5 Money Worries That Hold Back the Middle Class from Becoming Upper Class
Written by
Cara Danielle Brown
Edited by
Zuri Anderson
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Nowadays, social mobility can feel akin to endlessly climbing up a down escalator — especially for the middle class.
Certified financial planner, Stoy Hall, put it best: “The system is not built for the middle class to level up. It’s built to keep them in a loop of just enough stability to keep chasing the dream — but never quite catching it.”
With the deck stacked against them, the middle class are bound to feel beaten down. And while many of their hardships are grounded in reality, some of the resulting helplessness becomes internalized. As senior consultant at Nextpins, Lucia Lu, explained, sometimes the issue stops being about money and starts being about mindset.
Here are five money worries holding back the middle class from reaching upper class status.
Fear of Losing Stability
Stuck in survival mode, the middle class is often afraid to take a risk and fail because it could mean losing everything they’ve worked hard for. They don’t have a financial cushion to fall back on.
“When you finally reach a place where your bills are paid, you’ve got health insurance and maybe a little savings, the last thing you want to do is blow it all chasing a bigger dream,” stated Hall.
As a result, individuals settle for “good enough,” choosing not to leave a toxic job or start that new business venture. Safety becomes more enticing if financial growth comes with the possibility of complete destruction. And who could blame them?
Deficiency in Financial Literacy
While not a universal truth of middle-class individuals, many are in fact in the middle class because they remain constrained by their lack of financial knowledge and good decision-making. When it comes to leveling up, a salary bump is only as good as one’s knowing what to do (or not do) with that extra money.
Unfortunately, many individuals remain uneducated because not only does learning about money feel foreign and overwhelming, but knowing whose advice to listen to gets complicated in a landscape of unqualified finfluencers. So, they never really start the process of learning about money. This makes them vulnerable to financial scams and fraud, as well as making hasty decisions based on short-term gain rather than long-term growth.
Keeping Up with the Joneses
Living beyond one’s means is something many middle-class families fall victim to in a futile attempt to keep pace with flashy and successful peers.
After all, social pressure is real. And who wants to say they’re the poor family that has a used car and rent an apartment when all their fancy friends own new cars and expensive homes? So credit card debt and mortgages it is!
Unfortunately, those flashy peers may be cash poor. As Lu explained, the true upper class generally lives below their means and concentrates on putting their money toward investments and other money-making endeavors. Wealth simply isn’t flashy.
As Hall explained, lifestyle inflation can choke the middle class. Even if they get a raise, they spend it trying to keep up with others: “they never get a chance to invest the difference–because there isn’t one.”
Prioritizing Income Over Assets
Those stuck in the middle class are often on a hamster wheel figuring out how to generate more and more income without considering how to acquire assets. But money is essentially static in value (and may even decrease over time as a result of inflation); assets will continue to appreciate over time.
Passive income is one of the largest drivers of wealth for the upper class — and passive income is the result of assets. Unfortunately, many in the middle class are doing more work yet earning less money by failing to strategize effectively.
Lu advised shifting perspective: Divert some energy away from one’s paycheck and toward asset-creating endeavors like investing in stocks or real estate.
Focusing Only on the Short-Term
“A long-term perspective is a must for anyone seeking to level up,” stated Lu. Unfortunately, many in the middle class are keeping themselves there by failing to plan for the future or perhaps stick to their future plan.
The upper class isn’t intending to wing it, they are thinking long-term: Retirement planning, family assets, long-term investments, etc. By starting early and keeping an eye towards the future, the upper class is able to incrementally set aside money and allow that money to compound over time.
While it can be difficult for middle-class parents to think about the future or set aside any money while they’re busy trying to put food on the table, they are robbing their future selves (and their legacy) of wealth accumulation. Setting aside even small amounts of money for retirement can make all the difference down the road.
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