1. Plan your expenses in advance

The beginning of the year is the perfect time to plan for any major expenses you expect in 2026. Maybe you will need a new roof or porch, your HVAC unit might be in its final year, or it could be time for a new vehicle. Whatever large expenses you anticipate in 2026 (or next year), start saving in advance to avoid depleting your emergency fund or using credit card debt. Popular budgeting apps such as YNAB make it really easy to plan for these large, irregular expenses.

2. Make a plan to pay off high-interest debt

If you have any high-interest debt, there’s no better time than now to make a plan to eliminate it. Mathematically, it’s always better to start with your highest-interest debt and work your way down. If you can pay off all of your high-interest debt this year, that’s great, but don’t get discouraged if it will take you longer to eliminate your debt. Check your balances so you know exactly how much debt you have (it’s not uncommon for those with debt to not know exactly how bad the problem is) and budget as much as you can towards paying off your debt.

In the Financial Order of Operations, the only steps before paying off high-interest debt are covering your highest insurance deductible and getting your employer match in your retirement account. After that, everything should be put towards paying off your debt until it is gone.

3. Consolidate forgotten retirement accounts

Remember that 401(k) you had with your first job 15 years ago? Whatever happened to it? There are about 32 million forgotten or left-behind retirement accounts in the US, and many of those accounts are probably not invested appropriately or have high expenses and fees.

If you think you may have a lonesome retirement account out there somewhere, it’s worth taking some time this year to consolidate your accounts. Chances are rolling them into your current employer retirement account or IRA could give you access to better investments and lower fees and expenses. Check out our free download for help deciding what to do with your old retirement account. Even if those forgotten accounts are better off on their own, it would be wise to take a look at their investment allocation and adjust as necessary.

4. Check on your student loans

If you have any federal student loan debt, make sure your loans are current and you are enrolled in an appropriate repayment plan. Some repayment plans have been eliminated and eligibility for loan forgiveness has been further restricted. In January, the Trump administration plans to start garnishing wages for those who are behind on their student loans. It is estimated that around 5 million Americans with student loans will have their wages garnished starting this month, and millions more will be at risk in the coming months. If you have any federal student loan debt, it is imperative that you make sure your loans are current or you risk having your wages garnished.

5. Live below your means

Spending less than you make is a basic financial goal, but one well worth mentioning. 26% of Americans say they spend more than they make, and 56% of the country has at least some difficulty paying all of their bills. If you are one of the millions of Americans struggling to live below your means, it is not easy to spend less or make more, which you already know. Check out this article I recently wrote for some tips on how to get ahead financially and break the paycheck-to-paycheck cycle: “How To Build Wealth With an Average Income.”

6. Don’t forget to enjoy yourself

It’s not financially sustainable to live like a miser on ramen noodles and only spend money on the essentials. Set aside some money to spend on yourself this year. It could be as small as budgeting for a daily coffee or as big as planning your once-in-a-lifetime dream vacation. If you are saving what you know you need to be saving for retirement and are on-track elsewhere in your financial life, you owe it to yourself to splurge a bit on what you enjoy.

The beginning of the new year is a great time to make positive changes in your life, financial or otherwise, but it should come as no surprise that most New Year’s resolutions fail. To give yourself a greater chance at making changes in your own life, it’s important to set specific, realistic, and achievable goals. Ease yourself into your resolutions instead of going from 0 to 100 once the clock strikes midnight. And if you aren’t as successful as you wanted in January, there’s no need to wait until next year to try again.

The housing affordability problem

The National Association of Realtors, which certainly has no reason to be pessimistic about the housing market, recently described the current market as “starved for affordable inventory.” First-time homebuyers now make up only 21% of all buyers, a record low, and the average age of first-time buyers is now 40. Those who would normally be buying homes now aren’t because they can’t afford to. This is a basic fact that just about everyone agrees on, but there is little agreement about how to solve the problem. 

Proposing the 50-year mortgage is one of the Trump administration’s potential solutions to make houses more affordable. There is no disputing that a 50-year mortgage would do just that: assuming interest rates are the same, monthly payments on a 50-year mortgage would be about 12% less than with a 30-year mortgage. But that 12% savings does not come without some enormous costs.

The problems with a 50-year mortgage

50-year loans are riskier for banks and they would need to charge a higher interest rate in order to compensate for that extra risk. At best, a 50-year mortgage would have monthly payments of about 12% less than a 30-year mortgage. In reality, that difference will be significantly reduced due to a higher interest rate on a 50-year loan. We don’t know exactly what type of rates banks would offer on 50-year mortgages, but we can speculate based on the difference between 15-year and 30-year mortgages.

According to Mortgage News Daily, the average 30-year mortgage rate is 6.22% and the average 15-year rate is 5.78% as of December, 2025. If the average 50-year mortgage rate is 0.44% higher, like the 30-year rate compared to the 15-year rate, it would currently be 6.66%. At those rates, a 50-year mortgage payment would be just 6% less per month than a 30-year mortgage.

