Feeling Broke? These 10 Middle-Class Habits Are to Blame

The majority of America lives in middle class, yet many still struggle with meeting ends. Even worse, many find themselves broke.
There are many reasons why you might not have enough money. As inflation skyrocketed, so did costs, and there’s been a lot of controversy whether wages have stayed on par. People are quite literally paying more at the pump and in the stores. Even many making over $100,000 annually feel the crunch and live paycheck to paycheck. But that leads to the question, are there things you can do to prevent being broke?
The answer is yes and psychology may be to blame if you’re making these mistakes.
1. Indulging in Lifestyle Inflation

Lifestyle inflation is a term to describe spending more when your income increases. So many people are guilty of this, it’s not a personal attack.
For example, if you drive a Toyota and get a sudden income increase due to a promotion or moving to another job, you might feel inclined to upgrade that to a BMW or an Audi. You might even choose to move to a bigger place. Taking a tip from the wealthy, though, if you want to save more money, the real trick is to live below your means.
2. Being Financially Illiterate

Sadly, this is more widespread than most people think. Many people aren’t familiar with how to handle their money and to make smart financial decisions.
That leads to years of debt, taking on more than you afford, and/or not saving enough, which puts you in a tough position in the event of an emergency or significant life change. The solution to this is to learn. Learn what you can about your finances and how to save and invest. Seek out the advice of a professional expert if you’re unsure where to start.
3. Keeping up With the Joneses

This is a tale as old as time. A friend or neighbor buys a new car and now you feel like you need one, too, to “keep up” with them.
Comparing yourself to others has been proven to drive overspending, according to Leon Festinger’s Social Comparison Theory. That can lead to serious debt problems. And you know what the kicker is? Your friend or neighbor may be doing the very same thing, sitting on a mountain of debt to make it look as though they have it all together.
4. Being Overconfident

Investing and handling money requires a bit of savviness and smarts, but most of all, it requires know-how. If you’re overconfident in your abilities, that could lead you to make significant financial blunders, and you know where that leads…
Risky behavior is best left to the pros who know what they’re doing and won’t bet the farm.
5. Avoiding Your Finances

Then, there’s the other side of the coin where instead of making risky endeavors or simply being smart about your money, you simply ignore any problems that crop up.
This is often because of avoidance or denial, but the real issue is that continuing to neglect the issue will only make it worse. So buckle up and handle the important things. You’ll be surprised at how much stress that removes from your life.
6. Favoring Instant Gratification

If you had a choice to spend $1,000 today and get the latest gadgets or shoes you’ve been coveting, or to put that same money away to make you hundreds of thousands of dollars over a few decades, which would you choose?
Many opt for the instant gratification. The happiness now instead of the security later on. But if you do the reverse, you’ll forego the regret and have more saved up to enjoy in retirement.
7. Being Unrealistic

If you think that you’ll never experience a financial emergency and therefore preparedness such as having an emergency fund isn’t necessary, you’ll be ill-prepared should one occur.
A Bankrate survey this year indicated that more than half, 56%, of Americans couldn’t handle an emergency that cost $1,000, without taking on some form of debt. Don’t get caught in that trap. Make sure you put money aside in an emergency fund or rainy day piggybank, whatever you want to call it.
8. Not Taking Chances

We’ve discussed being too risky, but there’s such a thing as playing it too safe, as well. The fact is in order to make money, you have to take some risks.
If you’re not comfortable taking these risks, you can speak with a financial expert, who can run you through your options depending on your short- and long-term goals.
9. Perceiving Value Wrong

We’re taught from a commercial perspective that the price tag on an item is tied to its value. However, we shouldn’t take that as fact.
It’s important to do your research, whether you’re buying a new appliance, a new phone, or a new car. Don’t rely on pushy salesmen to define value. Figure it out for yourself and make educated decisions.
10. Treating Bonuses Differently

All too often, when people come into money, they see it as “spending” money rather than looking toward the future. We’re not saying you can’t spend some of it, but you should definitely think about investing, or at least saving, some of it.
This goes for your taxes, an unexpected bonus, or similar money coming in.