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The middle class in India or any country in the world is known for its hard work, honesty and simplicity. Middle class families give very good values to their children, but when it comes to money, investment and wealth management, sometimes the old and suppressed thinking passed on from generations stops a person from progressing financially. Since childhood, we are taught some things which sound very safe and good, but in real life they work to keep us poor or confined to a single economic circle. If these financial lessons and mindset are not changed in time, it becomes difficult to achieve financial freedom even after a lifetime of hard work. Let us know which are those 8 money related lessons of the middle class which can become the biggest wall in the path of your progress.
1. “Saving money is the biggest savings” – You cannot become rich just by saving.
It has always been taught in the middle class to keep a large part of their earnings every month in a bank account or fixed deposit (FD). There is no doubt that saving is a good habit, but just saving money and not investing it in the right place is the biggest mistake. In today’s time, the nominal interest earned on bank accounts or FDs cannot compete with the speed with which inflation is increasing. This means that the value of the money you save is decreasing over time. Instead of saving money, rich people invest their money in such places from where they can get compound interest and high returns.
2. “Taking a loan is the biggest sin” – Not understanding the difference between good and bad debt
Taking loan is viewed very badly in middle class families. Our elders have always taught us to never borrow from anyone and stay away from debt as much as possible. To some extent, this applies to credit card debt or personal loan taken to buy expensive goods, which is called ‘bad debt’. But rich people understand the power of ‘Good Debt’. They take loans to expand their business, buy real estate or build property that will earn them more income. Being completely afraid of debt prevents you from ever taking big financial risks and building a big business.
3. “Don’t take risks, secure job is everything” – Big returns impossible without risk
“Son, study well so that you can get a stable government or secure job, life will be set.” This dialogue is heard in almost every middle class house. Having a job isn’t bad, but just seeking security and never taking any financial or business risks is a big part of the mindset of poverty. History has shown that no person in the world has become extremely rich just by doing a secure 9 to 5 job. To earn big money, it is necessary to take calculated risk to some extent, but the middle class mentality always shy away from taking risk due to fear of failure.
4. “Spending on ostentation and status symbols” – Aamdani Athanni Kharchha Rupaiya
There is a strange pressure on middle class people to maintain their ‘respect’ and ‘status’ in the society. They spend their life savings on expensive clothes, cars, or lavish weddings beyond their means, even if they have to take loans to do so. This is called the ‘rat race’ in financial orthodoxy, where one spends money to look rich, not to actually become rich. In contrast, people who are truly rich focus less on appearance and more on building assets.
5. “Talking or learning about money is dirty or greedy”
In our society, talking openly about money, investments, stock market or business profits at the dining table is considered a sign of rude or greedy nature. Children are never taught how money works, how to save taxes or the magic of compounding. Due to this lack of financial literacy, when they grow up, they do not understand where to invest their hard-earned money. Schools and colleges teach us how to get a job, but they don’t teach us how to make money work for us, and it is this ignorance that always holds the middle class back.
6. “Only rich people can buy expensive things” – Putting yourself in a limited mindset
Whenever a person from the middle class sees an expensive sports car, luxury villa or high-end gadget, the immediate expression from his mouth is – “This is not for us, only rich people can buy this.” This is such a limited mindset (Scarcity Mindset) that subconsciously makes you believe that you can never become rich. Instead, a person with a successful and wealthy mindset thinks “How can I afford this?” or “What do I need to do to get to this level?”
7. “Taught since childhood, ‘Spread as many legs as you have a sheet'”
This saying sounds very sensible, but its negative impact is very deep. It is interpreted to mean that you should reduce your wishes and dreams according to your current income. If your income is low, then you should stop dreaming big. On the contrary, modern and rich thinking says to expand your horizons i.e. find new ways to increase your income. When you consider your potential to be limited, you never try to generate additional sources of income (Multiple Streams of Income).
8. “Work for money, don’t make money work for you.”
The biggest and last mistake of the middle class is that they work all their life only for money. They wake up in the morning, go to office, get salary at the end of the month and then pay the bills. If they stop working, their income also stops. Conversely, rich people create systems, businesses, and investments that continue to make money for them even after they go to sleep, which is called passive income. As long as you keep making money only by selling your time, you will not be able to become financially independent.
Conclusion: Change Your Thinking and Move Towards Financial Freedom
Old and suppressed financial habits never allow a person to move forward. To move out of the middle class and become financially prosperous, first of all you have to say goodbye to your old thinking and learnings which keep you limited. This cycle can be broken only by learning the skills of saving money as well as investing, ability to take risks and building assets. Change your thinking in time, because financial education is the key that can take you and your family out of poverty and give you a prosperous future.