It is misleading to focus on the monthly payment as the total costs of a 50-year mortgage would be much higher than a 30-year. If someone finances $350,000 over 30-years at current interest rates, they would pay $773,348 over the life of their loan. If someone were to instead finance $350,000 over 50 years, at a rate 0.44% higher, they would pay $1,209,180 over the life of their loan. While they would pay 6% less per month, they would end up paying 56% more over the life of their loan, which in this example would be $435,832.

There’s another problem with 50-year mortgages: it’s likely most borrowers would die before their loan is paid off. The average age of first-time homebuyers is now 40, which would mean if they chose a 50-year mortgage they would be 90 years of age when their mortgage is paid off, assuming they never refinance. The average life expectancy in the US is 78.4 years. 

One of the big benefits of home ownership, as opposed to renting, is that one day your mortgage is paid off and you no longer make monthly payments to the bank. For most borrowers, 50-year mortgages would be more like long-term renting at a fixed price than home ownership.

So are 50-year mortgages a good idea?

If 50-year mortgages were the only option consumers have, they would be a pretty good deal for those looking for long-term housing. Your rent would not increase every year, you would build equity in your home, and there’s a small chance that one day you may even pay off your mortgage. In a world where 30-year mortgages exist, though, there’s not really a need for 50-year mortgages. The monthly cost would only be about 6% lower, assuming slightly higher interest rates over the longer term, and the total cost would be much higher (about 56% more over the life of the loan).

If that 6% monthly savings would make the difference in you being able to afford a home, there are much better options to save 6% with a traditional 30-year mortgage. Putting more money down is one way to do it. Housing prices have been stagnant over the last few years and are even down a bit from 2022, so waiting a few more years to save a larger downpayment may not hurt you as much as it has in prior years when housing prices rose significantly. If you’d rather not wait, you can always buy 6% less house. Needless to say, a house 6% cheaper won’t be significantly different. Maybe you’ll have 0.5 less bathrooms, live a little closer to a highway, or have a kitchen that’s a little outdated.

Unfortunately for many Americans, houses may not be affordable right now. We love to see politicians propose solutions to help Americans achieve their dream of owning a home, but 50-year mortgages may do more harm than good. If you are in the market for a home, check out our homebuying calculator to see how much home you can afford based on your income, down payment, and interest rate.

Changes to retirement accounts

The Consumer Price Index, the preferred measure of inflation in the US, has risen by 2.9% over the last 12 months (compared to 2.4% this time last year). This means retirement account limits are increasing modestly, and in some cases a bit more than they increased last year.

IRA limits didn’t change at all last year, so a $500 increase is welcome. For those of you contributing to your Roth IRA every month, you will need to invest an even $625 every month to maximize your account. If your New Year’s resolution is to max out your 401(k), you’ll need to contribute a little over $2,000 every month to do so.

One Money Guy metric I like to keep an eye on is the gross income someone needs in order to complete Step 6 of the FOO without contributing more than 25% of their income. Assuming you can’t make catch-up contributions and have a Roth IRA, individual HSA, and a 401(k), in 2026 you would need an income of $145,600 to complete Step 6 of the Financial Order of Operations. This essentially means if you make under that amount, contributing to a 401(k), Roth IRA, and HSA will meet the 25% investing goal. If you make over that amount, you may need to utilize a mega backdoor Roth strategy and/or contribute to a taxable brokerage account.

The income phaseouts for retirement plans are also adjusted each year for inflation. If you are expecting your income to stay the same or decrease next year, you could potentially now qualify for Roth IRA contributions without using the backdoor Roth strategy. If you think your income may be higher than these phaseout limits, it is worth planning ahead and utilizing a backdoor Roth if necessary.

Standard deductions and marginal tax rates

This is a weird year for the standard deduction. Legislation passed in July modestly increased the standard deductions for 2025 (by 5% across the board), so when you file taxes in a few months you can expect to get a little extra back than you would have otherwise. About 91% of taxpayers take the standard deduction instead of itemizing.

Marginal tax rates remain unchanged, but income thresholds are also subject to annual inflation increases. Again, if you are expecting your income to decrease or remain the same next year, this means you will be paying a bit less in taxes, all else being equal.

If you are an accountant or tax enthusiast, you can review the full IRS release of changes next year and their separate release detailing changes to retirement accounts. Make sure to download our 2025 Tax Guide as you prepare your taxes next year, and be on the lookout for our 2026 Tax Guide with all of the changes mentioned here and more.

Index Funds vs. Active Funds

Actively managed investments can make sense in certain market sectors, but broad market indexes largely outperform actively managed funds. In addition to the difficulty of picking stocks that consistently beat the market, active managers must overcome higher expenses and fees and generating more taxable income from trading. Most active fund managers cannot accomplish these feats consistently over longer periods of time. The headwind to beat the market while charging higher fees is too much to overcome.

