The American Dream, the US’s iconic symbol of prosperity, has become something many Americans can’t afford.
Recent reports now show you’ll need to make around $3.4 million over a lifetime to reach what was once a given for most middle-class families. This number is far from an average American’s median lifetime earnings, which hovers at $1.7 million.
With this new normal in mind, most of us ask ourselves: is the “American Dream” a thing of the past?
Let’s explore why it’s become so unattainable in recent years and find ways to make it happen.
What Is The American Dream, Anyway?
The “American Dream” has been around in one way or another for over a century, emphasizing ideals that promise opportunity, prosperity, and the pursuit of happiness for everyone.
However, that “standard” has been slowly fading in the last couple of decades.
Houses, childcare, cars, and even basic food staples have skyrocketed. Yet, wages haven’t really kept up since the 1970s.
Many of us are still trying our best to hold on to this ideal. But with the hefty price tags, the dream is becoming a serious financial challenge.
Why Is It So Hard To Achieve Now?
The main obstacle holding people back from achieving the American Dream is its escalating cost.
For example, raising two children to adulthood can cost over half a million dollars. This number doesn’t even factor in college, which can cost over $25,000 per year.
As for purchasing a home, a central element of the dream, you’re looking at a lifetime mortgage average of around $800,000.
Compared to the median household income and lifetime earnings, people either work more to meet these milestones or reshape their lifestyle to fit their new reality.
Practical Ways To Make Your “American Dream” Still Happen
Meeting the essential milestones of a house, kids, and a couple of cars seems nearly impossible. But there are still a few ways to keep the essence of the “American Dream” alive:
1. Redefine Your Goals
The traditional American Dream might be behind us, so it’s time to start what the American Dream means to you.
Whether traveling long-term, pursuing a fulfilling career, or owning a smaller home, you can think big and design the dream based on your values and finances.
2. Consider Buying Used Products
Do you really need the newest model of something?
Having the latest phone or car is nice, but buying a slightly older model may still give you as many features for a lower price tag.
Don’t fall into the trap of needing a new edition because everyone’s rushing to get it.
When saving on these big-ticket items, you’ll free up more cash to meet other important milestones like buying a home, investing, or building a rainy day fund.
3. Start Retirement Planning Early
Retirement used to be a significant component of the American Dream. But now, over half of Americans don’t have anything saved up for their golden years.
Don’t be one of them. If you can, put something in an IRA or 401k, even if it’s only $100 a month. Over time, you’ll have a much bigger nest egg and may even have a chance at enjoying a stress-free retirement.
4. Think Twice Before Making A Major Life Purchase
Before committing to significant life purchases like going to an expensive college or buying a home, take a step back and decide whether it’s essential.
I know many people who went to an expensive university and are still paying those loans off by working a job not even related to what they went to school for
Always think whether something’s truly necessary and if there aren’t alternative options that make more financial sense in the long run.
5. Consider Geoarbitrage
Geoarbitrage involves relocating to a place with a lower cost of living to stretch your earnings further.
It’s never been easier to relocate somewhere before. Dozens of countries have new flexible visa policies inviting people to stay, and millions of Americans have left the country in search of greener pastures.
If you can picture yourself learning a new language or exploring new cultures, basing yourself abroad can stretch your dollar further.
Is The “American Dream” Still Possible?
The old “American Dream” may be on its way out for most people. Things are more expensive, people’s priorities have changed, and “success” isn’t a one-size-fits-all ideal.
But if you’re open to redefining your goals and learning how to manage your money wisely, there’s no reason why you can’t make it come true.
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