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10 Differences Between Middle Class And Rich People

10 Differences Between Middle Class And Rich People

According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined. But what about the people in between? The middle class? You may be considered middle class. You’re not poor, but you’re not rich…yet. The middle class seems to be shrinking, according to the data revealed over the last couple decades. That means you’re going to be less likely to be middle class in the future. You’ll more likely be poor or rich. Which side do you want to be on?

If you want to be on the side with the rich, you’ve got to start thinking like the rich. Here are 10 differences between middle class and rich people for you to learn from…

1. The middle class live comfortably, the rich embrace being uncomfortable

“Be willing to be uncomfortable. Be comfortable being uncomfortable. It may get tough, but it’s a small price to pay for living a dream.”
-Peter McWilliams

middle class and rich differences

    “In investing, what is comfortable is rarely profitable.”
    – Robert Arnott

    It’s comfortable to work a “safe” job. It’s comfortable to work for someone else. The middle class think being comfortable means being happy, but the rich realize that extraordinary things happen when we put ourselves in uncomfortable situations. Starting your own business is a risk and risks can be uncomfortable, but a little risk is what it takes to create wealth and achieve superior results.

    Step out of your comfort zone. Look at all your options. You will have to be at least a little uncomfortable if you want to become rich. You might even have to fail and that’s great, because if you’re not failing, you’re not doing much.

    2. The middle class live above their means, the rich live below

    “There is no dignity quite so impressive, and no one independence quite so important, as living within your means.”
    -Calvin Coolidge

    rich and middle class

      You won’t catch the average millionaire in a $100,000 car or a multi-million dollar home. The rich don’t spend their money on depreciating liabilities, they spend their money on appreciating assets and they live below their means. On average, the rich drive cars that are a few years old and they don’t buy them new, according to studies done in the book “The Millionaire Next Door.” Even if they can “afford” that fancy new Escalade, they usually don’t buy it.

      Remember, if you earn $1,000,000/year and you spend $1,000,000/year, you’re still broke.

      3. The middle class climb the corporate ladder, the rich own the ladder

      “The richest people in the world look for and build networks; everyone else looks for work.”
      -Robert Kiyosaki

      Middle class corporate

        The middle class tend to work for someone else. They have a job. A career. Upper middle class tend to be self-employed. They own a job. The rich tend to own the business. They own that corporate ladder that the middle class are busy working up. The rich understand that they need more people working for them to earn more money. The rich understand the power of passive income.

        4. The middle class are friends with everyone, the rich choose wisely

        “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
        -Warren Buffett

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        rich and middle class friends

          The rich understand that when you surround yourself with successful people, your own success will follow. Likewise, surrounding yourself with unsuccessful people tends to have the anticipated effect. Your income is usually the average of the incomes of your three closest friends. If you want to earn more, hang around people who earn more. It’s all about aligning your mindset with the mindset of successful people. If you want to be rich, you have to think rich.

          5. The middle class work to earn, the rich work to learn

          “When you are young, work to learn, not to earn.”
          -Robert Kiyosaki

          work to learn, not to earn

            The middle class are easily persuaded to change jobs when someone offers more money. The rich understand that working isn’t about the money, especially in the early years. It’s about developing the skills and traits you need to develop to become rich. That may mean working a sales job to better understand the world of selling. Or it could mean you work at a bank to better understand accounting. If you want to be rich, you should be working to learn the skills you need to become rich. Most rich people didn’t get there by earning a high salary.

            6. The middle class have things, the rich have money

            “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.”
            ― Will Rogers

            middle class and rich difference

              Back to the fancy cars and big houses. That’s where much of the middle class spend their money. Drive through a middle class neighborhood and you will usually see brand new cars, expensive landscaping and high-dollar homes. The rich understand that to become wealthy, you have to want money more than you want things. If you keep buying things, your money will keep going with them. It’s funny how that works. For example, Warren Buffett still lives in the same home he bought in 1958. And he only paid $31,500 for it.

              Stop buying things and start focusing on keeping, saving and investing the money you earn. If you are a shopaholic, start shopping for assets. Become interested in investing, then look for bargains on stocks and businesses instead of shoes and electronics. That being said, it’s not all about saving your money.