Index funds are typically more tax-efficient than active funds because they don’t tend to change very much. The goal of an index fund is to mirror a broad market index, such as the S&P 500, and it doesn’t require much trading or turnover to do that. Active investments, on the other hand, aim to beat market indexes. Attempting to beat the market often involves more trading and investment turnover, which in turn can generate more taxes.

Index funds are also cheaper than actively managed funds, which makes sense. Active managers need to spend more time and energy managing their investments because they are trying to beat the market indexes. Index fund managers need to only mirror their index, which keeps costs down. 

The Investment Company Institute studies trends in mutual fund and ETF expenses, and their most recent annual report, released in March, found that index funds still have much lower expense ratios than their actively managed counterparts. The average expense ratio for index equity mutual funds (such as S&P 500 indexes) is 0.05%, and active equity mutual funds sit at 0.64%. That makes actively managed equity funds over 10x more expensive, on average, which is significant over a lifetime of investing. It is worth noting that while actively managed funds are still much more expensive, average active fund fees have dropped significantly over the past 20+ years.

Not only are actively managed funds more expensive and less tax-efficient, but they tend to underperform market indexes. Data from SPIVA finds, time and time again, that passive investments outperform active investments the majority of the time. 

In their most recent report, market indexes outperformed over 80% of active funds over the past 15 years in every single category of domestic funds that SPIVA tracks, from small-cap to large-cap to real estate. In some categories, over 90% of actively managed funds were outperformed by their respective benchmarks.

Is it possible that this trend could reverse and more active funds could outperform index funds? Sure, anything is possible. But there are no signs to indicate a reversal in this trend is imminent.

To beat the market, one would have to overcome the tax efficiency and low cost of index funds, in addition to picking an active fund that can consistently outperform its respective benchmark. While beating the market may be difficult, we know there are about 10% to 20% of active funds, depending on the market segment, that outperform their benchmarks. Can you simply invest in active funds that have a history of beating the market and expect continued success?

High-Flying Active Funds

There are certain actively managed funds that have outperformed indexes over long periods of time. Fidelity Contrafund is one such fund. This fund has managed to beat the S&P 500 by about 2% on average, annually, over the past 10 years. This alone is impressive, but even more impressive is the fact Contrafund has returned 13.15% average annually since inception in 1967, besting the S&P 500’s average return of 12.25% over the same period of time. If you invest in an active fund that has a long history of beating the market, can you expect that success to continue?

An analysis conducted a few years ago by a professor of finance at Yale, James Choi, sought to answer this question. Proponents of active funds often believe that past performance of a mutual fund can be indicative of, but does not guarantee, future success. This belief is based in part on a 1997 study that found past performance of actively managed funds does correlate with future success. When Choi extended this analysis to the present day, though, he found that to no longer be the case.

They found that from 1994 to 2018, a fund’s past performance was “completely unpredictive” of future returns. Choi went on to state that, “if anything, over the past two decades, you seem to do a little bit worse if you chase past returns on mutual funds.”

We like to make decisions based on data, and all of the data points towards index funds largely being better investments than active funds. They are less expensive to invest in, have less turnover if you are investing in a taxable account, and beat active funds around 80% to 90% of the time. Even if you do invest in the 10% to 20% of active funds that beat the market, the data tells us that those funds have no better chance of beating the market in the future than any other fund.

It is clear that index investing is one of the best ways to invest for retirement. It also happens to be one of the easiest ways to invest. You can invest in one fund, a target date index fund, and never have to worry about shifting your allocation over time or investing in other funds. Index funds aren’t flashy, but they have a long track record of helping Americans invest for their more beautiful tomorrow.

Reduce large, unexpected expenses

Before we discuss how and where to invest for retirement, the first, and biggest, problem is creating enough margin in your budget to save something. Those with average incomes and little room in the budget often cut what others consider necessities to make ends meet. This means not spending money on preventative healthcare, regular car maintenance, vet visits, home maintenance, and more. Cutting in these categories will save you money in the short-term, but if you have an average income, they can cost you big-time in the long-term.

Potentially preventing some huge unexpected expenses can really help you get ahead with an average income. There’s only so much you can control, but spending a little more today can drastically reduce your future expected expenses.

Get good health insurance

Healthcare is very expensive, and if you have an average income, it can be tempting to delay going to the doctor or seeking needed healthcare until you can no longer ignore the problem. Make preventative healthcare a priority in your budget. Go to the doctor at least once a year for an annual exam and take care of other problems as soon as they pop up. Not only will your body thank you, your budget will as well.

Quality, subsidized health insurance is an invaluable perk from potential employers. All else being equal, look for employers that offer great benefits to their employees. A good company knows it needs to take care of its employees by offering access to high-quality medical care at affordable prices.

