While there are no hard and fast rules, there are several items that the middle class is more inclined to spend money on. In response to a Business Insider hypothetical question on how they'd spend an extra $1,000, middle-class respondents claimed they'd be more inclined to save, as opposed to poor and working-class Americans who would prioritize debt repayment or affluent Americans who would favor investing.
"When we look at how the middle class typically spends their money, it's a mix of striving for a comfortable lifestyle and the reality of financial responsibilities," Zach Larsen, finance expert and CEO of Pineapple Money, said. "For many, that means saving for a modest home, a reliable car, and a good education for their children." A common goal is to create a financial safety net through retirement savings and insurance."
"When we look at how the middle class typically spends their money, it's a mix of striving for a comfortable lifestyle and the reality of financial responsibilities," Zach Larsen, finance expert and CEO of Pineapple Money, said. "For many, that means saving for a modest home, a reliable car, and a good education for their children." A common goal is to create a financial safety net through retirement savings and insurance."
According to experts, building wealth ultimately comes down to mindset. By understanding the way we think, we can change our spending habits and set ourselves up for greater financial success. Below is a look at the different ways the middle class chooses to spend their money — both the good and the bad.
"The middle class often carries a load of debt, from mortgages to car loans and those pesky student loans," Larsen said, stressing that these financial commitments can eat into discretionary spending and limit savings. "Taxes and healthcare costs can also take a significant bite out of their income."
Debt That Doesn’t Serve Them
"The middle class is all about investing in education because it's their ticket to getting ahead in life," said Horizon Finance Group finance consultant Rob Whaley. "They see it as a way to get better jobs and keep their finances stable."
Continued Education
“The middle class often invests in suburban real estate, prioritizing space and comfort,” she said, “whereas the rich might opt for premium locations or multiple properties and the poor typically rent or live in urban areas due to work proximity or affordability.”
Real Estate
“The middle class sometimes goes overboard with buying stuff, and it’s not a great deal,” Whaley said. “They get caught up in wanting all the latest things, even if it means racking up debt. It can mess with their finances and make them work like crazy to keep up.”
Brand-Name, Non-Luxury Good
“Wealthier people tend to buy cars with cash or on very short-term loans. The lower-income families that I see usually have purchased or have been given used cars from friends or family members, many of which are under $15,000 — and quite a few are not financed at all.”
Leasing Pricey Car
“Instead of travel experiences that the rich might indulge in or the staycations the poor might be restricted to, the middle class often chooses package holidays that provide value for money,” Sparrow said.
Vacation Package
“I believe in the importance of aligning spending with value and long-term benefits,” Toit said. This involves building businesses, investing wisely, cleaning up personal finances and leveraging automation tools and tricks. Toit added, “The goal is not just to earn but to create a sustainable lifestyle that allows for both enjoyment and growth without unnecessary financial strain.”