is one of those areas that you have to run the numbers.

Many of you feel as though the purchase price is gonna be the true cost of owning a home. And if you buy a house for four hundred and thirty-eight thousand dollars, and you sell it for eight hundred and thirty-eight thousand dollars, all of a sudden you made four hundred thousand dollars during that timeframe.

No. The likelihood that you made any money whatsoever is going to be smaller and smaller and smaller depending on how much maintenance costs you have, depending on how much costs you have associated with closing costs, with those utilities, and all those various areas. This could be one of the most costly things that you ever take on.

And the wild thing about homeownership, even in two thousand and twenty-six, when we have all the information available to us, is that many people do not run the numbers on the number one purchase that they make, which is their home. You have to run total cost of ownership. If anybody's interested, we have a total cost of ownership calculator that's free.

Uh, we will link that up down in the show notes below. It's basically a spreadsheet that kinda takes you through, hey, how do I run these numbers so I understand how much it's going to cost me to own a home? But how did this become part of the American Dream? How did we develop this religion, and I'm saying that in quotations, this religion of homeownership where most people feel as though I don't make it unless I own a home?

Well, homeownership became central through the mid-twentieth century policy where there was government-backed mortgages, and they added in long-term fixed rate mortgages as well. And so this is one of those areas where it started to increase when people could borrow money. Back in the day, loans for mortgages in the early nineteen twenties were actually very short.

They were short-term loans, and most people would pay off their mortgage within five to ten years. Their goal was to pay it off as fast as they possibly can. Nowadays, when interest rates are low, a lot of people don't even sell their house because their interest rate is so low. I have a two point seven percent interest rate, and so it's one of those interest rates that it's pretty hard to sell a house when your interest rate is that low.

And so back in the day, people wanted to pay cash for their homes. Nowadays, people are much more likely to borrow, which increased the rate of homeownership, and so all of a sudden everybody around you owns a home, so you feel as though you should be owning a home too. But that, that begs the question, okay, well, what about rent?

Well, rent does rise over time, and so at least home builds equity, and it allows you to build that equity up over time where you're not just throwing money out the window, right? Wrong. Because you can look at the difference between the additional costs associated with owning a home, and if you invested to that difference right there, and you were disciplined enough to do so, you may come out ahead by investing those dollars.

In fact, we did an entire episode looking at what would happen if you owned a home versus investing that difference into the S&P Five Hundred, one of our most popular episodes last year. It was one of those things that was eye-opening, the difference between investing those dollars and renting, and owning a home.

And so if you wanna check out that episode, we will also link that one up down below in the show notes. Now, if you are looking to buy a home, one of the biggest things to look at is your interest rate. Now, sure, you are not locked into that interest rate over the course of the next 30 years. I want you to know that.

You can refinance down the line, but there are costs associated with refinancing your loan. And so when you are looking at your interest rate, if you want to buy a home, you wanna make sure you're shopping that rate hard. Go to a bunch of different lenders, make sure you understand, you know, the different rates and how they're gonna impact your money, but you wanna make sure you get the lowest possible rate because this could save you six figures over the lifetime of your loan, especially if you stay in that house over the course of maybe 30 years or 20 years.

It's gonna be a big, big difference. Now, one of the things I want you to also know is if you are gonna buy a house, you need to have a six-month emergency fund, you need to be completely debt-free, and you need to make sure that you are hitting your retirement goals. If you don't hit those three requirements, the likelihood that you should be buying a house is probably not very high when it comes to your financial situation.

You need to look at your whole entire financial picture before buying a home because buying a home is actually a lifestyle decision, is the way I see it. It is not a financial decision. It is not one that you are deciding, "Okay, well, this is a good investment. I'm gonna buy this home long term." No. Look at the Shiller price index of the appreciation of homes after you factor in all the additional costs associated with owning a home.

It is very small in comparison to if you just invested the difference, uh, of renting into your long-term wealth building budget. So I want you to just make sure that you understand all of the different costs associated with a home, which is why we created that total cost of ownership calculator, so you had that available to you.