Get pet insurance

If you have pets, make room in your budget to pay for pet insurance if you could struggle to cover unexpected vet bills. Nobody wants to decide between paying rent next month or paying for a life-saving treatment for their pet, but most will choose their pet (78% of Americans would go into debt to pay for their pet’s care). Pet insurance can help you avoid this issue entirely as long as you can make room in your budget for your loved one’s insurance. Pet insurance is much cheaper than human insurance, and for our cats, it is about $20 per month each.

We have been very unlucky with the health of our cats. Just this year, we’ve had hospitalizations for a blood clot, a mystery illness where our cat was refusing to eat, and a rare complication of coronavirus (I didn’t know cats could get a coronavirus, either). We’ve received over $10,000 in reimbursements from our pet insurance this year. Hopefully you never have issues with your pets, but if you would rather have coverage for unexpected medical expenses than paying out-of-pocket, pet insurance is the way to go.

Drive a reliable and affordable car

Vehicles can be really cheap to drive or extremely expensive to drive, depending on what type of vehicle you have and how well you maintain it. Consumer Reports ranks the reliability of the major manufacturers each year, so consider using their list or a similar study to help you choose which brand to purchase. We made a couple car purchases recently and chose Mazdas, which are higher on the reliability list but not as expensive as comparable Toyotas or Hondas.

No matter what type of car you drive, complete all maintenance as scheduled to avoid problems later down the road. Much car maintenance can be done at home for cheaper if you don’t mind getting your hands dirty. Change your oil as the manufacturer suggests, rotate your tires and regularly check your air pressure and wear, and don’t ignore any flashing lights on your dashboard.

Maintain your home

Home repairs can be very expensive, but regular maintenance can help you stay ahead of any potential problems. We have our HVAC system serviced regularly, pest control that visits once a quarter, and have other issues addressed when they pop up. If you are new to the area, talk to your neighbors to see what service providers they use and trust. It’s unfortunately not uncommon for unreputable companies to exaggerate issues with your home and get you to spend large sums of money that may not be necessary. For example, there’s a local HVAC company in town that will almost always say you need a new unit, no matter what your actual problem is.

Whenever service providers visit, take time to ask questions and learn more so you may be able to potentially self-diagnose and fix minor problems yourself in the future. I don’t consider myself an A/C expert by any definition, but I do know how to fix our unit when it freezes over and how to keep that from happening.

If you are deciding between renting or buying, renting is a great way to save money on repairs and maintenance. I love our house, but I miss having someone fix all of our problems at no extra charge when we lived in an apartment. There are many other considerations when it comes to renting vs. buying, which you can read more about here if you’re interested.

Cut other big expenses where you can

Ordinary, everyday expenses have a huge impact on your budget when you have an average income. What you spend on groceries, childcare, dining out, entertainment, and vacations determines how much you are able to invest for retirement. We do believe in paying yourself first and investing for retirement before tackling the rest of your budget, but the reality is that groceries and childcare comes before saving for retirement.

Groceries, dining out, and toiletries normally make up a significant portion of your budget when you have an average income. There is only so much money you can save here, and we would obviously never suggest skipping meals to save more for retirement. But there are ways you can save money on food and toiletries. Shop at a warehouse club like Costco for the staples, which can be especially beneficial if you have a larger family to feed. Buy in bulk if you have the space and if you can consume the items before they expire (I am often guilty of buying larger quantities than I can handle at Costco). Some grocery stores like Aldi, Lidl, and Kroger are cheaper than more “premium” grocers like Whole Foods, Publix, and Harris Teeter.

There are ways to save money on dining out aside from the obvious and unethical (yes, you could go out to eat less or not tip your server). If you typically order drinks when you dine out, try drinking water at dinner and having drinks at home later. When we order drinks with dinner, they tend to add $30 or more to our ticket, including tip. Many restaurants often have deals on slower days, so try going during the week instead of on the weekend if they have any specials. Our favorite local Mexican place has $1.99 Taco Tuesdays, which really can’t be beat.

Families in the US spend drastically different amounts on childcare, ranging from nothing to tens of thousands of dollars (or more) per year. If you are a single parent or if you and your spouse both work, you are going to need some sort of childcare. Grandparents that love children can be a great source of free childcare. Daycare programs range in price, and while it is probably not advisable to enroll your child in the cheapest program available, you can lessen the blow. Some employers offer free childcare for their employees, which is a huge benefit for parents. If you can figure out a way to do daycare 3 days per week instead of 5, you can cut your bill significantly.

Increase your income if possible

Increasing your income can be easier than reducing your expenses in some cases. If you are struggling to cut your expenses and still need to save more for retirement, you may need to make more money (simple, right?). The good news is it has never been easier to make extra income outside of your day job. If you are struggling to think of ways to increase your income, check out this article I wrote last year.

If you are in a role at work where you have room to grow, it’s worth putting in the extra effort and time to get that promotion or raise. If you feel like your career opportunities are limited, it might be time to explore going back to school or getting a certification in a new field. The trades (electrician, plumber, mechanic, construction, and more) are in high-demand in many areas with really good starting pay.

