6 Things Keeping the Middle Class From Getting Richer

People don’t often realize when they’re making poor financial decisions until it’s too late. In fact, many middle-class people spend mindlessly on unnecessary stuff that only drains their savings and keeps them from growing their wealth.

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Continuously spending more than you can afford can lead to high levels of debt, becoming a cycle that’s hard to escape from. This, in turn, makes it difficult to save for retirement and invest long term — steps that are essential for increasing your net worth and establishing financial stability.

Before you make the decision to spend, really consider how the purchase could impact your financial goals. If you’re middle class and want to become rich, try to avoid the following six expenses.

1. Student Loans and Other Debt

Your education is important, but it’s not worth going into lifelong debt for. Before you take on a massive student loan, make sure you understand the commitment that comes with it and what a realistic repayment plan will look like for you.

The main thing here is to steer clear of massive debts while amplifying your professional skills. You don’t want to take on excessive loans and debts as this will only hurt your earning potential and long-term finances after graduation. Simply put, try to manage the money you take instead of just compounding debt after debt.

Many people in the middle class tend to carry a lot of debt, so you are not alone. Whether it’s student loans or credit card debt, if you weren’t born rich, these things can add up to putting you financially under water. Taking on a smaller loan or pursuing more affordable higher learning can help you reach your long-term financial goals faster.

2. Memberships and Subscriptions

Many middle-class people today have memberships to many retail stores, or subscriptions to every online app or streaming service they come across. Even if individually, they are inexpensive, when you add them together, it can be quite a substantial sum each month. For example, even if you only had the basic package for Netflix ($7.99), Hulu ($9.99), Max ($9.99) and Apple TV ($9.99), that would be about $38 added to your monthly expenses.

If you are looking to build your wealth, it doesn’t always matter what you necessarily bring home in a paycheck, but rather how you spend, save and allocate those funds to put your best financial foot forward.

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3. Investing in Depreciating Assets

Many middle-class individuals invest in items that lose value over time, which could be considered flushing money down the toilet. If you make flashy purchases, possibly to keep up with the Joneses or imitate a richer lifestyle, it quickly becomes unsustainable.

Big-ticket purchases like new cars may seem cool, but a new car’s value drops the moment it leaves the dealership. Savvy shoppers and wealthy people often consider other options like slightly older cars with fewer miles, which don’t depreciate as quickly.

4. Covering Expenses for Adult Children

One frequent mistake that middle-class families make is taking care of their grown children’s bills, such as rent or healthcare, when nearing retirement. To avoid falling into this parental money pit, teach your kids financial independence. If you stop funding their lifestyle, you can start funding a more comfortable retirement plan for you and your partner.

5. Living Beyond Your Means

A significant barrier for the middle class in growing their wealth is not paying attention to lifestyle inflation, also known as lifestyle creep. This is when, as individuals earn more, they increase their spending proportionally, or even excessively, which can stymie their ability to save and invest in a more suitable fashion.

For instance, a common misconception is that driving a luxury car or living in a bigger house signifies wealth. While these might be indicators of a higher income, they don’t necessarily translate to long-term wealth if they’re financed with debt.

6. Giving in to Societal Pressure

Spending money to keep up with appearances is one of the worst investments you can make. Emotional spending such as this rarely helps make you as rich as you are pretending you are. In fact, it’s usually the opposite and detrimental to your financial health.

Cindy Lamothe contributed to the reporting for this article.

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This article originally appeared on GOBankingRates.com: 6 Things Keeping the Middle Class From Getting Richer