Rich vs middle class vs poor people – how they spend their money?

I share everything I know about money, investments and financial related ideas in this blog.

Also, I publicly share my net worth, my investment portfolios, and my total debts, and highly hope that someone could learn something from my financial successes and failures, and avoid costly financial mistakes in their life.

I love to read books, especially financial related book. If you want to be successful in your life, I would strongly recommend read good books in your fields.

When you read a book, you could get a full experience or knowledge of the book author for a tiny cost.

Warrant Buffet often says “Best investment you could make is invest in yourself, more you learn more you make”.

Thus, you should buy great books from online / local book stores OR borrow from public library and educate yourself and earn more money.

My favourite place to buy books is Amazon, where you could read real reviews from other customers and buy good books.

A few years ago, I bought a book called “Rich dad, Poor dad” by Robert Kiyosaki. It is a highly recommended book for those who are looking to improve their financial life.

Actually, the book motivated me to think and do differently than ordinary people do. It encouraged me think about financial freedom.

It is one of the best motivation books I read.

According to researches, motivation doesn’t last for long. Thus, we must read something every day to keep Ourselves motivated.

So, I re-read the book recently, and I would like to share some interesting concepts about what rich, middle class and poor people think and do differently.

There are so many other things rich and poor people do differently – such as Surround them by success and like-minded people, keep learning, maintain good habits, take risks, etc. You could count lot more. In this post, I just discuss about how they spend their money.

Before I discuss, I would like to tell one important thing. Family situations, physical disabilities, illness, societies, political situations in some countries, family backgrounds and other circumstances may not allow some people to become financially rich.

So, the scenarios below may not suitable for all.

It is just a general concept I learned from the book and other personal finance blogs.

How poor people spend their money?

Usually poor people rely on one income stream.

They spend most of their time in front of TV, especially reality shows. They don’t spend time to get advanced in their career or think about wealth building.

They spend money for lottos and gamblings, and look for options to get rich in overnight.

Also, when poor get money, they spend it for ‘stuffs’ that they don’t really need. They buy stuffs for cheap from local dollar stores, and they mistakenly think they are getting good deals for their money, but they don’t.

At the end, they will end up having lot of ‘stuffs’ in their homes, but money in their account. Majority of this group is renters not home owners.

And, they don’t track their spending habits.

I was in this group few years ago, and now moved to the middle-class group 😀 .

---

---

How middle-class people spend their money?

This group of people usually get good education and land in a decent paying job or own a small business.

They spend little bit of their time for watching TV, and work hard and take more responsibilities to improve their career and to get promotions. More responsibilities translate into more stress in their life.

And, majority of them work for other people (rich) and rely on their paycheque to meet their financial needs.

Majority of middle-class people spend more than 30% of their income for tax. Tax is one of the biggest expensive for this group of people because they don’t know how to legally pay less or defer tax like rich people do.

Also, they buy big ticket items using debts, such as big homes, big screen TVs, expensive cloths, luxury cars, fancy vacations, etc, and work even more hard to pay back for their loans. They think they own assets, but in reality they own liabilities.

They spend more than what they make and end up being in debts for long time. This forces them to work for longer hour and longer period.

This group of people mistakenly think they are rich because they have all they want, but they are not.

They live paycheque to paycheque, and cannot afford to maintain their lifestyle if they lose their high pay job.

They have to work for money whether they like it or not.

Some people save little bit money for their retirement and let other people to manage their wealth because they don’t have enough financial knowledge to manage for themselves.

Finally, they retire after they get old enough, but unable to enjoy their retirement life because of age and health issues because of their long stressful career period.

Currently, I am in this group, but making right progress to move to the ‘Rich’ category 😀 .

How rich people spend their money?

Rich people know time is money. They spend time to educate themselves and constantly look for opportunities make more money.

Most of this group of people own business and hire educated people to work for them.

Therefore, they let money work for them instead of work for money.

They usually setup a system to receive income from multiple sources.

And, rich people know how to legally avoid paying massive taxes for their income. Warren Buffett, one of the richest persons on this planet, said he pays less tax rate than his secretary.

In early stage, they spend much less than what they earn and accumulate assets (such as stocks, bonds, rental properties, businesses, etc) using the rest.

Those assets generate more money so rich could accumulate more assets and let enjoy the compounding growth.

Rich people usually delay purchasing those big tickets items, and buy them later - when they have enough money to buy and maintain their wealth status.

They keep educate themselves, and rarely think about retirement because they enjoy what they do.

Hopefully, I will be in this group in few years as I making right progress to get here.

If you want to become rich, learn about rich people habits, educate yourself and follow your passions. Read good books about finance, money management and investing. Set a goal and work toward to reach your gaol.

Once again, I totally understand that some uncontrollable situations and health issues keep some people in poverty.

If you are not one of them, then you can be become rich when you make right actions.

Resources:

• Rich dad, Poor dad” by Robert Kiyosaki
• Good investment related books
• Amazon

Disclosure: This post contains affiliate links, which means I will earn a commission if you decide to make a purchase (at no additional cost to you).

---

---