158: Why You Feel Behind Financially

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1:15Robert Croak:We'll also help you separate that perception from reality. My name is Austin Hankwitz, and I'm joined by my co-host, Robert Croak. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million, and I'm a multimillionaire in my late 20s with a background in finance and economics. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. So Robert, what are we going to be talking about in today's episode?

1:42Austin Hankwitz:In today's episode of the Rich Habits Podcast, we're leaning into the mindset side of our business, finance, and mindset tagline. We're breaking down why so many people feel behind financially, even when the data tells them they're not. And I think there are three big reasons, skewed benchmarks, survivorship bias, and the fact that most people won't admit what their real financial situation actually is. I feel like almost everyone I talk to, friends, family, people who message me on Instagram, even people who are objectively doing well financially, all say the same thing. I feel behind. I've heard it a thousand times and feeling behind and actually being behind are actually two completely different things, but we treat them like they're the same and they cause real damage to the mindset and where you actually are.

2:35Robert Croak:Yeah, Robert, I know people personally that make six figures, 100, 150, 200 ,000 a year, and they tell me that they feel broke and they genuinely feel that way. And it's not them being dramatic, but when you dig into a little bit and you ask them more about what's going on, the problem is not their finances. It's the way they perceive their finances. Robert, you mentioned skewed benchmarks. So let me jump into our first topic here, skewed benchmarks. Most people, they don't even know what they're really comparing themselves to, right? They just have this vague sense that everyone else is doing better than them.

3:07Robert Croak:And I think a lot of that comes from what we see online. You talk about this all time. This is that social media comparison bias. It's that psychological phenomenon where people evaluate their own worth by comparing themselves to people that they follow and see online. It's always been a thing, but Robert, I feel like since really 2019, 2020, it's just got out of control because now you're not just comparing yourself to your neighbors or your coworkers. Oh, wow, Johnny got a new BMW. Martha down the street, you know, she just upgraded this or whatever. You're not now just doing that, but you're doing it for everybody around the world simultaneously on Instagram, on LinkedIn, on TikTok.

3:47Robert Croak:Despite all of these people everywhere else, they're just showing you the highlight reel. It's not the reality of their lives.

3:55Austin Hankwitz:Yeah, we all scroll Instagram and you see someone posting about their new Tesla, their vacation in Bali, their crypto gains. You see LinkedIn posts about people getting promotions, starting new companies, raising capital. all of these things in your brain automatically goes, well, I'm not doing that, so I must be failing. But what you don't see is the debt purchase behind the Tesla, the credit card bills for Bali, or the fact that the crypto portfolio is down 60 % from its peak in October. You're comparing your full reality to someone else's carefully curated illusion, and this causes real problems.

4:33Austin Hankwitz:So here's why things get ugly. Let's pretend you feel behind financially because everyone on social media seems to be making more money than you. So you make the emotional rash decision to take a new job you absolutely hate because it pays more. Or maybe even you invest in something incredibly risky because you're trying to play catch up. Or even worse, you go into debt buying things to look successful when you're not quite there yet.

4:58Robert Croak:Robert, all of this turmoil and angst came about because you felt behind. You saw the Bali trip. You saw the Tesla model. You see those things and you're like, oh, I got to go start doing this stuff on Calci and Polymarket so I can better. I saw this really cool thing that I could flip a real estate this or you start doing these crazy out. Or I'm going to go take this job that I hate because I got to go make an extra thousand a month. You do these crazy things because you feel behind financially because your benchmark, that pure benchmark, you're saying, what is my life compared to? The benchmark is skewed.

5:34Robert Croak:You're comparing it all to social media. Now, the data shows that younger people are experiencing this more than anyone. 43 % of Gen Z and 41 % of millennials report feeling financially behind. But when you actually look at the data, and I think data facts are our friends, right? We hear that all the time. A lot of them are doing just fine for their age. You could have a growing 401k. You could be out of high interest debt. You can be making more this year than you did last year. But because you are comparing yourself to these skewed benchmarks, you are stressed and you don't feel like you're doing well financially.