All right, number two thing in the American dream. This is one that has been going around forever and ever, and honestly, it gets worse and worse every single year, is owning new cars. Now, this is up about a half a percent, uh, from last year, but the interesting thing is the number here. Owning new cars over the course of your lifetime can cost you one million two hundred and five thousand six hundred and twenty-seven dollars.

Now, the way that they ran these numbers was the model assumed that two adults each buy a new car every ten years from the age of twenty-two to the age of seventy-five. Now, this is a fascinating thing because how long do most people own cars? Many times when I tell you to own a car for ten years or longer, many people gripe at the fact that nobody owns their car for ten years.

This isn't something someone does, when in fact, in reality, that's what you should be doing is driving that car as long as you possibly can. I talk about this all the time. I have a two thousand and eighteen Ford F-150. I am gonna drive that thing into the ground. I'm hoping it makes it to my son's sixteenth birthday so that he can have that bad boy at some point in time.

So this is one of those areas where I definitely do this. I drive it as long as I possibly can, but this model is assuming that. And the average new vehicle loan is just under forty-four thousand dollars right now, and the average term is nearly 70 months. We want you to have 48 months or less is our goal, but the average term is nearly 70 months, and more than one-third of new car loans run longer than six years.

This is according to Experian in a study they did in 2026. Per person, over 53 years at 15,000 miles a year, that is $103,000 alone in fuel and $87,768 in maintenance and 89,782 in full coverage insurance and $43,089 in license, registration, taxes, resale, and all those different values are included. This inflates the total somewhat between all these different things.

Now, the big thing to note with cars is this is the most discretionary big expense that you have. You have the option to do a lot of different things, but this is an inherited script that I think a lot of people feel. They feel as though they need a nicer car as a status symbol. They feel as though they need the brand new BMW so they can impress their clients.

They feel as though they need, you know, the nice brand new Toyota or Honda because it's gonna last them longer, and they can drive that thing into the ground. Well, if that's the case, sure, but there's a lot more to this in money psychology than just having the brand new nicest or, or best vehicle overall.

Instead, we need to make sure that we are very conscious about the decision of buying a car because as you saw, there were tons of different costs associated with owning a car. One of which is if you want a luxury vehicle, the cost to maintain that vehicle are gonna be two to three times higher than something that was like, you know, a standard Toyota, a Honda, a Ford, a Chevy.

Those are gonna be significantly less to maintain long term Secondly is a lot of people, when you live out in the suburbs, like if you're further out from the city and you live in the suburbs right now, you will see that car ownership and suburban life go hand in hand. You are much more likely to spend more on ca- car ownership if you live further out at the suburbs than for someone who lives in the city.

And the key here is that a lot of folks are really looking at new cars and not valuing what you can get from a used car. So me specifically, I like buying cars two to three years used. That's kind of my sweet spot o- of finding a car where it already took that depreciation hit of the first couple of years, and so then I can take over and have ownership for the long haul.

Now, typically, I'm looking for those cars to have thirty thousand miles or less, and I want them to have one specific owner. And so a great place to look for this is looking for vehicles that have recently been leased. Why? Because leased cars typically are maintained much better than used cars with just a single owner, because leased cars are required to be brought in a certain period of time and making sure they are getting maintained at the dealership.

So here's my rule when it comes to buying cars. First, it's called the twenty-four/twelve/ten rule, meaning putting twenty percent down is number one And the reason why you wanna put 20% down on a vehicle, whether it's partially your trade-in, whether it's partially money that you are rolling over from somewhere else, is because the moment you drive a vehicle off the lot, typically you are underwater on that vehicle if you don't put 20% down.

Cars depreciate 20-- 15 to 20% the moment you drive it off the lot, and then they begin to significantly depreciate a couple of years thereafter. The next two or three years, they've already depreciated about 30%. The reason why I like buying cars two to three years used is because they already took typically that 25 to 30% depreciation hit, and so that is why I love buying them a little bit more used.

And so if you put that 20% down, it makes sure that if you get in an accident over the course of the next couple of years, you are not underwater on that vehicle and having to pay out of pocket on that vehicle. Now, is there gap insurance? Sure, that exists, so you can price that out if you want to, to see if that is something that you are interested in.

