The Middle-Class Trap: Why Smart People Stay Broke

"The average interest rate on a savings account in America at the time of recording this video is 0.6% 6% while the average inflation rate right now at the time of recording this video is $2.4%."

"So now let's do some basic math. Let's assume that a cart of your basic groceries today costs $100. But instead of going out and spending that money, you take that $100, you go to the bank and you deposit this $100 in your savings account. So instead of spending the $100 at the grocery store, you save that $100. What happens after one year? Well, if the average savings rate is 2.4%, 4%. That would mean that that same cart of groceries with the exact same stuff is going to cost you not $100, but now $102.40, assuming that we believe the reported inflation numbers. But that $100 that you saved in the bank is also going to grow. And the average interest rate on a savings account is 0.6% 6% which means your savings would grow to $10060"

"But the inflation rate for the things that you need could potentially be more than the high yield savings account, which means yeah, your money is growing faster in a high yield savings account, but it's not actually making you money."

"Well, I think this system, our economic system is designed uh to keep the majority people poor."

"The average interest rate on a savings account in America at the time of recording this video is 0.6% 6% while the average inflation rate right now at the time of recording this video is $2.4%. So now let's do some basic math. Let's assume that a cart of your basic groceries today costs $100. But instead of going out and spending that money, you take that $100, you go to the bank and you deposit this $100 in your savings account. So instead of spending the $100 at the grocery store, you save that $100. What happens after one year? Well, if the average savings rate is 2.4%, 4%. That would mean that that same cart of groceries with the exact same stuff is going to cost you not $100, but now $102.40, assuming that we believe the reported inflation numbers. But that $100 that you saved in the bank is also going to grow. And the average interest rate on a savings account is 0.6% 6% which means your savings would grow to $10060"

"Well, John, what if I put my money into a high yield savings account? Well, now I'm beating this inflation rate. Sure, you're beating the reported inflation rate, but you're not seeing any growth in principle. Not to mention that the prices of many things are actually growing faster than the average inflation rate. Because remember, the average inflation rate of 2.4% is the average of many things. And you have certain items, for example, many grocery items, for example, your housing costs, for example, your car insurance costs, which are growing significantly faster than the average. So yes, the average inflation rate might be reported at 2.4%. But the inflation rate for the things that you need could potentially be more than the high yield savings account, which means yeah, your money is growing faster in a high yield savings account, but it's not actually making you money."

"Well, I think this system, our economic system is designed uh to keep the majority people poor."