6 Steps To Escape the Middle Class
If you are a family of three making between $53,413-$106,827, you may be firmly rooted in the middle class. Today, living in the middle class usually means working a 9 to 5, grinding away week after week. Unlike past generations, a middle-class income may not be enough to retire on and certainly may not be enough to build wealth.
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Whether you want to quit your morning commute or are eager to travel the world, there are several ways to stop living paycheck to paycheck. By following a few easy steps you can achieve next-level success and, perhaps, even find financial freedom.
Here are six steps our experts recommend to escape the middle class.
Create a ‘Goal-Focused Financial Plan’
“Creating a goal-focused financial plan is the first step to achieving success and escaping the middle class. This plan should include attainable, measurable goals such as saving for retirement or paying off debt,” said Steve Rose, founder & CEO of MoneyTransfers.com.
“Additionally, you should use budgeting tools and track your finances regularly to make sure you are staying on track.”
By doing all this, you’ll be able to make sure your money is working toward your goal of getting out of the middle class.
Get on Budget
“A budget is the foundation of any financial plan. It’s essential to track your income and expenses to identify areas where you can cut costs and put more money toward your financial goals. Think of your budget as a map that guides you toward financial success,” said Michael Ryan, a financial coach and author of the financial literacy website MichaelRyanMoney.com.
And don’t feel trapped by the budget you create, they are meant to adjust as needed when your financial needs change.
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Establish an Emergency Fund
“An emergency fund can help you weather unexpected financial storms, such as job loss or a medical emergency. Strive to save three to six months’ worth of living expenses in a separate savings account,” Ryan said.
Jay Zigmont, PhD, CFP®, founder of Childfree Wealth, concurs, suggesting, “Save 3-6 months of your expenses as an emergency fund. If your income is more variable or you run your own business, lean towards 6 months, and if your job is more stable, you might be able to have 3 months. Keep this money in a High Yield Savings Account.”
Consider a Side Hustle
“Taking on a side hustle can be a great way to generate additional income and build wealth. Pick something you are passionate about or that has the potential to increase your earning power. This could include freelance writing, tutoring, photography, consulting, or even starting an online business,” Rose said.
Shawn Breyer, the owner of The Hive Law, agrees, “To begin building wealth, you can start a side hustle in your spare time. This could be anything from freelancing to creating a product or service that solves a problem for others. The goal is to create a business that can eventually replace your current income.”
Whether you have a lot of free time or just a little, there is a side hustle out there for just about every situation.
Invest In Yourself and Your Future
“Once you have a successful business, it’s important to start investing in assets that can generate passive income. This might include real estate, stocks, or other investments that can provide a steady stream of income without requiring your active involvement,” Breyer said.
Ryan adds, “If your employer offers a 401(k) or other retirement plan, make sure you’re contributing enough to take full advantage of any employer match. Investing in your retirement early and consistently can help you build wealth over time.”
He also agrees in investing in assets that appreciate over time, “Assets such as real estate, stocks, and mutual funds can appreciate over time and help you build wealth. Consider working with a financial planner to identify the best investment options for your financial goals and risk tolerance.”
Pay Off Debt
“High levels of debt can hold you back from achieving financial freedom. Focus on paying off high-interest debt first, then work to eliminate other debts. This can help you save money on interest and put more of your income toward building wealth,” Ryan said. “To put it simply, achieving financial freedom is like climbing a mountain. You need to start at the bottom, take small steps, and stay focused on the summit. It may not be easy, but with the right guidance and persistence, you can achieve your financial goals and escape the middle class.”
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