Next is the number four. That stands for having your loan four years or less. You want to make sure that you don't have car payments in perpetuity forever. Many people have a car payment for five or six years. All of a sudden that car payment runs up, and what do they do? They're like, "Hey, I don't have any car payments anymore.

I'm gonna trade this thing in, and I'm gonna go get another car because I have some extra cash flow available, and I'm just gonna keep recycling my car payments every couple of years." No. This is the reason why we want you to keep those loans four years or less. A, it keeps it affordable, but B, it allows you to have six full years of time where you could be saving for your next vehicle, putting those dollars into investments, putting them towards your emergency fund, taking more vacations, whatever else you want to do.

'Cause this is the reality. If you don't have car payments, you have way more flexibility in your budget. You can go on more trips. You can go on more vacations, especially if you've been used to making those car payments. And so this allows you to have flexibility in life and put yourself in a better financial situation.

Then we have the number 12. What does that stand for? That stands for 7% or less going towards your car payment and 5% or less going towards maintenance. That adds up to 12% of your income, and that's where we want you to be. And in reality, I really want it under 10%, but we said 12% because there are some, uh, different things.

There are some different situations where you can get up as high as 12%. Now, how do we look at this? How do we think about this, and how do we want to make sure that we keep it under this 12%? Well, one is if you have a luxury vehicle, that 5% is hard to fit into your income unless you have a high income. So this allows people who don't have a high income, or prevents them from trying to dive into a luxury vehicle, not understanding the maintenance cost.

You know, a, a regular maintenance, uh, oil change on a Mercedes, if you take it to the dealership, is like $2,500 a year Same thing for something like a BMW or anything else. And so you wanna understand those maintenance costs before you purchase the vehicle. And the last number is 10, which is driving that car for 10 years or longer.

This is one of those important points that I just wanna make sure that you note. Uh, we don't have to dive deeper into that, but I just want to make sure that you know driving a car for 10 years or longer is possible. I've been doing it forever, and it is one of the things that you should consider doing as well so you reduce the timeline of how much you're recycling cars.

But in addition, a lot of times it's cheaper just to get it fixed. Just keep fixing your car. I don't care if you need a new radiator. I don't care if you need a new engine. Six grand gets you a brand-new engine with a car that you've had for a long period of time. Stuff breaks, fix it. That's a lot cheaper many times than having to continue on with payments and interest and all those different things.

Your car payments are gonna cost you a lot more than just fixing your car, and so making sure you note that is really important. All right, number three is retirement. Now retirement right now costs on average $1,205,119. This is up two point two percent from the previous year. And the way they did this is they looked at a retired married couple with a paid-off home, spends about seventy-one thousand six hundred dollars per year.

Over twenty years, from age sixty-five to eighty-five, that is about one point two million dollars, with healthcare and vehicles left out because they sit in their own specific categories. And only about forty-five percent of non-retirees expect to retire comfortably, according to a Gallup survey. And this figure is a spending number, not a savings number.

It ignores Social Security, investment returns, and taxes. So it does not include taxes, investment returns. As you know, most of you listening right now are investing your dollars. If you're not, uh, come talk to me. Join Master Money Academy. We teach you how to do that stuff. But if this is something that you are looking at, knowing that you can invest those dollars is really important.

Now, when someone hears one point two million, this is not a savings target. The amount that you should have in retirement is gonna depend entirely on you and your specific situation. It has nothing to do with anything else. Every single person's situation when it comes to retirement is very, very different.

You could have a pension, and that could be reducing your overall number. You could have-- be spending a lot more, and that could be increasing your overall number. You could have rental properties, and those could help reduce your overall number. Maybe you have more Social Security than, you know, someone else 'cause you've been working for a long time.

Well, that could reduce or increase your overall number depending on the situation. So there's a lot of things going on here that are going to depict how much you actually need in retirement, and so it's very personal how much you will need long term. This is why when people give a blanket statement of like, "Hey, yeah, let's just, uh, save twenty-five times our income, and then we can draw down X amount of dollars every single year."

I talk about this all the time where I'll say, "Hey, save twenty-five X your income and draw down four percent." That is just a starting point. That is just the beginning of what you should be looking at, and then you should be diving deeper and deeper into this so that you can get to the accurate number based on your personal situation.

