Middle Class Money Traps That Beaks Your Financial Wealth
Today, I’m sharing with you the middle class money traps that are keeping you broke, so you can know what those traps are and actually get out of them and become a millionaire or become as rich as you want to become.
All right, first off, let’s talk a little bit about what the middle class is. So if you’re in the middle class, usually you’re living pretty comfortably, and you have some nice luxuries, and you know where your next meal is coming from.
You’re not struggling, but you’re living a pretty comfortable lifestyle. But here’s the thing it could be a lot more comfortable, and you could also have a lot less stress around money. So the first money trap we are going to talk about is not thinking long term, not having a vision or a plan for yourself. It’s more about living day to day and just kind of going through the motions, going through the grind. You go to work, you come home, you veg out, watch TV, and then you get up the next morning, you go to work, you come home, you’re tired, you veg out and watch TV, and you just continue to repeat the cycle over and over.
And you aren’t really working towards some type of long term plan. So you really want to think about where do you see yourself in five years? Where do you want to be in ten years? Are you working toward that? The second money trap is eating out too much.
how much I spend on food, and I spend about $100 a month. Money trap number three is leisure spending. So it’s going to soccer games or going to the movies or going to plays, just spending money wherever, doing leisure activities, but not really being conscious about what really matters most to you and spending your money there and cutting back on the rest. And money trap number four is having too much money in the bank.
You have too much money sitting in your savings account. And I was guilty of this before I really started investing. I was investing a little bit in a 401K, but I had a ton of money sitting in the bank, and I wish I wouldn’t have done that. I could have been so much further along financially if I did not have a huge savings account. And I’m not talking about getting rid of your emergency fund.
Definitely have an emergency fund. But once you have meant that amount that you want in your emergency fund, you need to invest the rest of that money. You will always stay in the middle class if you do not invest your money. And if you need help with that.
And then money trap number five is having kind of the opposite, having money sitting in your checking account, but realizing it’s in there and then spending all of your money. You really want to make sure that you do have that emergency fund. And I like keeping mine at a separate bank account. I personally like using li. They have a high interest rate.
So I transfer all of my money that would be an emergency fund into Ally. And that way it’s kind of out of sight, out of mind. And then money trap number six, this kind of goes along with number five, but it is not paying yourself first. So you are just completely spending all of your money, paying all of your bills, and then realizing, oh, I don’t have any money left over for myself to build up a savings or an emergency fund. So make sure you are paying yourself first.
And I like paying my tithing and myself very first. I feel like those two things have had a really big impact on my financial success. Number seven is fearing good debt. I remember talking to a friend a couple of years ago, a few years ago, actually, and she owned her own home and she knew that I had multiple properties. And she kept telling me, I think I would be too nervous to have multiple mortgages, have so much debt hanging over my head.
But in my mind, I’m thinking that is good debt. I have rental properties. I’m creating cash flow every single month from those properties, and the properties are also appreciating over time. And now I have paid off two of my mortgages, so I just have one mortgage left. But I wouldn’t have been able to do that had I not invested my money.
So it’s not all about just staying out of debt. It’s about staying out of bad debt, which we’ll talk about in just a second. But you can have good debt, debt that is going to make you more money. And money trap number eight is keeping bad debt. So, for example, if you have a lot of credit card debt and you’re slowly paying that off over time, you are keeping a lot of bad debt and you will continue to pay on that debt over the years because credit cards usually have high interest rates, so you are paying way more than you originally planned.
In for that purchase you made on your credit cards. You really want to pay off any high interest debt as soon as possible. That way you can free up some money to invest it. And if you’re wondering if you should pay off debt or invest.
And then money trap number nine is spending your money on liabilities instead of assets. You are buying things that you are having to pay for and they are not making you any money. If you continue to buy your liabilities first before your assets, you will stay in the middle class. You need to be accumulating assets, things that are going to make you money and then you can pay for your liabilities, things that won’t make you money with those assets. And then money trap number ten is paying too much for insurance.
For example, if you have really low deductibles, you are going to be paying more for your insurance. I like to keep my deductibles higher because the chance of something going wrong in me paying the deductible is very low and yes, it does happen. So make sure you do have whatever amount you choose for your deductible. But that way you were paying less for your insurance over time and going along with that you can definitely call your insurance. This could be your car insurance or auto home insurance, whatever it might be.
But you can call them every single year and see if you can get a better rate or call someone else and see if they offer a better rate and then switch over to a different provider. And this also goes along with other bills that you might have. Don’t just continue to pay increased prices every single year, see what the competitors are offering and switch your provider so that you are not paying so much in all of these expenses. And then money trap number eleven is only having one source of income. For example, if you only have a nine to five job, if that is the only way you are making money, that can be really scary if you lose your nine to five jobs.
So you want to have some other type of income and I give a lot of examples. I’m sure I’m not going to hit all of the middle class money traps. So comment below and tell me one middle class money trap that you are aware of. And number twelve for the middle class money trap is watching too much TV and I don’t know the exact thing but it’s something like the poor people have the biggest TVs and the rich people have the biggest libraries if you are constantly spending time watching TV and it’s not something that you are actually learning about like a documentary. If you’re just mindlessly watching TV that is not very productive.
So I would say switch over and read a book, or listen to a book or find a podcast that you really like. I like listening to the ChooseFI Financial Independence podcast. There are so many more productive ways to spend your time. And honestly, I feel like this is one way that I’ve been able to learn so much over the years is because I hardly ever watch TV. I would much rather read a book.
And when I do read a book, it is usually some self improvement or self development book. So I’m always learning something. And then number 13 is always saying yes to instant gratification. We are all about getting it now. I want it overnight, deliver it tomorrow.
Whatever it is, we want it instantly. And that is just creating a really bad cycle because then we want everything else in our lives instantly and that’s not how things work. So really try to delay that gratification. Really think about things in the long term, like we mentioned before. That way you aren’t just instantly spending all of the money that you have and realizing, oh, I don’t even like the stuff that I bought with my money and then having to get rid of it later, or organize it later, or clean it out later.
Going along with this money trap number 14 is not knowing when enough is enough. We constantly accumulate more things, more stuff, and we just don’t know when to stop. We look at our neighbors or we try to keep up with the Joneses and think, oh, they bought a new car this year, I should buy a new car. But our car is perfectly fine. We don’t need to be buying a new car every five years and then having a new car loan every single year and then never paying off a car and always having a car payment. We don’t need all of the latest technology. Our older phones work just fine. And I know that I have been guilty of this. Definitely, in the past, I bought way too many clothes. I just kept thinking, oh yeah, I could use a new skirt.
Oh, another skirt. Oh, another pair of shoes. Sure, I’ll buy it all. And then honestly, later I’m thinking, whoa, I have way too many clothes, way too many shoes. And then I need to get rid of it.
So just realize when enough is enough, we don’t need to always be spending our money. And then number 15 is having a scarcity mindset. And this is really a big one. This entails thinking that we can never make more money, or if someone else makes more money, then we have to make less money, that there’s not enough to go around. And that is not the case at all.