Sign up for Sofi, get $50 of stock when you fun a SoFi Invest account with at least $100. I signed up in 5 minutes. Get your money!
How’s it going everybody this is beat the bush today i’m going to talk about a scenario that a typical american might face number one you have fifty thousand dollars of annual salary this is roughly the average of the annual household income household income means total income coming from everybody living in the same home so it could be a dual income it could be
From multiple jobs one parent could be a stay-at-home parent whatever but the average per household in the united states is roughly fifty thousand dollars the other criterias is going to be twenty five thousand dollars worth of savings this sounds about right probably a bit high for the average american because the savings is pretty much close to a couple thousand
Dollars a lot of people are living paycheck to paycheck even with this average salary the third thing is no debt which relieves me of discussing how to get out of debt first so assuming you got out of debt already then what do you do afterwards the fourth thing is probably also pretty typical is that you’re renting and you could be renting anywhere maybe you have
A high cost of living area or it could be a pretty low cost of living area so today starting with all these initial conditions i’m gonna talk about what i would do if i were in this situation now fifty thousand dollars after tax you’re gonna end up with about forty thousand dollars that you can actually spend i have to say that probably all my life i’ve never
Spent more than forty thousand dollars every single year i think it peaked around there only because i had a mortgage so i like to start this off with asking you how you spend this fifty thousand dollars yourself most people are spending all of it how much is going into your housing because this is a major part of your spending how much is it gonna go into your
Living expenses because when i personally look at this i go man if that’s all i make i’m going to try to minimize the cost of everything i’m going to try to live in as small a place as possible i’m gonna minimize the cost of everything else i buy including utilities the cell phone do i buy the food that i buy the car that i drive the insurance that i get everything
According to my estimate of how much i spend currently right it’s about thirteen hundred and fifty dollars if i subtract all the electronics that i buy all the traveling that i do so this is the base amount i spent and out of this it’s about four hundred dollars to i spend on my housing so it’s roughly nine hundred fifty dollars i spent on everything else so you
Can say i can have my current standard of living everything except housing costs for about nine hundred fifty dollars every single month so this translates to eleven thousand dollars every single year if i do not have this place to live in i probably which rent somewhere a lot cheaper six hundred seven hundred eight hundred nine hundred dollars every single month
Probably i’ll get a studio or maybe i’ll rent a room within the house or something and it’s gonna cost me somewhere between eight and ten thousand dollars so right off top i need to spend about twenty thousand dollars just on my personal living expenses if i’m a single person so fifty thousand dollars – twenty thousand dollars i’m still gonna be able to save twenty
Thousand dollars every single year and you know after a few years i’m probably gonna have a hundred thousand dollars enough to put a downpayment on some house or something and given my salary if i earn fifty thousand dollars i would be looking to buy a small place one thing i have to talk to everyone about is the perspective that you have in terms of living in a
Small space because i feel like in america a lot of people look at living in a room or renting a room or something it seems kind of humbling right it seems like you don’t get much respect if you live with someone if you have a small place or something everyone wants to be like big big big they wanted to live in a big place to be impressive but i feel like you guys
Really got to go travel somewhere to someplace where they have very little space go to new york or something go to hong kong or something because that’s where i came from when i used to live there as a little kid my parents had a very very small flat it was only two bedrooms and four of my siblings we all lived in one single little room there’s two bunk beds in
There and there’s basically no room for anything else other than two bunk beds and one desk and you know we were okay with it and i did not know anything else i didn’t not know that was a small space and it didn’t really bother me frankly and looking back it wasn’t like i fit it didn’t feel like i was living in poverty or anything because it just felt comfortable
It’s like hey at least we get to live with the whole family all right we have our parents in different room and then we have our siblings everybody is in one place it was like you know a pretty happy thing when we moved to california we also rented an apartment for a short term before we got a home so at that point we moved to an american-style apartment that was
Also i forget if it’s two or three-bedroom but suddenly we moved to in relative sense for in american standard this is a really big place when you compare to a hong kong space so when i moved here i was like oh my gosh what’s happening or are we rich or something because suddenly we have so much room suddenly i had so much room so this might give you a little bit
Of perspective about how easily that we increase our standard of living so then if you can kind of scale back your own thinking you know thinking that this is absolutely required you absolutely need a certain amount of space in order to live you can actually you know downsize and be able to live happily in the same or less amount of space just because you might
Be able to be more efficient with the amount of space that you have maybe you own something that is really big right let’s say you own a bunch of couches or something and then they’re really big they won’t fit in your small space so then you have to go oh every time you rent a place you need a big enough place so you can fit all your furniture well if you can’t
Fit all of it you should get rid of something maybe you should get smaller desks or something so that’s just a little segway on your standard of living and just kind of shifting your mindset into a different perspective so that you can kind of see things on how it is right now just don’t take things for granted just because it’s the norm does not mean you have
To live like everyone else because if you are the oddball out right everyone has their own studio have their own one-bedroom and then you’re the oddball oh and you go okay no i’m not gonna do any of that i’m gonna go and you know rent a room and have two or three roommates i’m gonna go live in a van or something then all of a sudden you don’t have to the same
