What middle-class American doesn’t want to level up and be upper middle class? To turn the upgrade down would be like opting for coach over business class on a long flight. But, unless you land a windfall inheritance, such leveling up isn’t easy. Most middle-class folks will stay middle class for their whole lives and often it’s not their fault; they’re held back by external systemic forces such as job insecurity or discrimination.
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But there’s no shortage of people who want to be upper middle class but stay middle class simply because they’re not being proactive and responsible. Consider the following six key signs you’ll never make it to the upper middle class. You’ll see that you probably have more control over this than you think you do.
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You Don’t Budget
Budgeting can be a bore and a chore, especially if you’re not used to it, but it’s critical for all of us. Nobody who wants to move up the economic ladder can afford to not budget.
“Budgeting provides a roadmap to achieving your goals,” said Melanie Musson, insurance and finance expert at Clearsurance.com. “If you don’t budget, you may have a goal of becoming upper middle class, but you’ll flounder wherever your status currently has you. A budget can help you understand where you’re overspending and can cut back on so that you can build your wealth with what you can save.”
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You Spend Your Entire Paycheck
Millions of Americans live paycheck to paycheck, and again, we must have some compassion and recognize that a lot of people are cornered into this lifestyle not by choice but by circumstances. That said, there are plenty of us who are guilty of living paycheck to paycheck because we overspend.
“You will never get ahead if you spend everything you have,” Musson said. “One of the key elements to building wealth is saving and investing. If you don’t do that, you will never become upper middle class.”
Musson recommended shifting your spending habits today by putting a freeze on buying nonessentials. “Then, you can build on your saving habits when you get a pay raise and keep your same budget so that you can save your extra income,” she said.
You Have a Dead-End Job
Most of us need to earn a living and it’s not as though every single job out there leads to a bountiful career abundant in raises, promotions and bonuses. Some not-so-great jobs just don’t lead to better jobs and if you get stuck in a dead-end job, you’re unlikely to ascend to the rungs of the upper middle class. It’s time to get serious about making a plan and possibly pivoting.
“If you have no clear path forward in your current job, it’s time to broaden your prospects and look for something that offers a clear career path,” Musson said. “Before you quit your job, decide what type of position would fit your expertise, but also challenge you. If you need to get a certification, start working on it to improve your chances of getting a new job. Then, start applying. Don’t be discouraged if you try and don’t get a job right away. Keep trying.”
You’re Not Financially Protected Against Disruptions Like Layoffs or Illness
Bad things happen and when they do, they can set us back financially. If you aren’t prepared when a life disaster strikes, you could go into debt and get stuck for years.
“One job loss or medical emergency can wipe out fragile savings, forcing credit card debt that compounds over years, locking you out of the wealth flywheel,” said Patrice Williams Lindo, CEO at Career Nomad. “Build a six- to 12-month emergency fund — but also create income resilience by developing additional income streams and upskilling in recession-resistant sectors.”
You Buy a New Car Every Few Years
A 2024 study by The Zebra found that Americans are keeping cars they bought for longer periods of time than in the past — an average of 12 1/2 years. But you could stretch it even further. Most new cars are designed to last between 200,000 and 300,000 miles which is about 15 to 22 years. If you’re purchasing a new car more often than is necessary, you could be chaining yourself to a forever middle-class lifestyle.
“A new car can cost $1,000 a month,” Musson said. “If you’re middle class, that’s a large portion of your paycheck and too much to spend on a depreciating asset. A new car may give you the appearance of being upper middle class, but it will keep you from getting there. Instead, opt for a car that’s five years old and has already lost about half of its value. Then, drive it after it’s paid off and start allocating what you’re not paying for a loan payment toward saving for your next car.”
You Think in Terms of Income, Not Net Worth
Your mindset and perspective can play a role in class mobility. If you think in terms of your income and not your net worth, you’re not setting yourself up for success.
“People need to shift their mindset from, ‘How much do I make?’ to ‘What am I keeping and investing?’” said Dr. Shawn DuBravac, PhD, economist, CEO and president at Avrio Institute. “One of the most common financial traps is focusing solely on income rather than building wealth. Too many people correlate a high salary with upper middle class. Without disciplined saving and investing, income becomes a treadmill rather than a ladder. Track your net worth growth. Max out tax-advantaged retirement accounts and prioritize asset accumulation.”
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This article originally appeared on GOBankingRates.com: 6 Key Signs You’ll Never Make It to the Upper Middle Class
