The middle class makes up half of the American population, with the majority earning an average income of $40,000-$120,000 annually. While this amount is enough to sustain an American lifestyle and even build wealth, you’ll be surprised that most individuals in the middle class are living from paycheck to paycheck and have nothing left to save or invest.
Here are 12 things the middle class spends a lot of money on that hurt their chances of being rich.
Premium Cable Packages
While frugal people prefer to watch less TV and subscribe to expensive packages, the middle class falls into the trap of premium cable packages. Multiple premium cable subscriptions can accumulate quickly, leaving many unused monthly subscriptions. Unfortunately, having premium cable packages can amount to hundreds of dollars annually.
Review your subscriptions and cancel those that don’t add any value. That money can go into investments that will help you build wealth.
Extravagant Entertainment
For middle-class families, regularly engaging in extravagant entertainment like going to movies, concerts, and other recreational activities is a perfect way to spend money. However, these entertainment options can be costly and hinder wealth accumulation. Opting for free or affordable entertainment options like going to the park, hosting a game night at home, hiking, or setting up a picnic at home saves money that could go into income-generating activity.
Paying Premium for Designer Brands
The middle class spends money on designer brands to achieve a certain status in society, while others feel some sense of accomplishment with the supposed quality of goods. Buying luxury designer products can create a lot of financial burden and lead to debt. To build wealth, consider switching to less-known brands with quality craftsmanship and longevity.
Frequent Dining Out
Frequently eating out is bad for your health and can also be detrimental to your wallet. Most middle-class view dining out as part of their lifestyle, a habit that can quickly lead to substantial amounts over time. A meal plan and preparing home-cooked meals can be a healthier option and help you save money.
Leasing Luxury Vehicles
Driving a luxurious vehicle is a symbol of affluence for the middle class. However, succumbing to lifestyle inflation by leasing luxury vehicles only burdens you with high interest and frequent payments. Getting a cheaper, reliable vehicle can save significant money and help you achieve your financial goals.
High-Interest Debt
Some people in the middle-class income bracket finance some of their luxuries through loans and credit cards. Unfortunately, acquiring high-interest debt without a clear repayment plan can lead to prolonged financial stress and significant interest payments. Avoid taking on new debt and wasting money on non-essentials. Use that money to invest to build wealth over time.
Luxury Beauty Products
It’s tempting to purchase the latest high-end beauty products and cosmetics due to their alluring marketing. While most of these products claim to reverse signs of aging or give you a flawless look, research shows that most are unrealistic claims, and the products are not superior to cheaper alternatives. Avoid falling into this trap and instead opt for affordable beauty products that give you value for money.
Extravagant Gifts
The middle class spends lots of money on expensive gifts for close friends and relatives. While spending money on extravagant gifts may seem like a kind gesture, it can quickly strain your finances. Prioritizing your finances by budgeting for gifts allows you to manage expenses and save money.
Luxury Spa Treatments
Middle-class consumers frequently spend their money on luxury spa treatments. Although self-care is essential, opting for expensive spa treatments can be costly and strain your finances. You can maintain a financial balance by occasionally splurging on a spa treatment or considering more affordable self-care ideas like having at-home mani-pedi, soaking in a bath, and taking the day off to relax and unwind.
Latest Trendy Electronics
Smartphone companies constantly roll out new gadgets yearly with the alluring claims of better technology and unique features. The middle class often rushes to upgrade to the latest gadget to maintain their social status. However, this can quickly drain finances and lead to financial strain.
Assess your actual needs and determine if you need to upgrade. That will help you cut back on unnecessary expenses.
Expensive Gym Membership
Although fitness is essential, it comes at a higher price tag for the middle class. You’ll find them in the latest trendiest gym or with the most famous celebrity trainer. These gym memberships are expensive and offer more or the same benefits over affordable options.
Opting for budget-friendly alternatives or working out at home can help you maintain financial stability and enjoy the health benefits of being fit.
Lavish and Frequent Vacations
The middle class desires to maintain a particular lifestyle by going for lavish and frequent vacations. However, these vacations can have steep prices and lead to financial constraints. Consider budget-friendly travel options and packages to help you maintain a financial balance.
Finding Balance
While being in the middle class may signify financial stability, it’s also a tricky balance for most people who try to maintain social status and save money. Avoiding spending money on trendy electronics, expensive vacations, cable packages, and other unnecessary expenses can help you achieve your financial goals and build wealth.
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