Obviously increasing your income is easier said than done. You can’t snap your fingers and double your income, but if you are willing to spend more of your time working, whether that’s at a side hustle, your day job, or opening the door to new career opportunities, you can increase your income.

Know where to save

Creating more room in your budget to invest for retirement is all for nought if you don’t know where to save. Check out this article I wrote last year for a step-by-step guide of where you should be investing for retirement. The short version is get your employer match first, maximize your Roth IRA and HSA, if possible, then contribute more to your employer-sponsored account, if you have one. If you still have more money to invest after all of that, you can contribute to a taxable brokerage account.

The more money you make, the easier it is to build wealth; there’s no way around it. If you are building wealth with an average income, you have to do your best to avoid large, unexpected expenses, cut other large budget items where you can, and increase your income, if possible. It is still very possible to become wealthy with an average income, and through the power of exponential growth, your savings can compound many times over. By living below your means and saving a little bit today, you can build your great big beautiful tomorrow.

It’s impossible to watch any sports in the US without being inundated with gambling ads. The promises seem too good to be true: bet just $5 and get $300 in bonus bets, or get up to $1,500 in bonus bets if your first bet doesn’t win (both real offers currently available from major platforms). How can you go wrong gambling on sports with offers like that? Most platforms promise cheap entry and little risk, but the truth about betting on sports isn’t as it seems.

The house always wins

The amount of gross revenue sportsbooks make, as a percentage of wagers placed, has been increasing every single year since 2018, from 6.7% to 10% so far in 2025 (this percentage is called hold). They aren’t getting better at making odds, of course, but are getting better at steering users towards losing bets. For example, sportsbooks love parlays: hold is 18.2% on average for parlays, while they only make 4.9% on straight line bets. Data from New Jersey in September of last year showed that parlays accounted for nearly a third of total bets with a whopping hold of 24.2%.

Even if you avoid parlays entirely and stick to what you know, the odds are still stacked against you. A couple of the only ways to reliably make money on sports gambling are to take advantage of differences in odds across sportsbooks (known as arbitrage betting) or to bet on error lines. It is entirely legal for sportsbooks to limit your account for this behavior, which can effectively ban you from placing bets. It is very difficult to gain any sort of edge over the house, but if they discover you have, they can limit your ability to place bets or ban you entirely.

The stats on sports betting are grim and many bettors have a problem. A survey conducted earlier this year found that 50% of sports bettors have used a gambling addiction tool in a sportsbook app. That means half of all sports bettors surveyed either know they have a gambling problem or think they may have a problem. The same survey found that 37% have bet more money than they felt comfortable losing and nearly one-in-four, 23%, have had someone express concern about their gambling habit. It is worth emphasizing this wasn’t a survey of problem gamblers, but a survey of sports bettors in general.

Can you gamble responsibly?

I signed up for one of the major sportsbooks shortly after sports gambling was legalized in my state and placed a modest bet, I believe around $50, on UGA football to cover the spread in their bowl game (it was a New Year’s Day bowl game in 2021 against Cincinnati). I graduated from UGA and I am a fan of their football team, so it seemed like a natural bet to place. I placed the bet after the start of the game and my odds were UGA -2.5 points. That means if UGA won by 2 points or less, or if Cincinnati won, I would lose my bet. If UGA won the game by 3 points or more, I would win my bet.

The game was insane. UGA trailed Cincinnati by 2 points, 21-19, and kicked a field goal with just 0:03 seconds left in the game to go up by 1 point, 22-21. I was happy UGA took the lead, but disappointed I would lose my bet. Then on the final play of the game, the Cincinnati quarterback was sacked in the end zone for a safety, which is 2 points, so UGA won 24-21 and I won my bet.

That was the last time I ever bet on sports (or anything, for that matter). The game was exciting enough on its own, and I realized just how random gambling outcomes can be. I won my bet on a fluke safety on the last play of the game. I placed a bet on a team I had an emotional connection to, which is never a smart thing to do.

But the main reason why I decided to never gamble again after that win was because of the rush I got on that final play of the game. Not on the field goal for UGA to go up by 1 point, but on the meaningless safety to end the game. It was unlike anything I’ve experienced watching sports before and I realized just how addicting that feeling could be. I felt that if I continued to gamble on sports after that win, I would always be chasing the high from that day and would be at risk of becoming addicted.

The house always wins, and if you somehow gain a consistent edge over the house, well, they’ll kick you out. The share of Americans that see sports gambling as bad for society has been steadily increasing and is now at 43% (50% say it is neither good nor bad and only 7% say legalized sports betting is a good thing). Men under 30, the demographic group that places the most bets on sports, has seen attitudes shift even more dramatically. In 2022, just 22% of men under 30 said sports betting was bad for society. Now, 47% of young men agree that it is harmful. 

I decided that sports betting wasn’t worth the risk for me and that casual gambling could potentially evolve into a more problematic habit. That may not be the case for you, but if you do bet on sports (or anything else), make sure you set rules for yourself. Never bet more than you can afford to lose. Don’t expect to make any money gambling and assume you will lose money over time. And make sure you are investing at least 25% for retirement before you consider spending any money gambling on sports.

