Personal Finance

3 Steps to Escape Middle-Class Financial Mediocrity

Expertise: Personal Finance
13 Articles Written
middle-class-mediocrity

I needed a new audiobook. In the year and a half since my first daughter had been born, I’d read three or four parenting books. These covered topics like brain development and the traits that will make your child successful. It left me feeling uneasy. I was a smart kid growing up. I did well in school and managed to get an Engineering degree. But I didn’t actually consider myself all that successful, at least not financially. I mean, I made pretty good money compared to the average person, but my wife and I had money concerns like everybody else.

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I was out for a long walk to get some exercise, pushing a stroller that now had two tiny little passengers. They were depending upon me. I would be lying if I told you that didn’t weigh heavily on my mind. I decided to listen to another parenting book. This time, I found one called Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki. “Well,” I thought, “I’d like to teach my kids about money.” The problem was, I didn’t know anything about it. “Maybe this will help.”

Little did I know that the lessons I would find in that book would change my life.

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Denial

The thing is, it hadn’t really occurred to me that my life needed to change. I had a university education, a successful career, and a solid income comfortably above the national median. Based on income alone, we weren’t just middle class—we were upper middle class. Yet when it came to money, things weren’t so stable. We had a house with a mortgage that we were paying off slowly. But one month we would have $20,000 in our bank account, then before I knew it, we’d be struggling to pay for car repairs. What happened? We couldn’t put a finger on where the money had actually gone.

What I didn’t realize then was that I suffered from what I now refer to as “middle class mediocrity.” Like so many others, I was raised to believe that all you needed to do was to be smart and get a career. After that, you were pretty much a success.

Related: 12 Reasons You’re Poor

Except it doesn’t work that way, at least not anymore. These days, people are talking about the inequality gap and the disappearance of the middle class. When I was growing up, the middle class were the people who gained a specialized skill or became managers. This usually required some form of extended study, apprenticeship, or experience. The idea was to get educated, land a job at a good company or government department, contribute that special skill for 40 years, and then have company and government pensions to retire on comfortably. That’s what my dad did. People were looked after. The main thing they usually needed to do financially was pay off their home, something they could generally achieve over the course of a working career.

Entitlement

Now people are on their own. Company pensions have vanished, and government pensions are below the poverty line in many countries. Unfortunately, most people haven’t figured out what that really means. For those who do not understand personal finance, the education and decent income typical of middle class tend to result in a false sense of prosperity and even entitlement. I get it: I am a computer engineer, and my wife is a veterinarian. Surely that means that we deserve some of the good things in life, right? A co-worker of mine gave voice to this mentality. He said, “I have a good career with a good income in a prosperous nation: It is my right to not have to think about money.”

It is with this mindset that middle-class families spend more and more on their home, cars, vacations, education for their children, nice furniture and electronics, expensive tablets and smartphones, and more. Not actually having the money in the bank to pay for such items is a triviality; financing is available to people with good incomes, so there is no need to go without. Another friend recently asked me, “What is wrong with a car loan and buying stuff on credit cards?” These are well-educated people, some with multiple degrees. But middle-class mindset simply does not understand how money works.

Shame

In an incredibly brave article published in The Atlantic entitled “The Secret Shame of Middle-Class Americans,” author Neal Gabler poignantly and convincingly described this condition from firsthand knowledge. I sympathize with his fear, bewilderment, and even anger. After reading Rich Dad Poor Dad for the first time, I felt all of these emotions and more. It was easy, at first, to deflect the blame elsewhere; I blamed my parents and the education system.

I have a good friend who overcame extreme poverty and an upbringing in an environment surrounded by drug abuse to become a very successful entrepreneur. We would be in the middle of a deep discussion, and I’d become agitated and frustrated. Finally one night when we were talking, I put my finger on it: I don’t have the excuse or baggage of a bad start in life. Instead, I had every opportunity to become successful. Yet into my late-30s, my achievements were average at best. The reality is that I was the epitome of mediocrity trying to convince myself of my own success.

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Related: The Foolproof Monthly Budget: How to Save Up Money to Buy Investment Properties

Empowerment

Once I realized this, I was free to act. It is very confronting to realize that you are the result of the decisions that you have made in your life. It is so difficult to accept that many refuse to see it. But this realization has an amazingly powerful corollary: If I am responsible for where I am now, then I am also responsible for what I can achieve in the future. This spirit of self-reliance empowers me to redesign my life in accordance with my dreams.

Action

If you are ready to take charge of your own life, the following three steps will keep you busy for the next few years at least.