That is super important to understand. Now, some of the ways to do this is to make sure you're automating your money into retirement accounts, things like your four zero one K, your Roth IRA, your HSA. All of those are super important accounts if you wanna be able to retire someday. If you're not taking advantage of those accounts, make sure you listen to our episodes talking about this because this is one of those areas that if you can get your dollars going towards your financial freedom, it'll be one of the best things that you can do Most people listening to this show right now, they value their freedom more than anything else.

And you want to achieve that financial independence. You want to be able to achieve financial freedom. You want to have the ability to do what you want, when you want, with whom you want. Well, the only way to do this is to invest your dollars. The only way to achieve financial freedom is to invest your dollars.

And I want that for each and every single one of you. So this is really, really important. But the other thing to note about this is this has a paid off house. And I would love for every single retiree out there to have their house fully paid off by the time they hit retirement age. Why? A, it gives you more flexibility.

B, it reduces stress and anxiety. Three, it gives you options. If you need to sell the home, you can at any point in time and not having to worry about being underwater on the home or whatever else. But it also just gives you options to do a lot more stuff. And if you do have equity in that home, if you have that paid off house, it just allows you to like, hey, when worst case scenario, I've got my house paid off.

I'm still gonna have to pay the taxes, insurance and everything else. But at least I have the ability to not have that payment to worry about. And so I don't want you to have to stress a retirement. I want you to have a fruitful, amazing, flourishing retirement. And so because of this, this is why we look at this number.

All right. Number four on Investopedia's list for the American dream was raising two kids plus college. So if kids are in your future or if you already have kids on hand, you know how expensive they can become. And they averaged this out by looking at, uh, how much it would cost to have two kids, and the cost is nine hundred and fifty-three thousand seven hundred and sixty-three dollars.

Now, this is one of the biggest rises. This is, uh, eight point nine percent from the previous year. So they looked at this and said raising two kids through the age of seventeen costs seven hundred and seven, three hundred and forty-three thousand dollars. This is up nine point five percent, the largest increase in any category by far, and that covers extra housing, food, transportation, taxes, plus center-based childcare.

Childcare alone, if you haven't seen the recent cost of childcare, averaged more than thirteen thousand dollars per child in two thousand and twenty-five. And this is one of those things that is eating into a lot of your budgets. For anybody out there who's paying for childcare right now, you're probably nodding in your car or you're nodding at home while watching on YouTube or whatever else.

You're saying to yourself, "Yeah, I feel that pain. I feel the pressure of this childcare." And I know. Guess what? This number-- I have an eight-year-old now, and I've been paying ch-- for childcare because my youngest is still two. I've been paying for childcare for eight years now, and because of this, I know this number is accurate.

This might even be low for some of you out there who might live in higher cost of living areas. And so this is something that is a huge portion of your budget where it's really eating into that. So thirteen thousand dollars a year per child is a big, big deal. But then college adds another two hundred and forty-six thousand dollars for two kids living on campus in an in-state school, up seven percent.

And that sticker price is before any financial aid. So Let's talk about this. One of the things I want you to note is if you're thinking about having kids, trying to get your finances in order before you have kids is really important. Making sure you have that emergency fund in place, making sure you have the ability to be able to kind of cover some unexpected expenses, because Lord knows they're gonna pop up when you have kids.

For example, I feel as though every year we have a couple emergency room trips just from people falling or cutting their head or whatever else could happen. Uh, that happens pretty frequently. But also on top of that, there's just a lot of expenses that pop up from random events to random things you gotta do to birthday parties, and it just never ends.

It's one of those expenses that never ends. And so, you know, your parents complaining about how expensive kids are, that was a, a complaint that is something that can be warranted. But I don't want this to deter you from having kids. They are the most wonderful joy out there. They are amazing. They are one of those things that really just brings fulfillment to your life.

And so this is not to deter you from having kids, this is to deter you from not planning your finances around your kids. And so making sure that you are thinking through this stuff is really, really important. Now, obviously when you look at this study, two hundred and forty-six thousand dollars for something like college, sure, it can cost that over the course of forty year-- four years.

