A recently published article from the Office of National Statistics has shown that the richest 1% in the UK own as much wealth as the poorest 55%. But what about the people in between? The middle class? You may be considered middle class. You are not poor, but you are not rich yet. There has been lots of debate around the definition of middle class. Some of the best and most unique definitions I have come across are:
- Paid by the week, rent your house – working class. Paid by the month, own your own house – middle class. Don’t have to work, inherited your house, plus estate – upper class.
- When you go to work in the morning, if your name is on the front of the building, you’re upper class; if your name is on your desk, you’re middle class; and if your name is on your shirt, you’re working class.
Although definitions of middle class may very and be open to interpretation by different people, there is one thing everyone agrees on – The middle class is definitely shrinking. And this backed up by official published data That means you are going to be less likely to be middle class in the future. You will more likely be poor or rich. Which side do you want to be on?
If you want to be on the side with the rich, you have got to start thinking like the rich. Here are 10 differences between middle class and rich people for you to learn from…
1. The middle class focus on saving, the wealthy priorities earning (over saving).
Your greatest asset is your earning ability. Your greatest resource is your time. -Brian Tracy
Work hard, start saving early, live below your means – it is all the usual advice for financial freedom. Saving is important. For example, finding ways to cut the costs of utility bills by switching to Amigo Energy rates can make a huge difference to family outgoings by reducing the cost of power and electricity. But saving in the traditional form is exactly the opposite of what the rich do. The rich invest their money to ensure their money works for them. They spend time reading articles on The Money Sack to learn about money management. They aim to increase their earning ability, which is very rarely limited to simply working harder. The rich understand this and work on creating more avenues to earn and earning more with the avenues they have. If you really want to become rich, work on your earning ability, not your saving ability.
2. The middle class live comfortably, the rich embrace being uncomfortable.
Be willing to be uncomfortable. Be comfortable being uncomfortable. It may get tough, but it is a small price to pay for living a dream.-Peter McWilliams
It is comfortable to work a safe job. It is comfortable to work for someone else. The middle class think being comfortable means being happy, but the rich realize that extraordinary things happen when we put ourselves in uncomfortable situations. Starting your own business is a risk and risks can be uncomfortable, but a little risk is what it takes to create wealth and achieve superior results.
Step out of your comfort zone. Look at all your options. You will have to be at least a little uncomfortable if you want to become rich. You might even have to fail and that is great, because if you are not failing, you are not doing much.
3. The middle class work to earn, the rich work to learn
When you are young, work to learn, not to earn. – Robert Kiyosaki
The middle class are easily persuaded to change jobs when someone offers more money. Money is the motivator. The rich understand that working is not about the money, especially in the early years. It is about developing the skills and traits you need to develop to become an entrepreneur and become rich. That may mean working a sales job to better understand the world of selling. Or it could mean you work at a bank to better understand finance and accounting. If you want to be rich, you should be working to learn the skills you need to become rich. Most rich people did not become rich by earning a high salary, they did it by owning businesses.
4. The middle class live above their means, the rich live within their means
There is no dignity quite so impressive, and no one independence quite so important, as living within your means.?- Calvin Coolidge
You will not catch the average millionaire in a 100,000 pound car or a multi-million pound home. The rich do not increase their earnings just to feed their ever-growing appetites for consumptions. They do not spend their money on depreciating liabilities, but instead focus on acquiring appreciating assets and this helps expand their means. On average, the rich drive cars that are a few years old and they do not buy them new, according to studies done in the book The Millionaire Next Door. Even if they can afford that fancy new Range Rover they usually do not buy it. The richest people are indifferent to showing off their wealth.
On the there hand, when a middle -class person suddenly starts earning considerably more, he is quick to show it – by busing a more expensive car or moving to a larger house for example.
Remember, if you earn $1,000,000/year and you spend $1,000,000/year, you are still broke.
5. The middle class have things, the rich have money.
Too many people spend money they have not earned, to buy things they do not want, to impress people that they do not like.
Back to the big houses and fancy cars. That is where much of the middle class spend their money. Drive through a middle class neighborhood and you will usually see brand new cars, expensive landscaping and high-dollar homes – keeping up with the Joneses. The rich understand that to become wealthy, you have to want money more than you want things. If you keep buying things, your money will keep going with them. It is funny how that works. For example, Warren Buffett still lives in the same home he bought in 1958. And he only paid $31,500 for it.
Stop buying things and start focusing on keeping, saving and investing the money you earn. If you are a shopaholic, start shopping for assets. Become interested in investing, then look for bargains on stocks and businesses instead of shoes and electronics. That being said, it is not all about saving your money.
6. The middle class climb the corporate ladder, the rich own the ladder.
The richest people in the world look for and build networks; everyone else looks for work. – Robert Kiyosaki
The middle class generally work for someone else. They have a job. A career. They are employees, Upper middle class tend to be self-employed. They own a job. The money stops flowing the moment they stop working. The rich tend to own the business. They own that corporate ladder that the middle class are busy working up. The rich understand that they need more people working for them to earn more money. The rich understand the power of passive income.
7. The middle class are emotional with money, the rich are logical.
Only when you combine sound intellect with emotional discipline do you get rational behavior.?- Warren Buffett
Steve Siebold interviewed over 1,200 of the worlds wealthiest people over the past 30 years for his book How Rich People Think, and according to him there are more than 100 differences in how rich people look at money compared to the middle class. One of the key differences found was that the middle class see money through the eyes of emotion, but the rich see money through the eyes of logic. Making emotional financial decisions will ruin your finances. Warren Buffett explains that investing has much more to do with controlling your emotions, than it has to do with money. Emotions are what cause people to buy high and sell low. Emotions create dangerous business deals. Leave emotions out of this and turn to logic.
8. The middle class believe in hard work, the rich believe in leverage.
It is much easier to put existing resources to better use than to develop resources where they do not exist. – George Soros
Hard work is a necessity. For all of us. If you want to reach the top (whatever that may be for you), you have got to put in the work. The problem is that hard work alone will rarely make you rich. You cannot become rich by doing it all yourself. You have to use leverage to truly become rich and stay that way. Leverage works in many ways, from outsourcing to investing. The more leverage you can incorporate, the more time you will free up to work on the things that really matter in your business and your life.
9. The middle class underestimate their potential, the rich are not afraid of aiming high.
The minute you settle for less than you deserve, you get even less than you settled for. – Maureen Dowd
The middle class set goals that are reasonable and fairly easily attainable. The rich do not suppose that the goals they set for themselves are overly ambitious or just plain crazy – and quiet often they turn out to be not that impossible after all.. But they know they are achievable. It all comes back to having the proper mindset.
When you are setting your goals, ask yourself if they could be bigger. Ask yourself if that is really all you can do or if you can do more. I think you can do more. The important thing to understand about wealth is all about thinking, not luck. You may win a jackpot or lottery, but if you do not think like a rich man, you are most likely to lose everything you have won or stay at the same level of wealth.
10. The wealthy are always ready to change and grow.
It is better to hang out with people better than you. Pick out associates whose behavior is better than yours and you will drift in that direction.– Warren Buffett
The main feature that differentiates the rich from all the rest is their ability to change, grow and learn. They do not feel obliged to follow the way of life they have chosen a decade ago just because there is so much time invested into it. If they find something better, they will immediately use the chance of improving their position. It means constantly learning new skills, reading things that inspire them to do better, drastically changing lifestyles and so on.
Some differences between the middle class and the rich are vast, while others may seem simple and minor. The fact is that if you want to become rich, you have to think like the rich and do the things the rich do.