Price as everyone else except that you can get the same salary of all your peers you have roughly the same salary and yet you spend a lot less than them so you can save a lot more and a lot faster as well so if you earn $50,000 and you’re not only spending twenty thousand dollars because of something that you have to have right now some people have their living
Arrangements set already right maybe you’re paying two thousand dollars for a fancy apartment and this is just something that you’ve refused to downgrade on because this is something you must have okay i talked to some people in terms of frugality and sometimes they go you know i have this whatever cellular phone the best network you know they go i must have this
This is something i must have and they’re willing to pay i don’t know seven b to $100 every single month and well if you have a lot of must-haves what ends up happening is that all these costs they keep on adding up and up and by the time you’re done with all of it well you spent all the way up to $40,000 you’re not saving any money or maybe you’re saving very
Very little and this is how you can get stuck in just doing the rat-race you do this year after year and you don’t get anywhere because you’re not saving any money and the whole core premise of being able to save money you want to save money so that this money can work for you so that you don’t have to work for that additional amount let’s say you have 20 thousand
Dollars saved up after one year even if you put it in a high-yield savings account you’re still gonna get $400 that you do not have to lift a finger to work for so having any additional amount of money that you have sitting around collecting new dividends maybe increase on stock appreciation high-yield savings account all this will help you be able to be less
Dependent on your job income now let’s talk about an incremental increase on your salary right now let’s say you make $50,000 right of course it’s gonna be nice if you make $60,000 but where are you gonna get this $10,000 raise you could get it from your job you could work very hard at it and maybe you get a raise you get a promote but generally i feel like this
Is the long way to do it because if you are working hard you have to do it for a quite a long time maybe a year or two or something before someone else that you have to depend on like your boss or something before they can you know hold some cards back and then there will go okay yeah you know you’re doing a good job you have to rely on them in order to give you
This raise give you this promotion this is what i really don’t like because this is something you have to wait for this is as opposed to if you do some side gig okay you earn money on the side in whatever way possible then immediately you can get that extra $10,000 because you can either put 25% more effort into your job this is ten hours more every single week
Which is pretty reasonable or you can go you know what i’m gonna you know leave that job as is i’m gonna do the average like everyone else and put 40 hours into it and then this is extra 10 hours instead of putting it into your job you go okay i’m gonna do something else with it i’m gonna you know have a side hustle and something i have to mention about side hustles
Because in my previous video someone mentioned why don’t you take this and do ober why don’t you go work in an amazon warehouse you have to be very picky about where you put this ten hours because when you go around taking this 10 hours and selling your time for money you end up all your life selling your time for money and you can end up selling a thousand hours
Okay you’re gonna get a certain amount of money but then you’re still gonna be dependent on selling your hours for money uber is selling your hours for money you’re only gonna get an incremental amount per hour that you work i estimated around 15 to 20 dollars when you work in an amazon warehouse same thing 15 dollars or something but when you work on some other
Endeavor like your own business idea write a book or something build a website something that is truly your own and not some gig economy thing because we all know at least i know all those gig economy stuff it gets you cash right now quick hard cash but then it’s not like an extensible thing that’s all i have to say about it just a fair bit of warning because a
Lot of people if you or you know at that tier where $10,000 extra is a lot for you then you might be tempted to do those things where you get instant cash it’s pretty instant right right after you work for it for one week all of a sudden you see in your bank account where as if you put these ten hours towards something that slowly builds up over time you might be
Able to make this little endeavor that takes ten hours a week be able to grow to have more income than your regular job now let me talk about how powerful this is this extra 10 hours maybe you want to do as much as you know double job right two full-time job 40 hours at your regular job forty hours at your side hustle which is personally something i did for over
A year a year and a half or something before i was able to move out of my regular engineering job into youtube the thing i want to mention with this is that when you’re making $50,000 and you spend $20,000 let’s say you’re really good about saving maybe you watch my videos and you’re already really for gold you only spend $20,000 maybe you live in a van even right
Spend $15,000 and you’re able to save twenty thousand dollars every single year so when you look at this okay if you hold your standard of living your lifestyle the same and then suddenly you make this $10,000 extra suddenly you’re saving $30,000 this is 50% more this is significantly more this is as if it feels like you made 50% more only from making $10,000 more
On your side hustle you see how powerful this is because when your income is very low you tend to not be able to say very much because most of it goes towards your living costs but every small increment that you make extra on this all of this if you’re able to just fund on all of this into your savings it becomes super duper powerful you can save so much more so
Much quicker and from this little base right you can grow this into something a lot bigger you save a lot maybe you can buy a condo an apartment or something and then from this it’s kind of like bootstrapping yourself from this you have emergency savings and this is how you get the ball rolling and then you get more and more momentum and you know before you know it
You live a comfortable lifestyle so thanks for watching this video let me know if this video helps you in terms of the things that you need to do if you aren’t in this particular situation i do appreciate the feedback because you know whatever you tell me i can go and do the research and then you know make another video on how to help you guys in this particular
Segment of the income don’t forget to give me a like on this video comment down below let me know if this video helps you and as always don’t forget to push that subscribe button and ring that bell icon thanks for watching
Transcribed from video
$50k Salary, $25k Savings, No Debt By BeatTheBush