It can absolutely cost that. But there's also things like student aid. There's the ability to get scholarships. There's so many different options that are gonna be available to us. Plus, we don't even know if college is gonna be the default way to go in the rising age of AI over the course of the next twenty years.

So who knows what the world's gonna look like over the course, uh, of the next decade or so. But we will see that this is something where, you know, a lot of this stuff is pretty accurate, and there is a lot of areas here where you will be spending more. And even thinking through life, let's say your kids start to, to get really good at sports and they join a, a sports league, and then all of a sudden they do travel sports.

Well, travel sports alone costs thousands of dollars over the course of a single year. And many of you who have kids in travel ball or travel sports, or you're-- they're in cheerleading or dance class or whatever else, the list goes on and on and on of how much you could be spending on your kids. Now, I see some of this stuff as an investment In fact, a study was recently done looking at the history of parents who had successful children, where they did not need to rely on their parents in order for them to be-- live a sustainable life in adulthood.

And a lot of times, those parents invested in their kids, meaning they invested in tutoring to make sure that their kids were covered when it came to their classes. That allowed them to eventually get scholarships and, and grants, and all these different things in the future. Or they invested in things like music lessons to gain skills to get their mind working.

They invested in things like sports coaches and communications coaches as they got older, and manners coaches. It was very interesting to kind of read through the study, and I thought it was something that was really, really powerful on how you think about building wealthy kids. How you think about kids who are gonna be wealth builders in the future.

A lot of times, building their skill sets is one of the most important things that you can do long term. But there's a cost associated with that, and making sure that you think through those costs is really, really important. Also, your kids' college is not your responsibility solely, and I want you to understand this really quickly.

Because a lot of parents out there feel as though, "I gotta pay for my kids' college, otherwise I'm a failure." That's part of the American dream that people kind of think about sometimes. Absolutely not. You need to take care of your own retirement first. Then you can help your kids out secondarily once your retirement is taken care of.

Your job is to provide a safe place for them to be, a loving home, a home where they can, you know, come home to during their working years. But once they go to college, that is their responsibility, unless you have the means to help them. But you gotta make sure you take care of your retirement first, otherwise they're gonna have to fund your retirement for you, and that is an even bigger expense than college would ever be.

They can take out student loans. It is not the end of the world. Obviously, we don't want them to. If they can work, if they can lower the cost, if they could get scholarships, if they could get grants, do everything in your power and make sure they start their life i-in a positive way. But if they have to take out student loans and you are not hitting your retirement goals yet, that is okay.

And I want you to note that, uh, before you do anything else. We call this the oxygen mask method. It is the method that I think for many people out there, they need to understand. I have coached way too many people where I get to the coaching situation, I have a conversation with them, and they have three hundred thousand dollars in a five twenty-nine plan, and they don't really have anything saved for their retirement.

I don't want that to happen to you, because that is a very difficult situation to solve if you get to your forties or fifties or sixties and you are trying to unravel some of this stuff. And so if you over-fund these college funds or if you don't fund your retirement first, it is a big, big mistake. All right, the next one is healthcare.

So the rising cost of healthcare is one of the biggest problems that we have in this country, and this is one of the things that is very difficult to solve. We recently had an episode with Doc G where we talked about this exact subject, why the rising cost of healthcare is happening. If you're interested in that topic, please make sure you check out that episode because it's very interesting, uh, and he dives into it as a physician.

He dives into all the things that are happening and why your healthcare costs are rising. But this is the only category that actually declined over the course of the last year by about nine hundred dollars. So not a big deal. But healthcare costs about four hundred and thirteen thousand two hundred and seventy-one dollars over a lifetime from age twenty-two to age eighty-five.

If you live beyond age eighty-five, which I think most of us are in the age of AI and curing diseases and all these different things, uh, we could see this rise even more. So annual spending ranges from one thousand five hundred and sixty-one dollars under the age of twenty-five to eight thousand three hundred and twenty-four at seventy-five or older per year.

It is little change from last year, but still up substantially from five years ago. So it actually decreased a little bit from last year, but is way up from five years ago. And a lot of this is because the costs are continuing to rise on the insurance side. The cost of healthcare providers is rising.

