9 Middle-Class Money Traps That Keep You From Being Wealthy
9 Middle-Class Money Traps That Keep You From Being Wealthy
August 19, 2023 By Angela Mae
According to the Pew Research Center, approximately half of all American households are considered to be part of the middle class. This equates to roughly 165 million people. Typically, people in the middle class have some kind of college education, some disposable income, and may even be planning for retirement. But that doesn’t mean they’re financially stable.
In fact, middle class households usually have some kind of debt — like a mortgage, auto loan or credit cards — that they need to pay off. Along with this, these individuals are also still subject to many common financial pitfalls, or money traps, that keep them from achieving true wealth.
If you’re in the middle class and want to become financially independent or wealthy, here are some financial decisions or behaviors that might be keeping you from achieving this goal.
Trying To Keep Up With the Joneses
The “middle-class money trap is being on the hamster wheel of life,” said Sebastian Jania, owner of Manitoba Property Buyers. “This is doing things such as buying cars that depreciate over time, taking on student debt for a degree that doesn’t have a solid financial future, or buying a property that one simply shouldn’t be buying because it’s too expensive. This is all commonly referred to ‘keeping up with the Joneses.'”
Societal influence and pressure are very real concerns for many people, ones that often lead to extravagant purchases just to keep up appearances. The problem with this is that it can lead to a cycle of debt and overspending. When this happens, it can be harder to achieve long-term financial goals, invest in the future or build wealth.
Spending Without Saving or Investing
“A common middle class money trap is spending all or more than your income without saving anything that will allow you to make investments that generate wealth, such as a home,” said John Bodrozic, co-founder of HomeZada.
“For the middle class who are homeowners,” Bodrozic added, “the money trap is neglecting maintenance, repairs, and obvious remodeling and improvement opportunities, or mismanaging your home from a financial perspective, that will prevent you from growing your investment and may even lower home values and your equity.”
Settling for the Status Quo
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