  1. Educate yourself on personal finance. Read widely. There are many great books and articles on personal finance, real estate investing, and more. BiggerPockets and other sites often publish lists of the best books. Use them.
  2. Take control of your own finances. Get yourself or your family on a budget and start tracking where your money is going. Without this, you can’t tell your money what to do.
  3. Take action to build a better financial future. It might be through real estate investing, starting your own business, or some other venture. Start the process of building wealth, and you will be thanking yourself before you know it.

The inequality gap is a fissure that runs right through the middle class. It’s not so much that the middle class is disappearing; it’s that it is split on either side of the widening gap. Those who take charge of their financial situations may find themselves among the wealthy. Those who do not will become indistinguishable from the poor. Which side do you want to be on?

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In 2013 Brad awoke from lifelong financial slumber and took responsibility for his family’s financial future. His primary vehicle for wealth-building is buy-and-hold real estate. He is passionate a...
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    Eric Petersen Rental Property Investor from Lehi, UT
    Replied about 3 years ago
    It’s funny. I have put myself in the same rut. I am a single guy making a great income. I house hack, I don’t have crazy habits, etc but somehow I still end up spending way more than I would like and right now i have $10,000 in CC debt because I decided to live my crazy cool travel lifestyle while saving for the down payments of a house. Doy, don’t do that! Luckily I’ll be out of it by mid-Winter but it is never a fun place to put myself. In a minute I could be out of job and all of the sudden I have all these bills I have to make up and how am I going to do that without a good amount of cash ready to go? Maybe I should lower my costs too huh? This article is another testament to just making sure you are doing things in the right order and not using consumer debt to get ahead faster than my investments and income allow.
    John Murray from Portland, Oregon
    Replied over 2 years ago
    I have to tell of my success which pales in comparison to 2 of the neighborhood kids I grew up with. We are all multimillionaires but the 2 others I speak of here branded their names. We were just kids in the same elementary school, same high school and same small town in the NYC metro area. Dave became a world famous entrepreneur chef and Ray was the most winning NASCAR Crew Chief in history. Both branded their names. There is one more Mike, he made it through sales.
    Erik Orozco from Mcallen, Texas
    Replied over 2 years ago
    Thank you for sharing Brad! As a father of a 9 month baby girl this article speaks volumes to me. Without BP, its contributors with countless advice, the books recommended I wouldn’t be where I’m at now.
    Johnathan Frederick from Lubbock, TX
    Replied over 2 years ago
    Very strong and loud. I needed this. Thank you, sir.
    Eliseo Magallon from Lawrenceville, Georgia
    Replied over 2 years ago
    Brad, Awesome article! I believe for me to even be a successful investor I must first be successful with my own personal money because whatever problem I have with my own finances in order (which I don’t! I’m 10k in CC debt and I’m a student with no real job lol) I won’t be able to be a successful real estate investor. Luckily, I have sat down and wrote out all my expenses and how much money I can toss at my CC debt and I will be out of it by September hopefully!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied almost 2 years ago
    Great article!
    Robert Cantero from San Diego, California
    Replied almost 2 years ago
    Thank You Brad for sharing your story…It is very inspirational and informative to me!
    Christine Kwasny Rental Property Investor from La Cote, Switzerland
    Replied almost 2 years ago
    Well said Brad. Self-reflection and financial knowledge seem to be shockingly rare, and a little goes a long way towards improving one’s quality of life.
    Chris DeMello Investor from Las Vegas
    Replied almost 2 years ago
    Great article! Financial education Is extremely important. My life also changed after getting financially educated, and reading Rich Dad Poor Dad. I live on the Big Island where Robert Kiyosaki grew up, so it was extra exciting to read his book. My wife and I are so passionate about helping others get financially educated. We are master instructors with 101 Financial. We provide personalized financial education classes for each of our students, and meet privately over the phone, via webinar or in person to help them organize their entire financial lives and to get them out of bad debt in shortest time possible. I was born and raised in Hawaii, and I have an 8 grade education. I got a job at Merrimans restaurant at 16 yrs old and 24 yrs later I am still there as a part time bartender. After the first 19 yrs of my working life, all I had to show was 30k in debt, no savings, poor credit and no assets. After getting financially educated in 2013, I now own 2 homes in Hawaii, buying our 3rd in Las Vegas, 800 credit score and consumer debt free. I’m also finally quitting my “job” after 24 yrs and go full time with investing and teaching finances with my wife! I honestly thought I couldn’t do anything in life because I didn’t go to high school or I just wasn’t smart enough. Financial education opened up a whole new world for me I never thought possible, and thats why I love sharing what we do at 101 Financial because it’s so powerful!! We have a great 5 min video explaining how we do it: 101financial.com/peace Thank you for your article! We need to talking more on the importance of financial education!