6:10Robert Croak:All of that stress, all of that emotion is caused by a headline of some 23-year-old tech guru on LinkedIn selling their startup for half a billion dollars to Google or something, right? You have these unrealistic benchmarks in your head of how far along you should be in your life.

6:28Austin Hankwitz:Yeah, I couldn't agree more to this sentiment and this whole point because we see it every day on Instagram and TikTok where this person says, well, you can do this in five minutes a day and make$20 ,000 a month. And you've got people like Grant Cardone saying, if you don't make$400 ,000 a year and you're a man, you're a loser. Everyone needs to put away all that noise and get rid of it because the key point here is the benchmarks we're using, that comparison, that idea of what we should be doing is broken. We're comparing ourselves to highlight reels and outlier success stories, not the reality of life.

7:02Austin Hankwitz:And that's just the biggest problem I see. So that leads us to survivorship bias. We only hear about the winners, The person who bought Bitcoin in 2011. The entrepreneur whose startup went viral and they made millions. The real estate investor who timed the market perfectly and now is a real estate mogul. But for every person who posts on LinkedIn about a job promotion or a viral product that made them millions of dollars in month one, there are a thousand other people who are skipped on the promotion and couldn't get their viral idea to work. The difference is those thousand people aren't posting about it because success looks common when it's actually very rare.

7:42Robert Croak:Whereas the average outcome, the person who works a normal job, saves consistently, retires comfortably at 65, that doesn't make headline news because it's not sexy, but it's what many financially successful people actually do, including myself and Robert, right? That's the playbook. And it's the playbook that's as old as time. Which brings us to the actual numbers, right? This is most important because I want you guys to really tune in here and think about how do I benchmark myself against the actual numbers. The Federal Reserve does a survey every three years. And the most recent data we have here is from 2022.

8:16Robert Croak:And that survey shows the median net worth in America by age. We're using median, not average, because average gets skewed by billionaire tech bros and billionaire tech people. So we're not going to do average, we're going to do median. I'm median, right? We're all median here. So let's just roll. So if you're under the age of 35 in the United States, the median net worth is$39 ,000. That's it. It's not 100 ,000. It's not 500 ,000. It's not a million. Oh my gosh, you're 33. You're not a millionaire yet. Like what's wrong with you, Susan? No, it's$39 ,000. That number is actually up 143 % from 2019 to 2022, which tells you that younger people are actually doing a lot better now than they were just a few years ago, which means if you're a 30-year-old human being in the United States with$40 ,000 to your name, you are by definition above the median, right?

9:10Robert Croak:You're above average, right? Whatever you want to call it here. You don't need to feel like you're behind financially at 30 years old with$40 ,000 to your name because you are by definition doing better than the masses.

9:21Austin Hankwitz:So let's dig into the people in their 30s and 40s. And I've got some really good stats here to help you guys. So please take notes. Age 35 to 44 median net worth is$135 ,000. Age 45 to 54 years old, it's$247 ,000. And age 55 to 64 is$364 ,000. Now remember, 30 % of Americans currently have a negative net worth, 30%. So if you have no debt and$100 in your pocket, you are ahead of 30 % of Americans already. Take away all of these great stats. So keep that in mind because these are real numbers. And what's wild is 73 % of adults report they're at least doing okay or living comfortably financially, according to this federal reserve data, three quarters of people, which means people that are retired at 63 with 364 K to their name, collecting their social security are feeling comfortable, but take that with a grain of salt.

10:22Austin Hankwitz:I don't want you to retire comfortably. I want you to retire wealthy, which is why you listen to the show. But you wouldn't know that from social media. That's for sure.

10:30Robert Croak:You certainly wouldn't. And I just I love kind of reflecting upon stats like this. Right. So think about that again. 35 to 44 median net worth in America is one hundred and thirty five thousand. Forty five to fifty four. It's about a quarter million dollars. Two hundred forty seven thousand. And ages fifty five to sixty four median net worth is three hundred and sixty four thousand dollars. And you threw in the stat that essentially a third of Americans have a negative net worth. So if you have a positive net worth, no matter what that is, congrats, you're ahead of a third of Americans, which is great.

