7 Middle Class Habits Keeping You Stuck in the Rat Race 7 Middle Class Habits Keeping You Stuck in the Rat R...

7 Middle Class Habits Keeping You Stuck in the Rat Race

Hey guys! As somebody who's worked over 8 years in multiple corporate industries (Finance, Tech, and the Video Game industry), I've personally observed the middle class habits that keep people stuck in place - that keep them from advancing forward and ultimately making more money.

In this post, I want to talk through seven habits that keep people stuck in the middle class and how to avoid them.

1 Not Earning What You're Worth

This habit might be familiar to you if you're a bit shy or have a fear of rejection. I've seen this so many times because a lot of my co-workers (and even myself included) were afraid to ask for raises.

Oftentimes you'll start a job at a certain salary (say $50,000 a year) and we're taught that if we stick with it long enough, a promotion and pay increase will probably come our way after about 1-2 years. A pretty common occurrence is that you actually get the recognition you deserve (you get a pay increase), but when you look at how much your pay increase actually is, you're surprised to see it's only 3-5% year-over-year.

That means on a $50,000 salary, it's now perhaps $52,000 per year - which is great objectively, but that's barely keeping up with inflation.

The real dilemma comes when you realize that your skills have advanced so far disproportionately from your pay. Maybe you're taking on more responsibility, doing the work of two employees rather than just one, or going beyond your normal job description. You should probably be paid more.

The habit that holds most people back is simply being too afraid to ask for more money. Not asking for what you're worth is a habit that holds way too many people stuck in the middle class because employers know this and they love to basically not give you a raise because that means they can continue to pay you the same amount.

2 Not Exercising Delayed Gratification

To explain this habit, I need to tell you about the famous Stanford psychology experiment called the marshmallow test. In this test (which took place in the 1970s), children were offered a choice between one marshmallow immediately or wait 15 minutes to get two marshmallows instead.

According to the results of the study, those that were able to delay gratification had several advantages later in life - they performed better academically, had higher SAT scores, and fewer behavioral problems.

The lesson here is that often times those people that can exercise the most patience in life when it comes to seeking results are likely going to be the most successful.

Far too often, the people that want instant gratification are going to be the ones that spend more than they earn, forgo investing in retirement, and might even prematurely hop jobs. This type of habit might also manifest itself in impulse spending.

In order to avoid these situations, try to make your decisions surrounding where you want to be in 6 months, 1 year, 2 years, or maybe even 5 years.

3 Relying on One Income

According to the IRS, the average millionaire has several income streams. If we don't have more than one source of income, that can actually be quite risky. That's because if you only have one source of income via your primary job, if you lose that job, you need to fall back on an emergency fund.

The best thing to do when you have a job already is to think of ways that you can add multiple sources of income to your life - not only to help you make more money but in the event a disaster occurs like you lose your primary job.

The benefit of having more income in general is that you get to add more money to your retirement fund and savings, and that flexibility is going to be quite liberating.

4 Not Being Aware of Your Finances

This seems like kind of a no-brainer, but once you understand how much you are spending on average per month, you can then take your income and figure out a plan on how to allocate your money.

If you're able to establish this habit of being aware of your finances, this will help you spend a little bit less and make sure you earn more than you spend at all times. As your income increases throughout your life, it's easy to have your expenses naturally creep upwards, but by tracking your spending, you'll know exactly when your spending is getting out of control.

This practice alone will transform anyone that is stuck to a financial superhuman that is good with their money. If you're able to invest that difference accordingly, you can break free from the middle class.

5 Using Debt to Maintain Lifestyle

Credit card debt is literally at record levels these days - $1.42 trillion to be exact as of Q2 2024, with 47% of credit card holders carrying a balance from month to month at an average APR of 21.51%.

If you have a habit of carrying a balance on your credit card, it becomes increasingly difficult to grow your net worth and make progress on your financial goals.

The one situation you want to avoid is running up a balance so high that your interest payments don't make much of a dent on your principal balance. If you find yourself trying to keep up appearances or impress others and you have to go into debt to do so, this can definitely keep you stuck.

I'm all for spending money on things you enjoy, but if you're doing it just to keep up appearances, I would think twice about that and really try to curb that habit.

6 Misusing Alcohol

This is a little controversial because drinking doesn't just affect the middle class, but it is something that you don't want to get into the habit of doing regularly because of the law of inertia - an object in motion will stay in motion unless acted upon by an external force.

If you're constantly progressing yourself and trying to make more money, misusing alcohol can actually be the external force that stops your momentum. Pretend you go to happy hour every Wednesday night and drink too much - you wake up the next day feeling sluggish and aren't as productive at work.

If you did this every week for a year, that would be 20% of your work days affected - 50ish days out of the year that you're not operating at your best.

I don't want to tell anyone how to live their life, but if you're drinking to the point of excess where it's affecting your progress in life and work, you might want to think twice. It's also a really expensive habit that could keep you stuck financially.

7 Not Investing or Saving for Retirement

The average 401K balance in America at the age of 65+ is $272,588 according to the most recent Vanguard report. Meanwhile, an article in the Wall Street Journal notes that 6% of your paycheck is becoming the new standard for retirement contributions.

If you want to spend $50,000 a year in retirement, you'll need a balance of at least $1.25 million to do so using the 4% withdrawal rate rule. That means the average 65+ person is $1 million shy of retirement.

If you're currently aged 20-35 or even 40, you need to start early and aim for a 10-15% savings rate at minimum. If you're older than that, you may need to save even more to catch up.

Here's the good news: Even if you make a modest $50,000 a year from ages 25-65 and never get a raise, saving 10% will still get you a balance of $1.39 million by age 65 - enough for a comfortable retirement.

Breaking these seven habits can help you escape the middle class rat race and make real financial progress. The key is awareness first, then taking consistent action to change these patterns. Which of these habits do you need to work on the most?