10 Cash Flow Mistakes the Middle Class Is Making That Prevent Them From Becoming Upper Class
Written by
Cindy Lamothe
Edited by
Zuri Anderson
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A lot of people in the middle class feel like they’re just one step away from breaking into the upper class but can’t quite get there.
And honestly, a lot of it comes down to a few cash flow mistakes that are holding them back.
These are simple things we don’t always think about, but they can make a huge difference in how fast we build wealth.
Here’s a look at the top cash flow mistakes that might be stopping you from leveling up financially — and how to fix them.
You Treat Your Salary Like Your Spending Limit
Andrew Lokenauth, money expert and owner of BeFluentInFinance has spent years helping middle-class families manage their money, and there’s one mistake he sees constantly — they’re treating their salary like their spending limit.
“Last month, I worked with a client who made $85,000 but spent nearly every dollar,” he said. “That’s just not gonna cut it if you want to build real wealth.”
You’re Mishandling Your Paycheck Timing
The biggest issue Lokenauth notices is how people handle their paycheck timing.
“They’re living in this paycheck-to-paycheck cycle, even on decent salaries,” he noted.
Lokenauth said he personally made this mistake early in his career. His money would hit his account and — poof — it was gone within days.
The thing is, wealthy people think differently — they immediately move money to investments before touching a cent.
You’re Dumping Money into Depreciating Assets
According to Lokenauth, one thing that drives him nuts is watching middle-class folks dump money into depreciating assets.
“They’re financing new cars, buying the latest phones and upgrading appliances they don’t need,” he said.
Lokenauth had a client drop $45,000 on a new SUV when their perfectly good car only had 60,000 miles.
That’s $45,000 that could’ve been generating returns in the market.
You’re Keeping Too Much Money in Traditional Savings Accounts
“Don’t even get me started on the emergency fund situation,” said Lokenauth.
He explained that most middle-class people he works with keep way too much sitting in checking accounts earning 0.01% interest.
“Seriously, it hurts to see. They’re paranoid about having enough cash — which I get — but keeping [over] $30,000 in checking is just watching money lose value to inflation,” Lokenauth explained.
Whereas, high-yield savings accounts offer better interest rates than regular ones, helping to offset some of the loss in purchasing power due to inflation.
You’re Stuck in the Employee Mindset
One pattern Lokenauth has noticed with successful people who’ve broken into the upper class: They treat their businesses and side hustles as their primary income and their salary as bonus money.
But most middle-class workers are stuck in the employee mindset, limiting themselves to trading time for money.
You Misunderstand Good vs. Bad Debt
The middle class also tends to misunderstand good versus bad debt.
Lokenauth said they’ll avoid investing because they’re focused on paying off low-interest mortgages early, while simultaneously carrying $15,000 in credit card debt at 22% interest.
“It makes me want to bang my head against the wall,” he said.
You’re Overspending on Credit Cards for Points and Rewards
Speaking of credit cards — the points and rewards obsession is real, said Lokenauth.
He’s watched countless people justify unnecessary purchases because they’re “getting 3% cash back.”
The math just doesn’t work out, he added. They’re spending $1,000 to save $30, then wondering why they can’t build wealth.
You’re Not Automating Your Savings and Investments
A massive issue Lokenauth sees is the failure to automate savings and investments.
Most middle-class folks are still manually transferring money when they “have extra.”
“Spoiler alert: They never do,” Lokenauth said. “My wealthiest clients have systems that automatically move money before they can touch it.”
You’re Deep in Lifestyle Creep
The middle class also has this weird relationship with lifestyle creep. According to Lokenauth, every raise turns into a bigger house or fancier car.
He did this himself — got a $10,000 raise and immediately upgraded apartments. Now he realizes that was pure insanity.
Lokenauth observed that the key to building wealth is keeping expenses flat while income grows.
Poor Cash Flow Management Is Your Greatest Nemesis
“But honestly, the root of all these mistakes comes down to cash flow management,” said Lokenauth.
He explained that the middle class typically monitors their money monthly, while the wealthy track it daily.
“They’re reactive instead of proactive, always playing catch-up instead of planning ahead,” Lokenauth remarked. “That’s why I now check my accounts every morning with coffee — it’s completely changed my financial game.”
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