Yahoo Finance How I Went From Middle Class to Upper Middle Class
Think people get rich by winning the lottery or inheriting wealth?
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A few do, of course. But 79% of millionaires never inherited a cent, based on a study of over 10,000 millionaires by Ramsey Solutions. The overwhelming majority of millionaires built their wealth from the ground up, themselves.
Most didn’t even earn huge incomes. Only 31% of millionaires earned six-figure incomes averaged over their careers.
“My journey from middle class to upper middle class was driven by strategic decisions and hard work,” says Brian Meiggs, founder of My Millennial Guide. These are recurring themes in building wealth, but how specifically did Meiggs and others climb the socioeconomic class ladder and become millionaires?
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Starting a Business
For Meiggs and many others, the path to financial freedom started with growing a business from scratch. “One of the most transformative steps was starting a personal finance website called My Millennial Guide. Over the past eight years, I have dedicated myself to growing and nurturing this brand, and it has fundamentally changed my life.”
“Running this finance website has provided me with the flexibility to work from anywhere, allowing me to design a lifestyle that balances both professional and personal aspirations. The success of the website has also enabled me to earn a substantial passive income. This financial independence has given me more control over my time and the freedom to pursue other interests and opportunities,” Meiggs said.
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Ongoing Education
Meiggs continued: “In addition to the financial benefits, operating My Millennial Guide has been a continuous learning experience. Staying informed about the latest trends and best practices in personal finance, online marketing and content creation has been crucial.”
Continuing to learn new skills that boost your ability to earn remains a tried and true path to greater wealth. Certified Financial Planner Robert Persichitte of Delagify Financial has seen it among his clients. “I have a client who went from being a mechanic to a software engineer with stock options and a high salary.”
“His story is a testament to the power of self-initiative,” Persichitte continued. “While formal education is a common route to higher earnings, he took a more direct path. He actively sought out classes and seminars to acquire the necessary skills and stood up for himself to secure fair pay at his new job.”
Networking
Persichitte adds that his mechanic-turned-software-engineer client had to proactively expand his network in order to make the climb from middle class to upper middle class. “It took a lot of networking to make a meaningful impact with those new skills, even after he developed them.”
If you take the entrepreneurial route, networking becomes even more important. No business exists in a vacuum, as Meiggs knows well. “Networking within the industry has opened doors to collaborations and business ventures that further expanded my reach and influence.”
Disciplined Budgeting
It doesn’t matter how much you earn if you spend it all on gadgets and shoes and luxury cars. Your wealth comes from your savings, the gap between what you spend and what you earn.
Persichitte explains that resisting the temptation of overspending helped his client get over the hump to upper middle class. “He did a great job of avoiding the biggest mistake, lifestyle creep. Many people who see higher incomes immediately buy a new car, plan their dream vacation or get a more expensive house. Spending more as you earn more is called lifestyle creep.”
“The better option is to prioritize saving — especially tax-advantaged savings. This will help propel you to the next level, which is independently wealthy.”
In Meiggs’ case, he funneled much of his savings back into growing his business. “The journey wasn’t easy, but the discipline in saving, budgeting and reinvesting earnings back into the business has created a compounding effect on my wealth.”
Christian Maldonado, founder of Finsult, sees his successful clients do likewise. “Our clients know every dollar coming in and out of their business, by evaluating their monthly reports as well as having their personal expenses and income tracked down to the dollar. This allows them to know how much extra money they have after their baseline expenses are covered, both business and personal, in order to use that money to invest to create more wealth.”
“They do not spend on luxuries as often as they could, instead they prioritize their place of living, food and health.”
Disciplined Investing
To truly accelerate your wealth, you need to put your savings to work for you.
Maldonado expands on not just avoiding lifestyle creep but investing for compound returns. “Usually when people start making more money, they tend to buy liabilities instead of assets. Cars, primary houses, watches, jewelry and the like are all liabilities and don’t actually produce more wealth.”
To build wealth, Maldonado suggests the following to his clients, “Invest in assets such as investment property, equipment to grow their business, commodities such as gold mines, et cetera. These seem ‘boring’ but will set you up for life in some cases when done correctly. Lastly, these clients are huge on reinvesting back into themselves, whether that’s in their own health and lifestyle or into their business. They know that pouring back into themselves will double or even triple their income as time goes on.”
As you climb each rung of the ladder, the rules and challenges change. Be prepared to adapt not just your finances but also your mindset as you work your way from middle class to upper middle class.
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This article originally appeared on GOBankingRates.com: How I Went From Middle Class to Upper Middle Class
