- This is what a $25 million-a-year salary looks like versus a $25,000-a-year salary.

About 20% of Americans live on this amount of money or less. I want to show you the lifestyles of people who make this much money versus this much money and everything in between.

The reason I want to look at these differences is because of this graph. It's going up, which is a problem.

Let's start with $25,000 a year. All right, so let's say my name is George. I live in Atlanta, Georgia.

I am single and I have no kids, and I'm looking for a job. After some searching, I found this job as a security guard at a TV studio in downtown Atlanta.

It'll pay me $12.50 an hour, which is quite a bit more than the minimum wage of $7.25 an hour.

Let's assume I work 40 hours a week, and I work every week except two that I set aside for holidays, sickness, and vacation.

This means I make $25,000 a year. At this level, around 29% of Americans earn as much or less than me.

So how will I spend it? This comes out to be just over $2,000 a month that I have to spend.

I've got to pay taxes. That brings me down to $1,764 to live on this month.

To calculate this next part for this income and all of the incomes we're looking at, I used some data from the US Bureau of Labor Statistics that shows that people in this income bracket spend about 41% of their pre-tax income on housing.

I've got about $850 for all my housing expenses.

That's nearly half my after-tax budget. I'll definitely be renting instead of owning a house at this budget. A lot of landlords these days require you to earn three times more than monthly rent.

So I'm probably gonna need roommates if I'm gonna get approved for an apartment.

All right, let's look at Craigslist. I really can't afford to live downtown, so I'm gonna look in the outskirts.

And I found this place right outside the city. This is gonna work, and it's within my budget for rent and utilities.

So how am I gonna get to my job, which is in downtown Atlanta, that's 20 minutes away from where I live?

And like most American cities, there's not great public transportation here, so I'm gonna need to have a car.

Let's just say in this assumption—and it's kind of a big assumption—that I already have a car, and let's assume it's this car.

It's a 2004 Toyota Solara that I got on Facebook Marketplace. Lower-income Americans spend more of their income for transportation than any other segment of the population.

The data we'll use says about 15% of pre-tax income is spent on transportation.

So that's $313 for gas, insurance, parking, and saving up for maintenance and repairs.

We gotta be pretty careful about how much extra driving we do and hope that no big maintenance issues arise. According to this BLS data, I spend about 15% of my income on food that includes both groceries and eating out.

A lot of people think that this income bracket just goes to McDonald's all the time, but the reality is, the average order amount at McDonald's is between 7 and $8.

So that will not get me through the month. That will get me through 13 days worth of food. So I gotta go to the grocery store.

Unfortunately, in most lower-income areas in this country, there aren't a ton of grocery stores, and the ones that are available are much less likely to carry fresh produce or other nutritious food.

So I'm gonna see what I can do by stocking up on beans and rice, peanut butter and jelly, Wonder Bread, Top Ramen, freezer meals.

For fresh options, I'll be looking at potatoes and some of the cheaper produce.

And no eating out, or rarely, occasionally on special occasions eating out. If I do, I'll be looking at the value menu at a fast food restaurant.

I'll be looking for discounts, checking every price in the convenience store. Okay, but wait, don't I get government assistance for food, like food stamps?

So from my research, I can see that to get government assistance, I need my savings account to be less than $2,000.

Check. My income needs to be lower than $19,578, and I make $25,000. So nope, I don't qualify.

Okay, so we've covered our basic needs of housing, food, and transportation, but I still have a lot of expenses.

We hear a lot about healthcare being a massive personal cost in the US, but what does that actually look like? Georgia's Medicaid website says that I qualify for government help, but even with that, I will be paying around 10% of my income on health-related expenses like medicine, doctor visits, getting care that isn't covered by this government insurance.

This is one of the reasons why people in my income bracket live around seven years less than the richest Americans.

After all these main expenses, I'm left with a small amount of money for everything else, and there's a lot more that I need to spend just to live: laundry, internet connection, cell phone.

Conservatively, that adds up to $105, not taking into account the overcharges and hidden fees. Like, you're starting to see what's happening here.

This doesn't add up. Entertainment, fitness, and travel just isn't feasible. I have no emergency savings, no rainy day fund, and live in stress of an unexpected car repair, a health emergency.

Any of these unexpected charges could be a major setback.

I'm probably going to have to join the huge number of Americans that rely on debt to get through the month, whether that's credit card debt or short-term loans with high interest rates.

Maybe I'll need to move back in with my parents or take on a second job.

Maybe I'll start driving Uber or DoorDash. But what's clear is that my full-time job, which pays much more than the minimum wage, is still not enough to make it through the month.

I'm going to pause the video really quick. I'm excited about the sponsor of today's video.

It's the first time they're sponsoring a video, and it is Headspace. I started using Headspace over a decade ago when I was at college and I was first getting into meditation, and I love it.

Headspace is an app, but it's also just a general guide for people who want to get into meditation but don't know how, which is what I was 10 years ago when I was starting my journey of meditation.

First, let me tell you why meditation is important in my life.

I find that our minds are like muscles. They're like something that can be trained and reshaped. Meditation is kind of like exercise for that muscle.

It helps you retrain and reshape how your brain works, and there's no spiritual or religious requirement to any of this.

Good meditation and mindfulness are simply a practice that brings more peace into your life. Headspace is a platform, a community, and a guide that teaches you how to do this.