There's a lot of, uh, shady stuff going on, I think, in between there sometimes. And so that's why a lot of this stuff is going up. The cost of being alive is becoming one of those dream items for some people because the rising cost of healthcare, and these costs rise with age. So there's this thing they call the retirement spending smile.

And what this talks about is, hey, early in retirement, people begin to spend more money because they wanna experience things, they wanna go on vacations, they wanna do all these different things while they're able-bodied. And that makes a lot of sense. You should kind of front load your retirement with a lot of different experiences that allow you to go hiking in the Appalachian Mountains, or allow you to play a lot of pickleball, or allow you to kind of go out and do the things that you want to do.

Okay? So a lot of people spend a lot more early in retirement. Then in the middle of retirement, as they begin to age, as in are not as nimble or able to kind of do some of the things their health span, uh, once allowed them to do, then what happens is they spend less. But they're not at a point in time where they're like spending a ton of money on healthcare yet because they're not at the end of their life.

Then towards the end of their retirement, they start to spend a lot more again. This is because of healthcare, long-term care, the ability to have nursing care, all those different things, uh, happen towards the end of retirement. So they say it's a retirement spending smile because you spend a lot early, you spend a lot less in the middle, and then you spend a lot more at the end, okay?

And so because of this rising cost with age, we have to make sure that we prepare for the cost of health insurance. And a lot of you want to be financially free early. If you want to be financially free early, one of the biggest expenses you want to make sure you're factoring in is health insurance, is healthcare.

Because if you don't factor in healthcare, this can be one of those things that can catch you by surprise and ruin your entire retirement plan. So if you are planning on retiring before the age of sixty-five, make sure you're factoring that healthcare number. That's why every single retirement plan should be different, why every single person's portfolio should be different, because it needs to be set up in a way that is gonna cover your costs.

Also, I want you to think about an HSA, for example. An HSA stands for Health Savings Account. Now, this is an account that you can actually use as a retirement account. It has triple tax benefits, meaning money goes in tax-free, it can grow tax-free, and you can pull the money out tax-free as long as you have a qualified medical expense.

But that qualified medical expense doesn't have a timeline on it. So you could break your arm when you're twenty-five, and you can reimburse yourself when you're sixty-five for that same thing. So there's a long laundry list of items that you can reimburse yourself for with an HSA. You can even do it with like a Peloton bike now if you wanted to.

Uh, so there's a lot of things that you can do there. And if you start to fund your HSA now, you can use that as part of your healthcare savings and retirement, especially if you decide to retire early. Also, making sure you compare those plans with open enrollment every year is really important. And retirement healthcare line items for, for most people are just gonna be that big, big item that I think most people don't plan enough for.

On average, it costs people about three hundred thousand dollars in retirement. So the majority of this is gonna be at the end of your life. The majority of this spending, uh, for most people will be at the end of your life.

All right, number six. This is a luxury, but a lot of people feel as though this is part of the American dream. I know I do. And so a yearly vacation is gonna be a big one. And this, over the course of your lifetime, can cost you up to a hundred and eighty-six thousand nine hundred and ninety-nine dollars.

Now, the interesting thing about all of these stats, by the way, is that none of these even factor in opportunity cost. If you put opportunity cost into the equation for some of these, the number would be even bigger. Now, the model for this one counts one trip a year from age twenty-two to age eighty-five at about two thousand nine hundred and seventy dollars per vacation.

Now I don't know about you, but my family of five spend a lot more than $2,970 per year on vacation. Every time I feel as though we go on a vacation, if it's a local vacation, the hotels, the food, you know, being able to kinda do activities and those types of things, seems like you're spending, I don't know, $500, $700 a day for a family of five.

Now, if it's just you and your spouse, or if it's just you traveling, it's gonna cost a lot less. But I feel as though that number just keeps rising for me every single year. Listen, vacations are optional. You may not value vacations. This may not be part of your American dream. You may hear people talk about travel all the time, and you've traveled a couple of times, and you're like, "I'd rather buy a Rolex than go on some of these vacations every couple of years."

