Nischa Shah: 7 Middle-Class Habits Keeping You in the Rat Race

Nischa wearing a black turtleneck and smiling at the camera
©Nischa

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About 51% of Americans are considered middle-class, according to the Pew Research Center and, unfortunately, the data shows middle-class incomes are not rising as fast as those of upper-income households.

Nischa Shah, a popular YouTuber with 1.28 million subscribers, recently published a video talking about middle-class habits that keep people in the rat race. In it, she explained how the middle class can break free of cycles that keep them from building wealth.

Using advice like “Stop working for less than you’re worth” and “Stop ignoring financial literacy,” Nischa gave her viewers practical, no-nonsense tips that can help them build wealth and achieve their personal goals.

Here are the top habits Nischa said are keeping the middle class from prospering.

Working for Less Than You’re Worth

Nischa explained that many middle-class people work for less money than they deserve. She said that many companies offer annual raises; however, with the rise of inflation, these raises are not enough to keep up with or exceed inflation.

She added that you can earn more when you move between organizations and change jobs. And she’s right. According to ADP research, as of September 2024, people who stay in their jobs get on average a 4.7% pay raise, while people who change jobs earn 6.6% more on average.

Nischa said that because you can earn more by applying to new jobs, changing companies could actually be a beneficial decision for rapidly increasing your salary.

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Buying More Than You Can Afford

Nischa said it’s common for middle-class consumers to purchase expensive cars and bigger houses when they get a pay raise or a bonus. Because many banks will lend you several times your salary for a mortgage, it’s very easy to overspend on a house.

The problem is that many people believe that houses and cars are symbols of success and this is one of the primary ways they get caught in the “rat race.” Unfortunately, owning too expensive houses and cars can lead to significant financial strain. 

Instead, Nischa recommended that people live below their means to free up cash to save and invest, which can help them retire and get out of the rat race quicker.

Relying on One Source of Income

If you want to leave the middle-class and become a higher earner, Nischa said it’s important to have more than one income stream. That means that in addition to your day job income, starting a small business, freelancing, investing in dividend stocks or acquiring income-generating real estate is important.

Multiple income streams can help you insulate yourself against losing your job and give you a sense of independence, knowing that you have more than just your employer to rely on.

Not Saving for Old Age

Nischa explained that many people, especially younger people, delay saving for retirement. Because of that, 20% of Americans over age 50 do not have retirement savings, according to an AARP survey.

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This happens, Nischa said, because younger earners believe they have plenty of time. However, the earlier people start investing, the more compound interest can work in their favor. Many people have tax-advantaged accounts with employer matches for 401(k) plans. Automatically investing in a retirement plan from the earliest working days can help people reach financial independence earlier.

Focusing on Consumption, Not Production

Nischa said another factor keeping people stuck in the rat race is their focus on consumption. Many middle-class people spend money and go into debt. High-interest debt, like credit card debt, can prevent people from building wealth.

She explained that instead of focusing on consumption, focus on production — which means earning more and creating value in the workplace. Reducing unnecessary spending and allocating extra money to investments is a better way to escape the rat race.

Ignoring Financial Literacy

One of the most important parts of escaping the rat race is to work on deeply understanding personal finances. Nischa said understanding the basics of investing, taxes and cash flow can drastically help people improve their chances of having enough money to leave their jobs and enjoy financial independence.

If you haven’t learned financial literacy in school or at home, now is the time to educate yourself. There are countless videos and articles that can teach you how to budget, invest and pay off your debt. Learning about financial literacy can help you to take action, which in turn can give you skills and habits that can change the way you view money now and in the future.

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Work on Creating New Habits

Nischa concluded with one last tip: stop doing what everyone else is doing. She said it’s easy for the middle class to get caught up in spending money to fit in. However, that can keep you in a never-ending cycle. If you want more out of life and to learn how to build wealth, she said it’s time to stop all the habits listed here so you can afford to spend your life doing what you truly love.

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