You only get one chance at a successful retirement. Besides the basics like saving more money, what can you do to ensure a successful retirement? What insights can we gain from those who are already retired to better plan our own retirements?

1. Retirement is better than working

The majority of retirees, 67%, are happier on a typical day in retirement than they were on a typical day while working. Of the 33% who are not happier in retirement, about half say they are lonely. It’s no secret that loneliness is a leading cause of unhappiness and depression in older Americans, and having a network of family and friends that you regularly see can help ward off loneliness in retirement. Consider living in a community where many of your neighbors are also retired. You don’t necessarily need to move to The Villages, but having close friends and neighbors who are also retired can prevent loneliness.

2. Take care of your health

Being in good health can make or break your retirement. Of retirees that reported being happier in retirement than they were while working, 49% of them said they planned ahead by prioritizing their health before retirement. 44% of retirees are concerned about their finances in retirement, while 34% say health issues are their biggest concern. Saving for retirement and taking care of your health must go hand-in-hand. If you don’t take care of your health, it doesn’t matter how much you have saved for retirement. Just like it is never too early to start saving, it is never too early to prioritize your health.

3. If there’s something you want to do in retirement, don’t wait to do it

There’s a big gap in what we imagine doing in retirement, before we retire, and what we actually end up doing in retirement. The top activities pre-retirees imagine for retirement are traveling (79%) and exercising (71%). That makes a lot of sense. Traveling extensively can be difficult to do while employed, and it’s a common dream to “travel the world” once you retire. And exercising to stay in good health is another great goal. However, the top activity for current retirees isn’t traveling or exercising but watching TV.

Don’t take anything for granted in retirement. If there’s something big you want to do or accomplish, make concrete plans now instead of potentially waiting until it’s too late.

4. You might worry less about money

Interestingly, many retirees report worrying less about money than those who aren’t yet retired. 34% of pre-retirees are worried they will outlive their money, while only 22% of retirees fear the same. 46% of retirees say they have fewer financial problems than they anticipated before retirement. This may sound strange, but it’s how it should be: worrying about money, and adequately planning, before retirement can make it much less of an issue in retirement. 78% of retirees say they have more than enough or just enough money to last them through retirement, while 19% say they have less than they need.

It should be encouraging that a large majority of retirees believe they have enough money to last them through retirement, and many worry about money less than they did before retirement. This doesn’t happen without planning ahead and saving what you know you need to save for retirement.

5. When you retire matters

The period of higher inflation we’ve experienced since 2020 will likely go down in history as not the best time to retire. In 2020, before inflation had really started impacting retirees, 17% said their spending was a little higher or much higher than they could afford. Last year, 31% of retirees said their spending was a little higher or much higher than they could afford. Periods of higher inflation often hits retirees the hardest since many are on fixed incomes, with pensions that may not adjust for inflation and Social Security, and the last few years have been no exception.

When planning for your own retirement, it’s a good practice to hope for the best but be prepared for the worst. What happens if inflation skyrockets when you retire? Or what happens if you retire at the beginning of a prolonged stock market decline? Make sure your retirement plan is ready for the worst-case scenario.

Retirement is an exciting period of life if you’ve prepared well. Listen to those who are retired now and prioritize your health, make plans to accomplish your goals, whether that’s traveling, spending more time with friends and family, or something else, and be prepared to worry less about money and be happier than you were while working.

Millionaires are optimists

Year after year, we’ve found that our clients overwhelmingly consider themselves to be optimists. That shouldn’t come as a huge surprise since studies have found that optimists tend to experience more financial success. So what should you do if you are more of a pessimist? You can’t change your personality overnight to become an optimist, but you can become more optimistic over time through habits like practicing gratitude.

Being an optimist doesn’t mean seeing everything with rose-tinted glasses, either. You can recognize problems in your life (or the world) while working towards change. An optimistic outlook means believing you can change your life (and finances) for the better. The biggest problem with pessimists isn’t that they see themselves and the world for how it truly is, but that they often have a fatalistic outlook and don’t believe their actions matter.

Private schools are optional

Only 9% of children in the US attend a private school, but Americans largely agree that private schools do a better job educating children than public schools. In fact, studies have found that private school students score higher on the SAT than public school students. Another study compared academic performance for private school and public school students and actually found no statistically significant correlation after adjusting for one key variable: family income. 

Private school students tend to perform better than public school students, but there is a glaring selection bias. Private school is generally very expensive, so if you can afford to send your children to private school, chances are they are already ahead of the curve. Indeed, the study referenced earlier found that once you adjust for income, there is no statistically significant difference in academic performance.

Our millionaire survey further reinforces the idea that private school is not a prerequisite for success. 77% of clients surveyed attended public school from K-12 and 69% attended public universities.

