11 Things Middle-Class Families Waste Money On That Rich People Avoid
It's not always a choice.
Krakenimages.com | Shutterstock While there are a number of lifestyle choices and mindsets that play a role in keeping lower-class households living in financial uncertainty, the state of the current economy — riddled with wealth inequality, lacking opportunity, low financial literacy, and institutional corruption — play a much more significant role. It would be impossible to pick apart the things middle-class families waste money on that rich people avoid without recognizing these larger influences, although they often go unaddressed in societal discourse, specifically amongst the wealthy.
These small daily choices and investments may not transform middle-class families into their wealthy counterparts, but making the intentional choice to avoid them from time-to-time could help to unshackle them from the stress of living paycheck to paycheck or remaining stagnant in their situation.
Here are 11 things middle-class families waste money on that rich people avoid
1. Loans and interest payments
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Middle-class families are not only facing higher interest rates on their debt than the rich, they're also being directly pushed farther into economic insecurity as a result of wealthy demographics financial endeavors. They may be "wasting" money on interest payments and overwhelming debt payments — whether it's private, student, or credit card investments — but it's wealthy households contributing to their financial insecurity.
Economic advisor Maude Toussaint-Comeau also argues that many middle-class families with credit card interest rates around 15% are spending more than 30% of their monthly income on debt payments, further sabotaging their ability to save for emergencies, retirement, and rising costs.
Of course, this is one of the things middle-class families waste money on that rich people avoid not by choice: more and more middle-class families are simply relying on credit cards to survive paying basic necessities, unexpected costs, and housing than ever.
2. Materialism for status
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Many middle-class families spend on status symbols to cope with their desire to appear more wealthy, living beyond their means to keep up with the fashion trend cycle and everyday costs like going out to eat or paying for a car outside their means of affordability.
From lavish vacations, to food purchases, and luxury clothing investments, some even take on debt to fund their status expenses, without the disposable income to truly afford their costs.
In a society where many people, especially low-income and middle-class families, are struggling to find a sense of belonging and community without spending money, it's not entirely surprising that they're relying on overspending to cope with their emotional turmoil and distress, but it's simultaneously sabotaging their desire for financial comfort and stability.
3. Lottery tickets
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Grappling with the stress of financial insecurity and trying to spark a feeling of hope amid the despair, America's poorest low-income and middle-class households spend 33 times more of their income on lottery tickets and gambling than the rich.
While it may seem like a "waste" of money for the wealthy, who already have a disposable income, meet their basic expenses without worry, and have money to spend on joyful endeavors like vacations, new cars, and decorating their living spaces, for low-income households, it's a powerful — yet sometimes misguided — opportunity to build hope and stability amid the chaos of financial uncertainty.
4. Late fees
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Considering more than half of Americans feel like their money situation negatively impacts their mental health, according to a Bankrate survey, it's not surprising that they're relying on debt to feel "credit rich" and prepared, no matter how misguided it may seem. Many rely on their credit for expenses they can't afford or unexpected emergencies, urging them to spend money they don't have and backload an expense that will burden them in the long-term.
This is exactly why middle-class families also tend to "waste" more money on late payments and fees than the rich. They're spending more money with credit cards than they have, so when it comes time to actually pay them off, they're forced to effectively plan their monthly income to account for the payments. If they're not strategic, they're forced to tackle late payments and added interest until they have the money to pay it.
5. Flashy brand-name items
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There's a misconception that many rich people opt for flashy name-brand items to flaunt their wealth, but the truth is that many choose "quiet luxury" and unsuspecting status symbols to signal their wealth, while middle-class individuals tend to opt for visible displays of their expenses.
According to experts from the University of Michigan, many middle-class individuals are wasting their money on designer labels to feign a sense of misguided wealth, and many of these brand's marketing tactics and advertising strategies are feeding into their desires.
Despite the quality and longevity of true designer products declining in recent years, many middle-class individuals spend with these brands and rationalize it as "an investment," causing them to spend and waste more money on things like clothes and accessories than other income demographics.
6. Major home or car repairs
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According to a CNBC investigation on millionaire habits, many rich people don't "waste" money on major home and car repairs, instead opting to completely replace them when something goes wrong. Considering they have the money to spend outright, they rationalize replacements over repairs by suggesting they're better investments in the long-term — a replacement is sure to last longer than a repair would.
However, this is one of the things middle-class families waste money on that rich people avoid, considering they have less disposable income to invest in buying a new car or a new home when something goes wrong. Instead, they're stuck feeding money into issues and problems that usually end up costing them more in the long run.
7. Processed and packaged foods
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Wealthy people are more likely to steer clear of processed and packaged foods that contribute negatively to their health, shopping in organic grocery stores and farmer's markets that low-income individuals simply can't afford. Many believe these expenses are a waste of money, arguing that the health outcomes that are sparked by poor and processed diets tend to add up financially in the long run, but for many lower-income households, it's the only choice they have.
From living too far from high-end grocery stores, to lacking the financial means to pay for these fresh products, and even being too busy to intentionally workout, middle- and low-class families often "waste" money on accessible and convenient foods to feed themselves and their families.
Of course, wealthy people's ability to afford fresh and nutritious food, workout classes, and even preventative healthcare is part of the reason why they tend to be healthier and live longer lives than their low-income counterparts.
8. Fast fashion and cheaply made clothes
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Wealthy households are far more likely to purchase clothing and accessories for longevity over trendiness, while low- and middle-class families tend to fall into the trap of fast fashion and the ever-evolving trend cycle. From fleeting fads to cheaply made clothing at a discount, many middle-class people "waste" their money on these expenses, constantly replacing and repurchasing items that don't last.
While there's certainly an important discussion to be had around the affordability of truly sustainable fashion, for some low- and middle-class families, spending on fast fashion websites and purchasing fleeting items can be an unhealthy coping mechanism for their uncertainty.
9. Outdoor tools and machinery
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With the disposable income to purchase service workers' labor to do their household and yard work for them, many wealthy people don't "waste" money on outdoor tools and machinery — or the repairs and replacements associated with their upkeep.
By allowing someone else to bear the burden of these tasks, wealthy families also get to enjoy the benefits of their free time, relaxing and unwinding while middle-class families do yard work or stress about how they're going to afford their lawn mower repairs.
10. Renting
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According to housing experts from Harvard University, almost half of middle-class families are currently "rent-burdened" by their housing costs, spending much more than 30% of their monthly income on rent, not accounting for unexpected additional costs like owning pets, paying for parking, or utilities.
While wealthy people continue to grow their assets and feed into investments like homeownership and real estate, renting is often putting middle-class people behind. While they may save on household repairs and maintenance, in the long run, they're likely "wasting" money — of course, not by choice — by renting over buying a home.
11. Fast food and dining out
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Similar to the tendency for middle-class families to purchase more processed foods from their grocery store, they also tend to eat more fast food and dine out more often than their rich counterparts. While this is one of the things middle-class families waste money on that rich people avoid, it's not often a choice, but a matter of convenience and necessity for families without a lot of disposable income, time to grocery shop, or knowledge about budgeting their food.
While the rich may spend more money on their occasional restaurant trips and dining out experiences, the middle class often uses them as a means of convenience — feeding their families without having to overspend at the grocery store, take the time to prepare food at home, or worry about wasting food they never use.
Zayda Slabbekoorn is a staff writer with a bachelor's degree in social relations & policy and gender studies who focuses on psychology, relationships, self-help, and human interest stories.