11:02Robert Croak:And if you're coming in above these actual real Federal Reserve benchmarks, you are above the norm, like you are doing better than your peers. And I would argue, you listen to the show, I'm sure a lot of you are actually kind of running the numbers now in your head. And you're like, wait a second, I'm actually doing pretty good for myself. I thought I was behind because I saw this LinkedIn post about my friend who got promoted and now they're a VP where I'm still a manager, but you know what? I am doing pretty good. And that's the purpose of this episode, to give you guys hope, to help you understand that you're doing pretty good.

11:31Robert Croak:You guys are taking notes, you're taking action, you guys are taking control of your financial futures. I mean, you are doing so, so well. We'll get more into that in a second. But Robert, before we jump into that, we got to talk about the disconnect because that's where a lot of people fall, right? They fall that the disconnect between feeling and reality. Because even with these numbers, people are still feeling behind. And I think there's a few reasons for that. So half of Americans say that they're happy or even very happy with their finances. We're on the flip side. Half of Americans are living paycheck to paycheck.

12:03Robert Croak:But the thing here is, Robert, is living paycheck to paycheck doesn't automatically mean you're failing. It means your expenses equal your income, which in my instance, when I certainly was living paycheck to paycheck at 23, 24 years old, before I became an entrepreneur, it just meant I didn't have that much money to move around because I was maxing out my Roth IRA every year, right? So maybe you're someone who's contributing to their 401k, you're maxing out your Roth IRA, you're saving every single, you know, month and things like that. And you're like, Oh my gosh, I'm living paycheck to paycheck.

12:36Robert Croak:But like under the surface, once you kind of open up the hood, you see just how well you're doing. And the data backs that up. I know we've been dropping a lot of data on you guys in this episode, but it's important because facts are our friends. 72 % of young adults are actively taking steps to improve their finances. They're saving more. They're cutting their costs. They're paying down their debt. They're trying to make progress, but they don't feel like they're making the progress because they're comparing themselves to these impossible standards.

13:06Austin Hankwitz:Yeah, I remember when I was in my 30s, I was making good money, I was growing businesses, I was buying real estate, I was building wealth. But I was also very lucky because I wasn't constantly comparing myself to the barrage of highlight reels that we see nowadays on social media, like everyone now has to contend with. And I'm sure if that was the case back then for me, I might have felt uneasy as well on my wealth building journey. But going back to this, and this is one of the key points from what you just stated, is so many people, they might still be making six figures or higher six figures, but because they don't get their expenses in order because they're trying to keep up with the Joneses, that is a key takeaway that everyone needs to understand.

13:48Austin Hankwitz:What is the reality and what are the feelings? Because the reality is you're living beyond your means and that hurts your feelings, but you could fix it if If you get your affairs in order and get your debt to income and your budget in order, you can fix all of this. But this is a great distinction for people to understand.

14:05Robert Croak:Yeah, the big idea we're really trying to get across here is that feeling behind financially and actually being behind financially are not the same thing. And most people feel behind not because they're failing, but because they're using the wrong benchmarks. And your perception of your financial situation is shaped by what you see, not by what's true. and what you see is skewed in three major ways.

14:28Austin Hankwitz:Yeah, number one for me is social media highlight reels. You're comparing your full reality to other people's carefully curated illusions. And number two, survivorship bias in success stories. You hear about the viral entrepreneur, the early crypto investor, the real estate flipper who made millions, but you don't hear about the thousands of other people who tried the same thing and failed.

14:52Robert Croak:And the third major way you're skewing your benchmarks is the headlines that are everywhere focusing on economic pain, right? Credit card debt, record highs, most Americans can't afford this emergency, housing market crushes, young buyers, right? These stories are emotional. They're supposed to bring out your emotions because they need to get clicks. They get paid on clicks. They don't get paid when they say, hey, there was this guy in Montana or this woman in Nebraska that had a great retirement because she was a teacher and he was a plumber and they saved and invested 15 % of their income for the last 40 years.

