4 Spending Habits the Middle Class Should Avoid in 2024
Written by
Cynthia Measom
Edited by
Chris Cluff
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Poor spending habits are not uncommon. One-third of Americans report spending more than they can afford each month, according to a recent Wells Fargo Money Study. And 28% admitted that their money controls them instead of them controlling it.
People who are considered middle class earn enough to improve their financial positions. But overspending and not taking control of their finances won’t help them build wealth.
These are the spending habits middle-class individuals should avoid if they want to build wealth, according to financial experts.
Trying To ‘Keep Up With the Joneses’
Keisha Blair, a Harvard-trained policy expert and economist, founder of the Institute on Holistic Wealth and host of the Holistic Wealth podcast, said social comparisons and pressures to maintain a certain type of lifestyle can fuel overspending.
“It’s essential to differentiate between genuine needs and aspirational desires,” Blair said. “Focusing on personal financial goals rather than external benchmarks promotes a healthier relationship with money.”
Living Beyond One’s Means
Michael Ryan, a financial expert with over 25 years of hands-on experience as a financial planner, said the most detrimental mistake he sees is living beyond one’s means through excessive spending on housing, vehicles, dining out and other discretionary luxuries.
“This ‘buy now, worry later’ mentality fueled by credit card debt and lack of budgeting is a surefire path to financial ruin,” he said. “You simply cannot build wealth while hemorrhaging money on wants rather than prioritizing needs.”
Impulse Purchasing
“Another insidious trap is impulse purchasing — those unplanned, emotionally driven purchases that provide a fleeting high but no lasting value,” Ryan explained. “I caution clients to implement cooling off periods of 24-48 hours before making any unbudgeted purchase over $100.”
Ryan said this strategy helps reduce impulsivity.
Not Paying Yourself First
“Neglecting to pay yourself first through consistent saving and investing is equally damaging,” Ryan said. “Building wealth through dollar cost averaging and compound growth should be the top priority after covering basic living expenses. No excuses — automatically funnel funds into tax-advantaged retirement accounts and investment vehicles from every single paycheck.”
Why Do People Overspend?
True Tamplin, a certified educator in personal finance and founder of Finance Strategists, said middle-class individuals often fall into the trap of what he calls “low-mood spending,” which means they purchase items not because they truly need them but for a fleeting dopamine rush or to momentarily boost their moods.
“Such spending habits manifest in various ways, from indulging in takeout, splurging on new clothes, decorating homes, acquiring tools, to buying alcohol, electronic games, hobby-related items, gym equipment, vacations, candles, or plants,” Tamplin explained. “The core issue with these expenditures is the short-lived happiness they bring, leading to a cycle of continuous buying in pursuit of fleeting satisfaction.”
How Do Wealthy People’s Spending Habits Compare?
Ryan said his wealthiest clients practice mindful consumption rather than mindless spending.
“They diligently track expenditures, distinguish wants from needs, prepare for unplanned expenses through emergency funds and make their money work smarter through diversified, tax-efficient investing strategies,” he said. “Asset allocation, loss harvesting and proper estate planning are just a few advanced tactics they utilize.”
How To Avoid Making Middle-Class Spending Mistakes
The cold, hard truth, according to Ryan, is this: “If you struggle with consumer debt, lack an adequate safety net of three to six months’ of expenses, spend more than you make or cannot articulate a clear retirement plan, you are making one or more of these detrimental financial mistakes. The antidote requires consistent discipline, patience, planning and education.”
Ryan said you can start by making an honest assessment of your spending leaks and creating a balanced budget that aligns with your financial goals and values.
“Pay off consumer debt, build emergency reserves — then maximize retirement contributions through automated plans,” he said. “Embrace a commitment to lifelong financial literacy. Seek professional guidance from a fiduciary advisor, read extensively and hold yourself accountable.
“The path to middle-class wealth may not be rapid or sexy, but steadily fixing spending habits while implementing prudent strategies like asset allocation and tax planning will ensure you achieve financial peace of mind.”
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