And so for you specifically, that may be the move to make. But if you do value vacations, making sure that you only pay in cash for vacations is one. Making sure that you do things like maybe you potentially travel hack if you're responsible with credit cards. That's gonna be very helpful for a lot of you out there, uh, allows you to, you know, use points and miles for part of the vacation, like flights or airfare, those types of things.

And when I talk about those expensive vacations I was referencing earlier, I mean, like, the dollar amount before points and miles, uh, and all those different things as well. But set up a dedicated sinking fund. Every month, just go look at how much you wanna spend on vacations per year. If it's $6,000 per year, then put $500 per month into that vacation sinking fund.

This is gonna make sure you have the cash on hand so that when you take the trip, you are able to do so without any stress. The last thing you wanna do is go into debt for a vacation. That is a ridiculous thing to do. If you do that, please, for the love of God, don't ever do it again. But making sure that you are paying cash is really important.

And then make your bucket list of trips. This is the same thing as when we are thinking about the skill of spending. We wanna make sure that we have our trips lined up so that we know where we want to go. I just spoke to my wife about this, uh, over the course of the last couple of days. I said, "Hey, I wanna go to Japan," and it's one of the big items on my list to, to go on, but I don't wanna just go for a week.

I wanna make sure I'm going for, like, two, three, maybe even four weeks and really kinda go all over Japan. And so because that's a bigger trip, one is I'm gonna wait till my kids are a little older to go on that trip. Two, I'm gonna make sure I have the funds available to go on that trip in cash saved and set aside.

Three, I'm gonna make sure I have the points and miles plan in place so that at least we can cover flights and maybe some hotels, maybe some, you know, car trips, maybe some experiences can all be covered by points and miles. And so I'm developing a plan now for a trip that we probably won't take for another five or so years.

And so this is just the way that you gotta think about things, especially big trips like that. Maybe for you, you wanna take a big old trip down to Disney. Well, for me, I live about an hour and a half, two hours from Disney. I go, you know, every single month. But for people who live farther away, you may have to get on a flight, get a bunch of hotels for the whole family, and making sure you're staying for an entire week.

Well, that gets really expensive fast, if you've ever been to Disney. Old Mickey Mouse is taking away from my wallet on a monthly basis, and it's one of those things that I think For, for many of you out there, if you're planning that big trip, just make sure you save it up in cash. If you look at how many people go into debt for a Disney trip for like a two and four-year-old who are not even gonna remember the trip, it is absolutely amazing.

So just making sure that you are paying in cash for all that kind of stuff is super important. Number seven. Now, this is one that we don't talk a lot about on this show, but is part of the American dream and is a real cost to you, and in fact, when I see this number, I feel as though it's low, is pets. So pets on average cost about $40,772, which is up 3.5%, and the estimate uses the ASPCA cost data and assumes one cat with an eleven-year lifespan and one dog with a thirteen-year lifespan, covering food, vet care, which gets more, more expensive as time goes on, insurance, and one-time cost basis.

Two-thirds of the respondents in two thousand and twenty-five Investopedia study called having a pet a non-negotiable, meaning 66% of you said having a pet a non-negotiable. It is the second smallest number on the list and often the most loved. So I think this is what is an interesting one. Now, I have had many pets in my lifetime.

Right now I have a zero, and I have zero because I have young kids. My last two dogs died, uh, a couple of years ago, and it was one of those things where, like, it was, you know... It was, it was one of those things where it was sad, and I really don't want to experience that, that again, like losing your, your buddy, your friend.

Uh, and so for me, I'm pausing from having any pets or, or animals during this time frame. But at the end, as they've got older, because I had a Boston terrier and I had a boxer, and as they got older, the expenses just kept racking up. I mean, they would just have issue after issue after issue, and it was thousands and thousands and thousands of dollars that kept popping up.

And I thought to myself, "How do people do this? How do they do this over and over and over again and really absorb these costs when you have all these other stressors and budget line items that you gotta work on on a monthly and yearly basis?" It can be really expensive, and so some of the things you can look at are like pet insurance.

That may help with some of those costs associated with, associated with vet bills. Making sure that you adopt when you can can be really helpful, and especially with the budget, because it's a lot cheaper to adopt than it is to buy a brand spanking new, you know, bulldog or, you know, a Persian cat kitten or a, uh, puppy or whatever else.

