7 Money Mistakes The Middle Class Never Stop Making
Moving from the rat race to the fast track is one of the biggest problems the middle-class population in every part of the world faces. They dream of financial freedom and talk about what they’d do if they “luckily became rich”, but still continue to make the same money mistakes that keep them trapped in their financial situations.
What money mistakes are these? And how can a large part of the population stop making them?
If you feel you’re currently in this position and don’t know how to break out of this group, here are 7 money mistakes the middle-class never stop making:
1). Buying Things They Want, Instead Of What They Need:
The most successful organisations in the would market their products around people’s wants, not just their needs. They appeal to the masses’ fantasies and use their brilliant campaigns to make them desire the need to settle their appealing wants before their core needs.
The problem with this is it does nothing but keep a large part of the masses in degrading financial situations, while the owners of the businesses running these campaigns continue to get wealthier.
When you place you wants above your needs, you activate misplaced priorities, which in-turn negatively affects your financial situation.
By spending more money on what you don’t need over what you need, breaking out of the rat race would be very difficult for you to achieve.
2). Piling Up Excess Debts:
The people who borrow money the most are the middle class, and a large part of them haven’t realised that yet. In underdeveloped countries where credit cards aren’t rampant, people borrow so much from family and friends to settle their immediate wants and needs, and as these debts pile up, they realise they have little to nothing to save after repayments at the end of every month.
It gets even worse in developed countries where credit cards are the norm. Too many people swipe-away with their cards for almost everything they need. Thereby piling up extraordinary debts that can only hardly get settled.
One money mistake to avoid no matter what class you belong to in the society is to stray far away from debts that are not taken towards making you more money. If borrowing will only build up your liabilities, you should avoid it at all costs.
3). Not Having A Retirement Plan:
A retirement plan is what determines how well you’ll be taken care of in your later years. It ensures you have all you need even if you have no other means of income, and it guarantees that your basic concerns surrounding financial independence in your later years are to a great extent, solved.
Most people have no retirement plans. They look at it as a long-term process, and instead, choose to live for the now, because after all, “You Only Live Once (YOLO)”.
When you have the YOLO mentality, regrets will almost inevitably build up in your later years when reality sets in and there’s no way for you to raise money.
Having a retirement plan is planning for the future. And planning for the future, is one of the first steps to make a move out of the rat race.
4). Having Little To No Savings:
Most people have little to no savings. They spend everything on their immediate needs and make little to no efforts to put out at least 10% of their monthly income in an emergency fund or a form of savings.
When you have no savings, you’d have no money to take advantage of any sudden opportunities that come your way. Likewise, you’d also have no funds to take care of any unexpected emergencies that also hit you.
A key money mistake the middle class keep making is having little to no savings. And until they can learn to put aside at least 10% of their monthly earnings, breaking free from their financial situations would prove to be very difficult.
A recent report from Frugaa revealed how over 30% of the middle-class families around the world have no savings at all, with 69% having savings of under $1,000, meaning most people have little to no savings. They spend everything on their immediate needs and make little to no efforts to put out at least 10% of their monthly income in an emergency fund or a form of savings.
5). Depending Purely On Salaries:
A large part of the population lives pay cheque to pay cheque. Their lives revolve around their next salaries, and the only thing they aspire towards is to attain a promotion at work, so they can earn an even higher salary.
They brag about whose organisation pays better, complain about most of their bosses who do nothing but frustrate them, and spend a large part of their time talking about people they know are doing big things.
If you find yourself in these circle, change your association as soon as possible. People are infectious, and their way of life will affect yours. You need to be amongst people who motivate you to act, who push you with their success, and who do nothing but help each other grow.
6). Putting Their Children In Expensive Schools:
Every parent wants the best for their kids. But when they go as far as putting the family’s finances in harm’s way because they want their kids to attend one of the most expensive schools, they do nothing but threaten the family’s financial future.
The people who make this mistake the most are those who earn a considerably fat salary. They equate a huge monthly pay cheque to success, and so, ensure they step up most of their expenditures, including the class of schools their children attend.
Instead of putting your kids in the most expensive schools, you can put them in really good schools that charge a modest fee. A $4,000 a term school will never guarantee your child would be better off in life than a child attending a $400 a term school. Afterall, some of the wealthiest people around the world today didn’t even have any form of education.
7). Making Financial Decisions Solely Based On How They Feel:
One of the biggest mistakes people make in life is to make decisions based on how they feel, and not based on what is practical. There’s always a time to follow your guts, but when that time feels like every time, you’d always find yourself ending up with mistakes.
Hope is not a strategy, and making financial decisions based on emotional connections will do you no good. Brands build emotional connections with their customers so they can keep selling more products. The emotional appeals of their campaigns confuse the prospects and drive them into making decisions they think they’re completely in control of.
Experienced marketers also know this, and so, design their sales pitches around getting a sizeable number of people to act immediately.
When you make financial decisions based on how you feel, you lose money. And when you lose money, you push yourself deeper into the rat race. By realising your emotions could be your biggest enemy in making financial decisions, you can better understand how to control it, tame it, and shape it into what could become your best bet in avoiding many money mistakes that the middle class never stop making.
What are your thoughts on these 7 money mistakes the middle class never stop making? Let me know by leaving a comment below.