Middle class Americans are in trouble — at least according to Grant Cardone. The businessman recently shared a Tik Tok video expressing concern for those who fall into this economic category.
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“The middle class is a broken class of people,” Cardone said.
Despite having the largest middle class in the world and being the richest country in the world, he said the idea that America is the greatest country in the world is propaganda. “We are a degrading society,” Cardone said.
If you’re part of the middle class, you might be able to relate to the financial struggles Cardone alluded to in the video.
“Whether or not you agree with Grant Cardone, the reality is it feels harder than ever to get ahead,” said Alvin Carlos, CFA, CFP®, financial planner and managing partner at District Capital Management. “Wages haven’t kept up with housing, child care or healthcare costs.”
However, he said middle class Americans can still thrive by being smart with their finances. Here’s a look at six ways the middle class can make the most of the U.S. financial system, despite its shortcomings.
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Build ‘Boring Wealth’ Through Low-Cost Index Funds
To generate wealth, you don’t need to bet on cryptocurrency or meme stocks, Carlos said.
“Most millionaires got there through steady investing in diversified index funds over time,” he said. “It’s not sexy, but it works.”
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Avoid Lifestyle Creep
Middle class Americans commonly receive salary raises, but for many, their wealth remains stagnant, Carlos said. This often occurs because their expenses rise with their income — i.e., buying a more expensive car or home with each pay increase.
He said to avoid this by being intentional with your income and paying yourself first before upgrading your lifestyle.
Play the Tax Game
“The wealthy use the tax code to their advantage,” Carlos said.
Not just limited to the elite, he said the middle class can do it, too. He advised learning how to use your retirement accounts and — legally — write off expenses from any side hustles.
Learn Personal Finance
“We live in the age of information with excellent personal finance guidance at our fingertips,” said Phillip Durbin, a financial planner at Generational Wealth Development. “Instead of paying a firm 1.5% of your investments every single year, take a little bit of time to actually learn how to budget and invest on your own.”
If this proves too challenging, he recommended working with a financial advisor who will educate you about your finances, instead of just passively managing your money.
He also emphasized the importance of teaching your kids about personal finance, to set them up for success in adulthood.
Invest in a Roth IRA
“Roth IRA’s are specifically designed to help the middle class,” Durbin said. “So much so, that they are not even available to higher income people.”
These accounts are funded after tax, allowing you to access your money tax-free when you reach retirement age, he said.
Take Advantage of Your Benefits
Health savings accounts are rising in popularity with employers, Durbin said.
“Use them for your long-term financial success by investing the funds instead of using them every year,” he said. “If you’re relatively healthy, pay for your medical expenses out of pocket, save your receipts in an email folder and invest your HSA funds so they can grow long term.”
He said this is the only type of account that offers triple tax savings. It’s deposited tax-free, grows tax-free and can be used tax-free for medical expenses. Funds not used now will grow with the market, and can be withdrawn when you need them, he said.
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Sources
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Grant Cardone (@grantcardone on TikTok), “The Middle Class Is a Broken Class” (video)
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Alvin Carlos, District Capital Management
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Phillip Durbin, Generational Wealth Development
This article originally appeared on GOBankingRates.com: Why Grant Cardone Says the American Middle Class Is ‘Broken’
