Middle Class Habits Keeping You in the Rat Race

Having spent 8 years of my life working in Investment Banking and three years studying accounting, I have seen first-hand the middle-class habits that keep people in the rat race. These habits keep them tied to a job they don’t like to sustain their lifestyle, while their greater life goals and ambitions are placed in the background. In this article, I’ll walk you through what these habits are and how you can avoid them.

Working for Less Than Your Worth

One of the biggest mistakes people make is working for less than their worth. It’s common practice for employers to pay their employees the least amount possible and just enough so they don’t quit. How many people do you know whose employers haven’t given them a raise at all? Or if they have, is it something insulting like three or four percent, which is less than the rate of inflation?

So, despite you having another year of experience, you’re getting paid less than you did the year before. And then when you leave the organization, they try to hire someone else, they realize they need to increase the salary in order to get anyone else to take the job.

A middle-class habit is just accepting this the way it is because it’s comfortable. You know you’re getting paid x amount on X day, no matter what. But this habit will keep you in a cycle, and finding a new job elsewhere could actually be the best decision you can make when it comes to getting out of the Rat Race.

Buying More Than You Can Afford

When people get their first full-time job, they get a promotion or a bonus, they tend to upgrade two things. The first is their car because even if you don’t have the money to buy a full, you can still afford the lease payments. And of course, this is structured in a way to make you buy a more expensive car than you can afford, and it’s also the number one wealth killer.

The second thing people will look to upgrade is their home because again, banks will lend you four or five times your salary to purchase your house. So even with a marginal increase in your salary, you can afford a lot more home. But you don’t want to buy more home than you can afford.

Relying on One Source of Income

If we have learned anything from the last few years, it’s that relying on one source of income is extremely risky. The pandemic caused millions of people to lose their jobs, and we’re seeing the same happening again with more and more layoffs being announced.

By having one source of income, you are one incident away from not having any incoming cash flow. A middle-class habit is to just rely on one source of income, being their day job. By doing this, you’re putting your whole livelihood and financial responsibility in the hands of your employer, and this is a super risky position to be in.

Ignoring the Importance of Saving for Old Age

Imagine if you were walking on the streets and you dropped fifty dollars because you had a hole in your purse. And then the same thing happened the next day, and the next day. You wouldn’t let that keep happening; you would either fix your purse or you’d get a new one.

The same thing applies when it comes to investing. Yet very few of us act on it, even though we are aware that by holding back on investing every day, we’re essentially losing out on the ability to let that money compound.

Consumption Versus Production

Money will come into your life and then it’ll leave.

This is a relationship that is often looked at in terms of income and expenses. Another way to express this is by looking at it in terms of production and consumption. Money will come into your life because you have produced some sort of value, and for the majority of us, this value will come in the form of labor, a job. Money will leave when you have consumed something, be it a house, a car, or a Netflix subscription.

Ignoring Financial Literacy

Financial mastery has a huge impact on our lives, whether we like to admit it or not. We put so much importance on our well-being, our mental well-being, our physical well-being, but so little actually on our financial well-being when really this plays an equally important role in our enjoyment in life.

Doing What Everyone Else is Doing

In today’s society, we are really under pressure to spend, and we have to do it to fit in. This applies to everyone, whatever your income level is. I have worked with people who are making a lot of money, way into the six figures, but they are still living paycheck to paycheck because they are spending to impress and to look rich, and to show everyone how rich they are, instead of actually being rich and building wealth.

The rat race isn’t about working a nine-to-five job; it’s about living life on such an edge where you are always chasing the next thing, whether it’s a paycheck or a material possession, in a way that your greater life goals and your ambitions are placed in the background in order to keep continuing this race.

Hopefully, this article gave you some ideas or triggered some thoughts into habits that you do not want to go down. Remember, the key to breaking free from these habits is to understand them, acknowledge them, and then make a conscious effort to change them.