According to Dave Ramsey’s State of Personal Finance report, 56% of Americans worry about their financial situation every day, including many people earning over $100,000. While it might sound surprising, it’s possible to struggle and have little wealth even if you make a decent salary, control your expenses and don’t rack up credit card debt.
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In a recent YouTube video, financial expert Jaspreet Singh explained that many Americans remain poor because they believe five money lies. Learn why these popular beliefs aren’t true and what you can do to avoid mistakes that hurt your financial security.
Your Home Is an Investment
Buying a home is often more appealing than renting since each monthly mortgage payment helps you build equity. While Singh encouraged homeownership, he cautioned against viewing your property as an investment, partly due to how banks amortize the loans.
“They do something called front-loading mortgages, which means in the beginning, the majority of your mortgage payment is going directly into your banker’s pocket with interest, and a little bit is going to actually build equity in your house,” Singh explained.
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He said it can take 20 years before the point where half of each payment goes toward growing your equity. He also explained that homes are like liabilities because you’ll always have ongoing costs, like taxes, insurance and maintenance, even after the final mortgage payment.
Singh suggested carefully considering all the upfront and ongoing costs before buying a home and not relying on the property as your only investment for building wealth. Other income sources will be especially important during retirement.
Your Job Will Make You Wealthy
While a job provides you with money for your needs, it’s unlikely that your work-related income alone will make you rich. Singh explained employees are really in the business of helping companies and their shareholders become wealthier. Plus, there’s the fact that you need to put the time and effort into working to get your paycheck.
Singh said that investing is a better path to becoming wealthy than relying on your salary, as you’ll be able to benefit from companies’ profits as a shareholder. Whether you receive dividends, interest or gains, that passive income won’t require working like your job. This makes growing your wealth more sustainable.
Investing Requires Being Rich
If your budget leaves little to invest, you might believe it’s pointless or impossible to get started. But Singh explained that even $100 monthly contributions could make you a millionaire if you start early, earn a 10% return and maintain the habit for around 46 years.
He recommended starting to contribute whatever you can, even if that means a few dollars per day. While your progress may be slow at first, stick with the habit, keep your wealth goal in mind, and remember you can adjust your strategy as your financial situation changes.
“As you earn more money, invest more money and keep investing your money when markets go down and over the long term,” Singh said. “What we have seen is that this is a proven way to become wealthy.”
Your Banker Is a Trusted Advisor
Getting advice from your bank can seem like common sense if you’re buying an expensive asset like a car or house. However, you shouldn’t consider the banker to be a reliable financial advisor who will recommend the best money moves for your situation.
Singh explained that bankers often get commissions, so they might suggest that you borrow more for something than you should. While they’d benefit from a bigger commission check, you may be stuck with an unaffordable loan payment or regret your purchase. So, watching out for yourself is crucial.
That’s why Singh recommended a system that lets you know how much you should be spending on all monthly expenses alongside your savings and investing goals. He recommended setting your spending limit to 75% of your income, allocating 10% to savings and investing 15%.
Your 401(k) Plan Is Enough To Retire
According to Fidelity Investments, the average 401(k) balance in the first quarter of 2025 was $127,100. That was far below the $1.26 million that Americans participating in Northwestern Mutual’s Planning & Progress Study said they’d need for a comfortable retirement.
Singh explained that a 401(k) plan is important but is just one of the retirement planning tools to have. You should also consider additional options, such as IRAs, health savings accounts and regular brokerage accounts.
Different tax rules and potential contribution limits apply to different accounts, so finding a financial advisor who can help with retirement planning is a wise move.
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This article originally appeared on GOBankingRates.com: 5 Money Lies Keeping Americans Poor, According to Jaspreet Singh