Credit card use okay, credit card debt no way

Why do millionaires use credit cards? Credit cards can be a powerful tool, as I wrote recently, and millionaires know how to use them effectively. It’s really simple, actually – just don’t use them to live above your means! Credit cards are superior to cash or debit cards in almost every way. They often offer enhanced fraud protection, points or rewards, and some offer extended warranties, price matching, and insurance. But all of these benefits are only worth it if you have the discipline to use it like cash or a debit card and not go into credit card debt.

Drive it until the wheels fall off

When you think “millionaire,” you probably don’t imagine someone driving an older, high-mileage car. But our millionaire survey found that most clients tend to drive cars for over seven years! Driving vehicles for as long as reasonably possible makes a great deal of sense. Cars are depreciating assets, but depreciate the most in the first 3-5 years. The longer you keep a car, the greater the “value” you are getting out of driving it.

20% down isn’t a must on your first home

Putting 20% down on your first home is a good idea. It gives you a buffer against price depreciation and will make your monthly mortgage payment a bit lower than putting down less. With median home prices over $400,000, though, putting 20% down on a first home can be really difficult. Our millionaire survey found that 78% of our clients did not put down 20% on their first home, and you don’t need to either, but you still need to follow some ground rules to make sure you aren’t buying more home than you can afford.

Follow our 3/5/25 rule (aim to put down at least 3% to 5% on your first home, and make sure your monthly mortgage payment does not exceed 25% of your gross income). You need to plan to live in the home for at least 5 to 7 years, especially if you are putting down less than 20%. And on subsequent houses, you should aim to put down at least 20%.

Invest 25% or more for retirement

It should come as no surprise that our millionaire clients are good at saving money. The majority of Abound Wealth clients either invest 25% or more for retirement or are already retired.

Investing a healthy amount for retirement is a no-brainer if you want to achieve financial success. It’s like brushing your teeth to avoid cavities or eating healthy and exercising to keep in good shape. We recently launched a compound interest calculator if you are curious to see how much your savings can grow.

We’ve found that the public perception of millionaires is often quite different from the reality. Millionaires are optimists, usually go to public schools, use credit cards (responsibly), drive cars for a long time, don’t put 20% down on their first home, and most importantly, invest a large percentage of their income for retirement. None of these habits and traits require an extremely high income to achieve. No matter whether you are already a millionaire or currently have a negative net worth, implementing these habits and traits in your own life can help jumpstart your financial success.

The changing attitudes about college have had a significant impact on college enrollment. From 2010 to 2021 (the most recent available data), enrollment has declined 15% across the board. That may sound like a modest decrease, but equates to 2.7 million fewer college students now than there were a decade ago.

I enrolled in college in 2011, right at the peak of college enrollment in the US. I felt that college was a requirement to getting a good-paying job and most of my classmates felt the same. I believe high school graduates today feel like they have more options after graduation than I did, which is a great thing. There are good-paying jobs available that don’t require a college degree and, maybe more so than in the past, those jobs are not looked down on. 70% of white-collar workers say that blue-collar jobs are more respected now than they were 10 years ago, and over 90% of blue-collar workers are proud of the work they do.

There are many paths to financial success that don’t involve a college degree, but I believe the pendulum has swung too far in the opposite direction. Not only is college still worth it for many students, the data shows that, while attitudes about college have shifted over the last decade, college is now a better value.

Why college is a bargain (on average)

The shifting attitudes about college are understandable. For decades, tuition costs have been rising much faster than inflation. As costs have risen, so has student loan debt. When you think “recent college graduate,” what image comes to your mind? Is it a successful white-collar professional or a struggling Starbucks barista? For many Americans, the latter image has firmly taken over and “recent college graduate” has become synonymous with “struggling young adult.” 

Why is this? I blame the decline of thoughtful journalism and the increased prevalence of clickbait, sensational headlines. You simply aren’t going to see many headlines that read: “Most College Graduates Doing Good, Data Shows,” or “Lauren, 22, Graduates with Little Debt and Receives Great Job Offer.” Instead, you often see headlines such as “Woman’s Dream of Being a Nurse Leaves Her $110,000 in Debt” or “Why Today’s Graduates Are Screwed.

If you look beyond the clickbait headlines, college actually looks like a bargain. Over the last few years, inflation-adjusted tuition costs have fallen. It is now cheaper, in real dollars, to attend college in 2025 than it was when I enrolled in 2011. If you think that college costs are moderating because earning potential is decreasing for college grads, well, you’d be wrong. College graduates have historically made significantly more than those without a degree. Instead of shrinking, that gap is widening.

For young workers aged 22 to 27, the average high school graduate without a college degree makes $36,000 per year, compared to $60,000 for the average college graduate. The unemployment rate is twice as high for those without a college degree. Self-reported financial wellbeing for college graduates is 87%, compared to 67% for those without a degree. Median lifetime earnings for college graduates are $1.2 million higher than non-graduates. All of the data shows that, on average, attending college is a great decision.

