5 Wealth Killers Most People Ignore, According to Vincent Chan
Vincent Chan, a popular financial influencer with nearly 1 million subscribers on YouTube, highlighted some overlooked money drains in a video called “The 5.5 Wealth Killers No One Talks About.”
In his video, he shared several purchases and decisions that could be preventing people from building wealth. He also offered strategies and tips for making big purchases, like houses and cars.
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Viewers who watch his video or read the advice below should leave with a solid understanding of how to make big life decisions and purchases that can impact them for a lifetime.
Cars
Cars have become incredibly expensive to own. In fact, the average new car payment is now $806 per month, according to a April report from JD Power. As Chan pointed out, cars also significantly depreciate in value. He explains that in just the first year, new cars lose 20% of their value.
There are some tactics consumers can use to purchase a car the smart way. Chan advised following what he calls the 20/4/10 rule, which is to make a 20% down payment for four years. Additionally, he said car expenses should not exceed 10% of a person’s monthly income.
Consumers should also consider buying used to avoid the initial depreciation new cars experience, and to avoid rolling negative equity into a new loan.
Divorce
While no one wants to think about divorce, it’s a good idea for people to understand early on that their choice in a partner affects their long-term wealth-building goals. People should consider signing a prenuptial agreement before getting married to protect any assets they have before getting married.
Divorces cost, on average, just under $20,000 per couple, according to data cited by Self. That, combined with a loss of assets, can be a big wealth killer.
High-Interest Debt
According to Federal Reserve data, the average credit card interest rate as of Q4 2024 was over 21.47%. This high interest rate can make it incredibly difficult for consumers to get out of debt and have enough cash flow to invest.
One tactic to eliminate high-interest debt is to consolidate it. Consumers can apply for a balance transfer card that has a 0% introductory APR for a set term. This can help them to pay down the principle much faster. Alternatively, consumers can apply for a personal loan with a lower interest rate, and use funds from the personal loan to pay off their credit card debt.
Houses
Houses are supposed to be the American dream, but many people don’t realize just how expensive homeownership can be. A 2024 Harvard University report claimed the number of households that were “cost-burdened” — meaning their housing costs made up more than 30% of their income — grew by 3 million between 2019 and 2022 to a whopping 19.7 million.
That means that for millions of people, their home is unaffordable and prevents them from building wealth. Although many financial experts agree that owning a home is a worthwhile investment, it’s not worthwhile if owning it negatively affects someone’s quality of life.
In order to avoid this wealth killer, Chan said to run the numbers before buying a home. Potential homebuyers should wait until they can fulfill what Chan calls the 28/36/20 rule, which means people shouldn’t put more than 28% of their monthly income towards housing. Then, they should make sure all their debt payments combined are less than 36% of their income. Finally, Chan recommended people save 20% for a down payment.
Procrastination
At the end of the video, Chan reminded his viewers that procrastination is also a wealth killer. Every time people delay saving or investing, they lose out on potential growth in the future. The earlier someone starts investing, the better, thanks to the wonders of compound interest.
Chan reminded his viewers that they can start small and automate their investments to make progress easier.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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