15:31Robert Croak:That doesn't get headlines. But what does is the housing market is crashing and the buyers can't afford anything. So when you put these three things together, social comparison, survivorship bias, negative headlines, you get this warped perception. where it feels like everyone else is either crushing it financially or completely broke, and there's no in-between.

15:52Austin Hankwitz:Yeah, walk down the neighborhoods and see the Jeep Cherokee and the BMW in the driveway and all the cool stuff, and most of those people are broke. And that is why you have to stop comparing, live your life, live within your means, do all the right things so you can retire with wealth and financial freedom. So Austin, what do we do about this, and what can everyone do to follow along? I think it all starts with questioning the benchmarks we're using. Like if you feel behind, ask yourself behind what? Behind who? Is that benchmark even realistic? Is it based on reality or is it based on social media?

16:27Austin Hankwitz:And be honest about survivorship bias. When you see a success story, ask yourself how many people have tried the same thing and failed. When you see a headline about someone making millions, ask yourself, is that the exception or the rule? And I'm sure you'll find yourself in a much better mindset.

16:43Robert Croak:And don't forget, get grounded in your actual financial situation. Not how you feel about it, but what the numbers actually say. Are you saving money month over month, year over year? Are you reducing debt month over month, year over year? Are you making more here in 2026 than you made maybe last year in 25 or maybe even 2024? Because maybe not everyone makes more money year over year. Maybe it's a little 18, 24 months promotion, 18, 28. But are you making progress? Are you building the skills to increase your income over time throughout your career? Like you have to measure what you can control and you can control your savings.

17:22Robert Croak:You can control reducing debt. You can control your skills to make more in your career. Those are the things to focus on because if you measure those things, everything else is going to fall in order.

17:31Austin Hankwitz:And if you're actually struggling financially and you're not making progress, if you're going backwards, that's real and that needs to be addressed. But most people who feel behind aren't in that situation. They're making progress. They're doing fine. They just feel terrible about it because they're using these broken benchmarks we're talking about in this episode.

17:51Robert Croak:Robert, what an awesome episode here. I'm so grateful that we get to come back every week and share these strategies and perspectives and sort of reality checks with 100 ,000 people that tune into the show. if you're someone that is trying to figure out like, wait a second, my net worth says I have $79 ,000 to my name. I'm in my early 30s, or maybe I've got 186 ,000 to my name. I'm in my late 40s, like whatever it is, like, that's what you should be focused on, right? We talk about this all the time, which is, again, you can only control the controllables. You can't control what the stock market's doing or, you know, things like that.

18:24Robert Croak:But what you can control is that I save a little bit of money this month. Did I invest a little bit of money this month? Did I pay off a little bit of debt this month, right? Like just that's what you got to focus on because it's not the crazy crypto, real estate, tech bro, AI, like all this stuff that you see in the headlines of some guy raising all this money or some woman go buy a condo and she's building up a whole empire. Like it doesn't matter. None of that stuff affects you. You're on your own journey. You're on your own path. And the sooner you realize that you are on exactly where you need to be in your life, the better you're off you're going to be.

19:01Robert Croak:I'm exactly where I need to be. Robert's exactly where he needs to be. And you are exactly where you need to be.

19:06Austin Hankwitz:100%. I've been saying it for years. And to me, this episode really reflects a lot of what I believe in, that life and leading a financially free, mentally free and a fulfilling life is about what you do for yourself because everyone is different. Personal finance is different. Life gets in the way. We all have setbacks, but so much of the outcome is based on your mindset. And that's why we're always bringing this up. And I love this episode for that, to just give everybody a little bit of a reality check, a little bit of bump in the shoulder to get them to understand, stop worrying about the highlights, stop worrying about all the fake stuff on the internet and worry about what you can control in your own house and in your own habits and finances.