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              7. The middle class focus on saving, the rich focus on earning

              “Your greatest asset is your earning ability. Your greatest resource is your time.”
              -Brian Tracy

              middle class and rich people

                “If you would be wealthy, think of saving as well as getting.”
                -Benjamin Franklin

                Saving is important. Investing may be more important, but earning is the foundation of both. You understand that you need to save and invest, but to really achieve extravagant goals with them, you need to earn more. The rich understand this and work on creating more avenues to earn and earning more with the avenues they have. If you really want to become rich, work on your earning ability, not your saving ability.

                8. The middle class are emotional with money, the rich are logical

                “Only when you combine sound intellect with emotional discipline do you get rational behavior.”
                -Warren Buffett

                middle class and rich money

                  Steve Siebold interviewed over 1,200 of the world’s wealthiest people over the past 30 years for his book “How Rich People Think”, and according to him there are more than 100 differences in how rich people look at money compared to the middle class. One of the key differences he found was that the middle class see money through the eyes of emotion, but the rich see money through the eyes of logic. Making emotional financial decisions will ruin your finances. Warren Buffett explains that investing has much more to do with controlling your emotions, than it has to do with money. Emotions are what cause people to buy high and sell low. Emotions create dangerous business deals. Leave emotions out of this and turn to logic.

                  9. The middle class underestimate their potential, the rich set huge goals

                  “Set your goals high, and don’t stop till you get there.”
                  -Bo Jackson

                  middle class and rich goals

                    The middle class set goals. Sometimes. It’s the capacity of the goals that differ from the middle class to the rich. The middle class set safe goals that are easily obtainable. The rich set goals that seem impossible, difficult or crazy. But they know they are achievable. It all comes back to having the proper mindset.

                    When you’re setting your goals, ask yourself if they could be bigger. Ask yourself if that’s really all you can do or if you can do more. I think you can do more.

                    10. The middle class believe in hard work, the rich believe in leverage

                    “It is much easier to put existing resources to better use than to develop resources where they do not exist.”
                    -George Soros

                    rich and middle class workers

                      Hard work is a necessity. For all of us. If you want to reach the top (whatever that may be for you), you’ve got to put in the work. The problem is that hard work alone will rarely make you rich. You can’t become rich by doing it all yourself. You have to use leverage to truly become rich and stay that way. Leverage works in many ways, from outsourcing to investing. The more leverage you can incorporate, the more time you will free up to work on the things that really matter in your business and your life.

                      Some differences between the middle class and the rich are vast, while others may seem simple and minor. The fact is that if you want to become rich, you have to think like the rich and do the things the rich do.

                      Featured photo credit: Dude Walkin/Alejandro Escamilla via unsplash.com

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                      Published on November 20, 2018

                      The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

                      The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

                      The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

                      Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

                      In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

                      Why Your Past Prevents You from Saving Money

                      Are you constantly thinking about your financial mistakes?

                      If so, these thoughts are holding you back from saving.

                      I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

                      It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

                      For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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                      How to Effortlessly Track Your Spending

                      Stop manually tracking your spending.

                      Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

                      When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

                      Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

                      The Truth on Why You Keep Failing

                      Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

                      Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

                      Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

                      If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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                      Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

                      Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

                      1. Save more than 50% of your available money (after expenses)
                      2. Only buy nice things after saving
                      3. Automate your savings with automatic bank transfers

                      These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

                      How to Foolproof Yourself out of Debt

                      Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

                      So how can you separate yourself from the 60%?

                      By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

                      This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

                      For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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                      Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

                      A Proven Formula to Skyrocket Your Savings

                      Having proven systems in place to help you save more is important, but they’re not the best way to save money.

                      You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

                      What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

                      Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

                      Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

                      During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

                      Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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                      Transform Yourself into a Saving Money Machine

                      Saving money isn’t complicated but it’s one of the hardest things you’ll do.

                      By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

                      The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

                      Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

                      Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

                      What are you waiting for? Go and start saving money, the sky is your limit.

                      Featured photo credit: rawpixel via unsplash.com

                      Reference

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