6 Middle-Class Money Mistakes To Overcome in 2024
Written by
Martin Dasko
Edited by
Chris Cluff
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Certain money mistakes become standard over time, and we may not even realize we’re making them. The goal is to be self-aware enough to notice when you’re making a mistake so you can resolve it.
If you’re in the middle class, defined as making anywhere from about $50,000 to $150,000, your dollar does not go as far as it used to. That makes financial planning more important than ever.
With that in mind, here are six middle-class money mistakes you should try to avoid in 2024.
Also see five things middle-class people typically cannot afford.
Mistake #1: Falling Into the Lifestyle Inflation Trap
“When you start earning more, it’s tempting to spend more on certain luxuries, like a bigger house or a fancier car,” said Jeff Rose, a certified financial planner and founder of Good Financial Cents. “But this can lead to serious debt. It’s smarter to keep living within your means, even as your paycheck grows. Focus on saving, clearing debts and building that emergency fund.”
Lifestyle inflation is a common trap for the middle class because as soon as your income increases, you’ll likely want to upgrade your standard of living. You could easily end up living above your means since it’s difficult to control yourself once you start making certain upgrades.
“One of the biggest financial mistakes anyone can make in any type of economic situation is to live above their means,” said Erika Kullberg, a personal finance/debt expert and founder of Erika.com. “Spending more than you can afford is especially easy to do when you’re in the middle class. Because you are comfortable financially, it’s easy to slip up and let impulse or luxury purchases ruin your budget.”
How can you combat this mistake?
It’s critical that you pay attention to your spending as your income increases. You want to continue allocating money toward your emergency fund so you can protect yourself in the future.
Mistake #2: Staying Put in Your Job
“Sticking with the same job and settling for small annual raises can hold you back,” Rose said. “People who switch jobs often see salary bumps between 10% to 20%, way more than the usual 3% raise. So, don’t be afraid to look for new opportunities or push for promotions.”
Staying in one job is a common middle-class money mistake because it’s easy to get comfortable with your paycheck and position. However, if you don’t make career changes, you’ll be leaving money on the table.
How can you avoid this mistake?
The goal is to hold yourself accountable so you don’t become too complacent in any role you work in. You want to ensure that you update your resume and LinkedIn accounts often so you’re always evolving and moving up in your career.
Mistake #3: Not Saving Consistently
“Saving early and regularly for retirement is huge if you want to enjoy your golden years,” Rose said. “Thanks to compounding, the sooner you start, the more you’ll have down the road. For example, a 30-year-old saving $10,000 yearly in a 401(k) could have over $1.2 million by retirement, compared to just over $494,000 for a 40-year-old starting the same habit.”
If you don’t save consistently, you won’t get to reap the benefits of compound interest.
“Keeping up with the Joneses is a cliche but for a reason,” Kullberg said. “Many people struggle to regulate their spending habits due to feeling they need to keep up with their friends, neighbors, co-workers and other members of their community.”
How can you overcome this mistake?
You have to make saving money a priority by setting clear financial targets so you stay focused. You also want to ignore what others are doing so you stay on track with your own journey.
Mistake #4: Not Investing Enough
“The more you spend now on unnecessary or extravagant purchases, the less money you have to leverage toward your financial goals,” Kullberg said. “Saving and investing money can help it grow and can make saving for retirement or buying a home so much easier.”
If you don’t invest or if you remain on the sideline because you’re worried about the market, then you’ll miss out on investment opportunities in 2024.
How can you have more money to invest?
The best way to overcome this mistake is to prioritize investing by putting any additional funds toward your future.
Kullberg concluded with this advice: “Every time you are on the fence about whether or not you need to spend money, it can be helpful to think about what that money could do for you if you don’t spend it.”
Mistake #5: Trying To Do Everything DIY
As you try to save money, it’s easy to get caught in the trap where you try to do everything on your own. Trying to do everything DIY around the house is a common middle-class mistake since it’s tempting to look for ways to cut costs. However, you could find yourself spending more money if something goes wrong and you’re taking energy away from other tasks.
How can you avoid this mistake?
You must know when to complete a task on your own and when you should outsource it to a professional. You don’t want to divert your attention from focusing on tasks that matter and could bring in more income for you.
Mistake #6: Not Diversifying Your Income
The last few years have shown that you can’t rely on one income stream because you never know what life can throw at you. Relying on one income source is a middle-class money mistake that could hurt you in the future if something happens with your job.
How can you overcome this middle-class mistake?
The best way to avoid this problem is to create multiple streams of income. You can look into different side hustle ideas, real estate opportunities and even consider freelance work to ensure you’ll always have money coming in.
The Bottom Line
Financial planning isn’t just for the rich. If you’re in the middle class, these are common money mistakes that you’ll want to overcome in 2024. You can spot these mistakes and begin working on them immediately so they don’t continue to hurt your financial planning.
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