5 Middle-Class Lessons From How Wealthy People Manage Money

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The middle class can be comfortable, but we’d all like to get closer to that famed 1%.

There’s nothing like enjoying your hard-earned money today and years down the line. We look up to the wealthy because they seem to have already accomplished that, but we don’t have to be content to stare wistfully out the window wishing we could grow our wealth too.

Money Talks News spoke with financial professionals across the country to see what lessons middle-class Americans can learn from those who are wealthier. Here’s what the experts have to say.

1. Don’t be flashy

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Trying to portray a higher status might be tempting, but it’s not how you build and maintain wealth.

“Most really wealthy clients don’t show their wealth,” Ryan Marshall, a certified financial planner and partner at Ela Financial Group tells Money Talks News. “Some of the middle class will buy fancy cars or expensive jewelry to appear wealthy but barely have enough money saved for retirement.”

Preparing for the future is much more important than enjoying flashy luxuries today. A new car with expensive payments won’t be much help when you retire.

Howard Pressman, partner at EBW Financial Planning, tells Money Talks News:

“Wealth isn’t a relative measure of income or assets; it’s about accumulating more than you need now. I have worked with couples who have seven figure incomes, yet they spend it all and have very little wealth to show for their efforts. I have also worked with clients earning quite modest incomes but who make saving a priority and have built themselves nice nest eggs.”

2. Spend on what adds value

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Instead of spending on shiny new things that depreciate over time, direct that spending towards things that will increase your wealth.

Mitchell Kraus, a partner at Capital Intelligence Associates, tells Money Talks News:

“The biggest thing that the wealthy do is surround themselves with advisors to make sure there are no holes in their planning. Too many middle-class Americans don’t know what they do not know and do not spend the time to find out what is missing. They are often surprised when a situation comes up while the wealthy are rarely caught off guard.”

Paying for a financial planner, advisor and/or accountant can help save you money in the long term. This doesn’t have to be a consistent expense either. Sure, some wealthy people might have frequent meetings or interactions with their advisors, but you don’t necessarily have to do the same.

Find a professional you trust and check with them about your finances — even if that’s on a more spread-out basis. Some help is better than no help at all.

3. Think prevention

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It’s great to live in the moment in many areas of your life, but your finances isn’t necessarily one of them. Looking ahead at potential threats and ways to protect from them is essential.

“The wealthy usually have plenty of insurance. They realize it’s easier for their assets to be taken away than it was to build them,” Kraus says. “They might have high deductibles, but they also have plans with high limits. Do not forget umbrella liability insurance.”

He goes on to explain that mundane things like regular health care can make a difference here too. “Wealthy people are preventative,” he says. They visit doctors to search for any illnesses before they become serious. Whereas middle-class people might not go to the doctor until they’re already sick — making treatment more expensive and harder.

Not everyone has time and money for extra doctor visits or pricier insurance plans, but many middle-class Americans may have more access than they take advantage of.

Consider if preventative and protective measures like these fit into your finances.

Even if these strategies are currently out of reach, consider what other financial assets you’re able to protect ahead of time.

4. Keep a saving mindset

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Many people fall into the trap of “lifestyle creep” in which they start buying luxury goods, eating out more often and spending money on other unnecessary things that drain their accounts.

Don’t grow your spending — instead, grow your savings.

Pressman says, “Wealthy people pay themselves first. They have developed a saver’s mindset and make saving a part of their nature … Even during the difficult or tight times, they find a way to save something.”

The amount you put into savings shouldn’t be stagnant either. Hopefully, you continue to grow your wealth and ensure your saving habits reflect that. The extra money you earn today can make a much bigger impact in a high-yield savings account than it would if spent on little luxuries.

“Increase your savings as your income grows,” Jamie Ebersole, CFA, CFP and founder of Ebersole Financial tells Money Talks News. “Many individuals stretch to buy the biggest house they can afford, which stretches their ability to make their payments once they lose their job or incur other unexpected bills.”

5. Always review your finances

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You could be on top of the world, certain that your finances are in or heading towards a good position. But you can never be sure of that if you aren’t regularly reviewing your money.

“[The wealthy] review and then review again,” Kraus stresses. “Most Americans put much of their financial life on autopilot. This makes it easier to focus on other areas, but as times change, one’s planning needs to change too.”

Is my portfolio still properly balanced? Would I buy my current investments again if I had to start over, and if not, what should I do to change my portfolio? Is my insurance coverage still appropriate? Am I sticking to my budget, and is my current budget effective?

These are all questions you should be asking yourself — even better, ask a professional. It’s easier to lose your wealth than it is to build it, so you have to be proactive.

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