College offers economic mobility

I wasn’t poor growing up, but I didn’t have many advantages that wealthier kids often have. I attended (and graduated from) a Title I high school. I could only afford to take the SAT and ACT one time each, and I didn’t have any tutoring or material to study to prepare. The exams also weren’t offered in my county, so I had to wake up at the crack of dawn and drive 45 minutes to an unfamiliar high school to take them. My 1996 Buick Century that got me there was the worst looking car in the parking lot. I often felt embarrassed to drive it.

Growing up, my mom took us to the public library at least twice a week. I loved learning and I was always a good test taker in school. I had advantages over many of my friends. Neither of my parents were on drugs and both were present. We always had food to eat and never went hungry. I didn’t have to worry about providing for my household at a young age. My parents made it clear that doing good in school was the most important thing for me growing up.

Those advantages in life helped me do very well on the ACT, which got me into a great college, which led me to where I am today. Although I didn’t realize it until I was older, my parents knew that a college education could allow me to move up the economic ladder. High school students today considering college actually have greater potential for economic mobility than I did, not less. In fact, an analysis of the outcomes of over 30 million students found that public universities offer the greatest economic mobility. For most kids, college is your best chance at climbing the ladder.

It is worth repeating that college is by no means the only way to achieve financial success, however you measure it. Some of the wealthiest individuals in the country never graduated college. It isn’t a golden ticket and you must be very careful deciding which college to attend, choosing a major, and paying for school (check out this article for some tips on how to do college the right way, and read up on the best (and worst) college degrees here). However, my story, and the millions of stories just like mine, are proof that public education and public universities are a great path to becoming financially secure.

The financial problems faced by millennials are well-documented. We were graduating high school and college during the Great Recession. We used student loans to pay for our college degrees that often weren’t worth the paper they were printed on. We had (and many continue to have) trouble affording homes. We are waiting longer and longer to have kids or are not having them at all (to be fair, the decision to delay having children or to not have children isn’t always related to money). We own less than half of the wealth that our parents did when they were our age.

All that being said, I wouldn’t want to trade places with my parents or any previous generation. My parents and grandparents had to go to a friend of a friend to invest, and they usually sold them insurance or annuities instead of helping them invest in the stock market. It is easier to access good financial information than ever before. Sure, there’s a lot of misinformation out there, but if you know where to look, you can teach yourself how to invest, the best way to pay off debt or buy a car or house, and so much more.

Gen Z’s four-letter problem

Gen Z shares many of the same financial problems millennials face. Homes are out of reach for many, college is expensive and often necessitates student loans, and many are facing tough job markets when graduating college (tech especially). There is one notable difference, though, and that is debt.

Gen Z carries a higher average debt load than any other generation. The average Gen Z adult has nearly $100,000 in debt (including credit cards, student loans, personal loans, medical debt, mortgages, and auto loans), but this average is skewed by a small but notable percent of this generation that carries a significant amount of debt. 32% of Gen Z adults have no debt at all, and 30% have some debt, but less than $50,000. 13% of the generation has between $50,000 and $100,000 in debt, and 11% has over $100,000 in debt (I’m assuming the percentages here don’t add up to 100% due to non-respondents).

The reason for Gen-Z debt

There’s no doubt that many members of Gen Z with over $100,000 in debt have their mortgage to blame, but the most common debt carried by Gen Z adults was not mortgages, but credit cards (56%), student loans (31%), personal loans (23%), medical debt (19%), and finally mortgages (16%) and auto loans (10%). The spending habits of young adults is quite different from older generations and might explain the higher debt load young people carry.

Older households spend more money on housing, household goods and services, and healthcare. Younger households spend more on education, communication, transportation, and leisure. It makes sense that the older you are the more you spend on healthcare, and that younger people spend more on education and communication. The notable difference in spending appears to be a preference by older households to spend money on goods and services and younger households to spend money on transportation and leisure. 

This is something we’ve known for quite a while: young people would rather spend money on experiences than things, and about 60% would rather have those experiences now instead of saving for retirement. Not saving for retirement is definitely bad, but choosing to spend money on experiences rather than stuff is a good thing. Experiential purchases have been shown to make people happier, even when accounting for price differences. Younger people are prioritizing spending that makes them happier, but unfortunately some may be going a little overboard.

How young adults can avoid consumer debt

In some ways, it is easier to control spending on things than it is spending on experiences. With things, your happiness boost often fades quickly and buying stuff doesn’t really provide you with cherished memories. Spending money on experiences is often accompanied by pressure from friends and family to join in on the fun and spend a certain amount of money, whether that’s just a dinner out or an expensive vacation.

It is really difficult to turn down new experiences with friends and family, but setting boundaries around how much you are willing to spend can help avoid those tough conversations entirely. Friends and family are much less likely to pressure you to spend money on something you can’t afford if they know you can’t afford it. It can be really difficult to talk about budgeting and money, but it is far better than the alternative which is living above your means.