Middle-class people never getting rich doesn’t mean they don’t; most families stay at the same level till the next generation.
Yes, you might have read the biographies of many successful people who have earned massive wealth. Either they came from a poor background or an already wealthy family. Either they have a story filled with starvation, or they are thankful to their father, who left a legacy for further care.
When it comes to middle-class families’ stories, they stay middle-class even though they have resources, energy, qualifications, and other things that help them climb to the upper class. There can be psychological, emotional, financial, and cultural reasons. Let’s discuss in the article.
Why is it hard for middle-class people to be financially rich?
1. If we feel already safe, why should we risk our security?
The majority of middle-class people survive on a salary that is enough to fulfil basic needs and other expenses. Salary is also enough for purchasing fixed assets in finance and paying insurance installments. Including some savings for emergencies.
They think that they have everything that a normal human needs to survive, and they feel a sense of security. But this security creates fear when it comes to taking a step-ahead risk.
For example, I have a salary of 1000$ per Month. I spend 20% on Emi, 25% on household, 10% on educating children, and 5% on entertainment. I reserve 15% for emergencies and put 25% in savings accounts.
This habit makes my life peaceful and comfortable. I can save 250$ after all the expenses. I can do everything from eating good food to travelling occasionally.
Now, let’s say I got a big opportunity for an investment of 1000$, the return will be good, but under certain conditions. In this case, I fear that $ 1000 is my 4 months’ savings. What if I lose my hard-earned money?
The middle-class person has a similar mindset; they have financial literacy but no risk-bearing capacity.
They think that if we feel already safe, why should we risk our security? And yes, it is completely normal. If you are already living comfortably, why will you make uneasy decisions? Nobody wants to sacrifice peace, right?
But the fact is that to earn a lot of money, one must dare to take risks. Salary may not be enough, but multiple sources of income are a must. The higher the risk, the higher the profit, but the higher the loss too.
2. Bounded by culture, which manipulates
My grandfather was a teacher, I am a teacher, and my offspring should also be teachers. Most middle-class kids don’t have the freedom to do what they want to become.
You are my only son, only daughter, stay at home, etc etc…
There is a lot of emotional manipulation in the family.
Instead of teaching the kids about financial freedom, wealth creation, and asset building, middle-class families want them to follow the same things they did and are doing. They want to boost their prestige using their kids and forcefully drag them into an uninterested occupation.
For example, a free bird can fly anywhere. It can travel the whole world in its lifetime because it is free.
The same thing happens here. My son or daughter will do this or that, but not with freedom, but without our boundaries and instruction.
A middle-class people feels too much responsibility and societal pressure because they live an incomplete life, neither fully poor nor fully wealthy, and that is the reason they never become rich. How?
On the one hand, he has to take care of family culture and image in society. On the other hand, they have to work within boundaries, where there is no full support, but instead, emotional manipulation.
This situation creates an unhealthy mind and a sense of being lost, which directly affects the thinking capacity. An unhealthy mind can’t be rich.
3. Scarcity is the mother of invention.
People from middle-class backgrounds have hidden scarcity. From the outside, everything feels comfortable. But when it comes to heavy problems, the real situation is revealed.
Here is a brief story;
Everything was alright until his wife suffered from a disease, which was expensive to cure. He had a prosperous life, with good savings. Since his salary was good, he never did long-term investments or passive income. Yes, but he had some emergency funds. But he lost all his liquid assets to cure his wife. He also fell into huge debt.
From that day on, he realized that although my life looks chill from the outside, I am still poor. Then he started investing in stocks, fixed deposits and other areas. He found a way to earn passively. That event made him a person with a money mindset. Fortunately, he is more prosperous than earlier, and his wife is also well.
Do you know how that was possible? Yes, the scarcity made him realize that it was not enough, and risks should be taken. Then he worked hard to earn more and find other ways to generate wealth; now, he is not a middle-class person but above that.
Yes, sometimes scarcity reveal the real situation, then we fight for it. Like a hungry person searching for food. Scarcity forces us to do something beyond our boundaries. If we fight wisely, we win.
However, most middle-class people enjoy the comfort and remain the same; yes, that is also good.
4. Active Income and Debt
It is hard to escape middle-class traps because there is cash inflow from salary or limited sources of income, and outflows from paying interest and installments. Installments of EMI, insurance, fee and other expenses.
When the salary is insufficient to cover expenses, they take a loan instead of pursuing entrepreneurial initiatives.
Yes, a loan should be taken, but to magnify that cash, not to spend it on immediate expenses.
The cruel side of taking credit is that you have to pay interest, compound interest. If you don’t have a passive income source, you’ll never become financially independent because you have to pay for it from your monthly salary.
Salary is good for running the household, and a loan to invest in business startups. However, most middle-class people take a loan to cover emergency expenses, then spend their whole lives paying it back, and finally, their net worth remains the same. Sometimes that loan is transferred to the next generation.
Although having a good salary, there is inner financial pressure.
You might have heard from many people that I earn a lot, but my bank balance is not enough. It happens due to a mismatch between incoming and outgoing cash, and a lack of fund management.
5. Lack of back support
What kind of people your surroundings have matters. For example, are your friends rich, is your spouse rich, are your parents financially literate, are you backed up by powerful people? All these things matter.
Don’t judge me wrong, but it really matters.
Let’s say you are from the middle class, and you have a brilliant idea. But not enough courage to ask for money from parents and risk it on that start-up. However, your friends are rich and supportive. In this case, you will try your idea with full security and consistent motivation.
But most middle-class people don’t have high reach. They don’t have contact with high-level people.
So, due to fear of losing what they already have, they don’t want to take risks and fail to escape the middle-class trap.
Moreover, they have another mentality, which I would call a limited comparison mentality. For example, if I have a car and my neighbour has a bike, I feel I am rich. My friend is working for 1000$, and I am earning 1200$, and that is enough. My relatives are below my level; that is enough.
This narrow thinking also doesn’t let you escape from this situation.
6. Living to show off
Another reason why middle-class people never get rich is their purposeless thoughts. They think the worth increases with showoff and societal attention. They purchase branded products without enough savings.
You might have read the words of Warren Buffett: ‘ I made this empire living in a rented house.’
One can become rich using the compounding method and eliminating unnecessary costs.
For example, I invested 10$ and earned 5$.
I further invested five dollars.
Now I have a net worth 15$. So on…
If your mission is to level up yourself financially from the middle class, spending money on unnecessary luxury items to show off is stupid.
Showing up attracts fake love and appreciation; instead, it creates pressure in the mind.
In conclusion
Being rich needs many things, including taking risks and luck, to be successful. But middle-class families don’t dare to risk their security and spend time managing that risk.
But the secret of making money is taking risks. Risk of investing saved money, time, effort and energy.
For example, I am earning 2000$ now. One of my friends came up with a brilliant business idea and asked me to invest some money and full-time support. I will not be happy to quit my job. Although the business will grow in future, I will hesitate to contribute my full time to it. Yes, the middle class, like me, seek security first.
Overall, I want to suggest to middle-class people that, no matter how much your active income is, don’t depend on only one source, as it will not help you build fixed assets, reduce liabilities and be rich.
The world is experiencing growing inflation. Without proper long-term thinking, emotional intelligence, and proper budgeting, you may remain middle-class forever.
Disclaimer: This Article is written for motivational purpose, with personal thoughts. Thank You For Reading 🙂