And so making sure that you are thinking about some of those areas can be really important. But also is looking at some of the preventative vet care that you can do in place. Maybe you could talk to your vet and say, "What are some of the preventative care that you can do so you don't have some of these big bills coming and waiting?"

I think that'd be really, really helpful as well. The number eight, this is the last one on the list, is a wedding. Weddings are up 1.6% from a year ago. On average, they cost $38,800. And couples who married in 2025 spent on average $34,200 on the ceremony and reception, up from $1,200, and this is according to The Knot.

And the average engagement ring fell from 5,200 to 4,600 as more couples chose lab-grown diamonds. Lab-grown diamonds are pretty cool because they ha- give you the ability to have literally the exact same composition as a real diamond, but they're much cheaper because they're lab-grown. So I love that movement a lot.

Uh, reduces the blood diamond stuff, all those different things. I think that's a great thing. All right, here's the thing about weddings, okay? I want you to have the best wedding that you want. I want you to have everything that you want in your wedding. I want you to be able to do all the things that you want to do.

But the reality of a wedding is that if you go into debt for it, you are starting your life off on the wrong foot. Never, and I mean ever, ever, ever, ever, ever, go into debt for a wedding. I recently heard of a couple who spent two hundred thousand dollars on their wedding, completely went fully into debt.

And the reason why they spent that much on their wedding is because they wanted it to go viral. They wanted to create this viral moment for their wedding that allowed them to then propel themselves into a career as content creators. Well, most of you are probably rolling your eyes right now or laughing out loud because they realized pretty quickly that content creation means that a lot of times you got to create some value for people.

The days of content creation where you were kind of going out there and just kind of showcasing this rich and magnificent lifestyle are for the most part gone. And instead, what happened was they went two hundred thousand dollars into debt. And it was one of those scenarios that is devastating for their marriage.

It is devastating for them to start off on that foot where they went into two hundred thousand dollars into debt for a six-hour party. My friends, please don't do this. Make sure you're saving up cash for the wedding. Don't go into any debt whatsoever. I don't care if it's a zero percent interest rate.

It's not worth it. Okay? So just making sure that you're gonna stay on top of this because a lot of vendors, a lot of folks, when you mention the word wedding, they're gonna try to charge way more for this. And so in that area, that is gonna be super important. All right? So here's the thing. These are the eight areas that I wanted to talk about, and we'll link the, the article up down below in the show notes so that you can check it out.

But costs overall are up four point one percent, while wages are only up three point one percent. This leaves a one percent delta or a one percent gap. And I think for many of you out there, this is why it is so important to ensure that, A, you learn how to negotiate your salary at your day job so on a yearly basis you're getting more than the inflation rate.

Because if you don't get more than the inflation rate, you just took a pay cut, and that's not really the, the future that I want you to have. But B, it also shows how important it is to identify what your American dream is. If you took on all these different things, you know, you'd be paying a lot. And a lot of these are luxuries.

Now, I know for a lot of you, maybe pets are non-negotiable, but it is a luxury. Having a wedding is a luxury. A yearly vacation is a luxury. Buying a new car is a luxury. And so these are some of the things that I want you to consider when you think about the American dream, is ensuring that you note that you don't have to do every single one of these things What is your American dream?

What are some things that are not on your list? I would love to hear from each and every single one of you down in the comments below. And also, if you guys want to work with me directly and you wanna work with me on a one-on-one basis, feel free to shoot me an email, andrew@mastermoney.co and let me know.

The only qualification that we have is that you make over $100,000 per year or you have $100,000 to invest. This is one of those episodes that I think could be life-changing for a lot of people, so making sure that you think through the skill of spending, what you want in your American dream, and reframing your mindset around that is so incredibly important.

Again, my goal is to bring as much value as possible to you on this podcast. That is why we have this. That is why we created this. So if you guys have any other questions, please feel free to reach out to me, and thank you so much for listening to this episode. And if you're getting value out of these episodes, make sure you like, subscribe, and leave a five-star rating and review on your favorite podcast player.

I cannot thank you guys enough for leaving those five-star rating and reviews. All right. Thank you so much for being here, and we will see you on the next episode