It guides you through meditations. The platform has a huge number of guided meditations, also has this really cool feature where in the morning it will prompt you to watch like a very peaceful, thought-provoking video that will sort of ground you and give you perspective for the day, all done in this really beautiful animation aesthetic, which I'm super into.

For me, Headspace took meditation out of like the new age, kind of like hippie spirituality and into like a very accessible, very grounded guided approach.

And by the way, mindfulness meditation has a very, very strong basis of scientific evidence to be very effective in promoting a healthy mind and even treating things like depression and anxiety.

Something I've actually thought about making a whole video on. Studies have shown that using Headspace for 30 days can reduce your stress by 32%.

For now, I want to tell you that Headspace is offering 60 days.

It's like two months for free to anyone who uses my link. It's down in the description. There's also a QR code here on screen.

So go try Headspace out for free for 60 days. See if it's a helpful addition to your life.

Thank you, Headspace, for sponsoring today's video, supporting our journalism. And with that, let's get onto the next income tier.

Alright, now let's see what we can do with $40,000 a year. Now, my name is Simon.

I am the representative of the median American income of a single earner. I make $40,000 a year as an event coordinator at a country club in Atlanta.

My $40,000 salary gives me just over $3,000 a month.

After federal and state taxes, I'm left with just under $2,700. Using that same data set, my budget for housing is $1,133.

I'm kind of filling this one-bedroom house. Let's say between rent for this house and my utilities, I'm paying $1,133 for my monthly housing expenses.

The country club is kind of far from my house, and because there's no public transportation, I'm going to need a car.

I saved up and purchased this 2011 Subaru Forester on Facebook Marketplace. I got it for $4,500.

So, like George, I spend about $136 a month just on gas to get to my job. This leaves me with a little over $400 for everything else.

Guy's gotta eat. What am I going to do for food? According to the BLS data, someone like me spends around $467 a month on food.

I typically spend about $100 a week on groceries and can use the rest on a dinner out or two. I've got a Kroger grocery store four minutes away from my house.

And at this point, I'm definitely cognizant of every price on these shelves. I'm using coupons, trying to get the best deal, but I have leeway to spend a little bit more on maybe a decent cut of meat or some fresh produce.

Maybe I buy organic every once in a while. I can comfortably feed myself if I'm smart about how I spend and I don't eat out too much.

This income level is right on the threshold where employers start to sponsor your healthcare plan, they start to subsidize it.

That's a thing here in America, and luckily my employer does, but even still, I spend $300 a month on health, medicine, out-of-pocket doctors, pre-deductible expenses, and now I get to pay for a gym.

I signed up for this low-cost gym for 10 bucks a month.

So after covering these basic needs, I have $231 left for everything else. All of my other essentials: laundry, cell phone, internet brings me down to $126.

I will try to put some of this away for an emergency or a trip, put it into a savings account with a good interest rate so it'll grow over time.

But to be honest, I'm probably gonna spend this on entertainment. Like, I want to go out and have fun.

I want to go to a movie. I want to subscribe to Hulu and Netflix. I might buy a book, might go out with some friends, and after all of that, I end up around zero.

So all in all, I'm doing better than George, but not that much better.

I've got some money left over at the end of the month, but an emergency expense would still leave me in debt.

All right, let's up this to 100 grand a year and see what our budget looks like. Okay, now I'm Tim, and I just found this job in sales.

It makes me $100,000 a year. I'm officially in the six figures. I make four times more than George and double the median income that Simon makes.

I'm now near the top 10% of earners in this country.

My salary gives me $8,333 every month. $2,200 of that is going to go to taxes, and I'm left with just over six grand.

In this income bracket, you see that people spend around 30% of their income on housing. Until recently, this salary would've been more than enough to buy a house, but these days not so much.

But for the case of our assumption, let's assume that I, Tim, have been saving for 10 years and I'm finally ready to purchase my first home.

Zillow is telling me that I can afford a house that's around $314,000.

I'm going to buy this nice one-bedroom townhouse in Atlanta. It's got these nice wood floors, all of this natural light.

Oh wait, no. Looks like there's a condo fee, $426 per month, probably for that fancy workout room.

Okay, we're going to have to keep looking. Okay, I found one. It's a one-bedroom condo.

It's got a fireplace, access to a pool and a fitness room. It's in a pretty good location and it's just under $260,000.

With the condo fee, I'll be paying around $2,700 per month, which is about 32% of my income for housing.

I get to spend more on housing than George and Simon make in a month. Oh, and by the way, I will have to cough up $20,000, which is my whole savings for a 5% down payment and closing cost to make this house purchase.

Thanks to my good credit, I can qualify for a good car loan that allows me to buy this beauty, a $50,000 BMW.

It'll cost me $754 a month for five years, and it will leave me with $579 every month to spend on gas, repairs, and insurance.

I'm even starting to be able to afford to bring it to a professional car wash place, get it detailed every couple months.

I am upper middle class now, so I only have to pay 11% of my income on food per month just to feed myself.

When I'm at the grocery store, I get to peruse the fresh and nutritious food much more abundantly. I can buy nice meat and nice produce.

I'm not overly concerned about the prices. And lately, since meal delivery apps have become more common, I'm ordering DoorDash like once or twice a week.

I'm starting to be able to use money to save myself time and stress. My job pays for a lot of my health insurance, and yet, I still pay $500 a month on health, medicine and these kind of expensive supplements I've been buying.

$25,000 vs. $25,000,000

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