„How do you explain to someone you’re friends with that you think their way of life is bullsh*t and it’s wasting their life, and forcing them not to reach their potential?“

You don’t (or you do; there is no wrong choice, actually🙃).
Because that’s bullshit to them.
Why? Because they’re not equipped with ‘the tools’ to understand.
They need to get there themselves, by experiencing it.

It’s also a good question how to explain to yourself (and accept) that it’s not. It’s the learning process we all have to go through.

When passing the driver’s exam, do you tell yourself your driving is bullshit?
It is, but you need support, not honking and calling it bullshit.