Are you in the middle class? If so, are you aware of the “middle class squeeze?” Even though the stock market is at record highs, many are worried about the shrinking or disappearing middle class. In other words, the rich are getting richer while everyone else is being left behind.
Some people are getting out of the middle class because they are making more money. In many instances its because their stock investments are paying off. Others however are beginning to feel the squeeze and see their dollars being stretched farther than ever.
Why The Middle Class is Shrinking
There are 2 big reasons for the shrinking middle class:
1. Rising prices/inflation. As prices rise on goods and services, the middle class must adjust their budgets accordingly. In most instances, this is because they only have one primary source of income, which is earned income. Wealthy people, on the other hand, own businesses and/or have multiple streams of income. In other words, they have more control over how much money they make. For more information beating inflation, read a previous post HERE.
2. Taxes. This follows along with rising prices: when taxes increase, budgets must be adjusted. Less money is available to purchase various items, which can slowly erode at a family’s standard of living. Another issue with taxes is the potential for increased income taxes. What many may not know is earned income (the most common type of income) is charged the highest tax rate compared to the other types of income (passive income and capital gains). Wealthy individuals may pay less in taxes because their income is not received from working a job, which is earned income. Instead, they receive income from passive investments.
For the middle class, everything hinges on one paycheck, and if they are married, 2 paychecks. Mortgage, insurance, food, utilities, etc. are all paid with one source of income. That paycheck is a constant amount: it doesn’t increase as the cost of living rises. Getting raises isn’t always guaranteed, and layoffs can happen at any time. In addition, finding a job that pays a reasonable salary can be difficult as well.
As children grow, more expenses can be incurred. This means the budget is squeezed even more, unless they can make more money with a raise, getting a second job or a new job that pays more money. All these things can have a tremendous impact on the middle class.
Avoiding the Middle Class Squeeze
There are 2 ways to avoid the squeeze of the middle class:
1. Create multiple streams of income. This is key. Too many people rely on one paycheck to pay ALL their bills. Why? The average millionaire has over 7 streams of income. Change your mindset on how you view money. A bonus is to create multiple streams of PASSIVE income. This is the key to accumulating wealth. Learn how to make money in your sleep.
The average person gets paid every 2 weeks. Why not create multiple streams of income so you can start getting paid every 2 DAYS?
2. Hold money outside the current monetary system. This includes gold, silver, and cryptocurrency. There are several reasons for this, but one big reason is to protect yourself from inflation. As prices of goods and services increase, the purchasing power of the dollar may decrease, but gold and silver tend to retain their value and become more valuable as well. They can be sold at higher prices, allowing you to maintain your current standard of living.
The average person is not knowledgeable on gold and silver. Asa result, they tend to overlook these assets and think they aren’t worth a look. This is a mistake. Consider the following recent news:
The central bank of Hungary, the Magyar Nemzeti Bank (MNB), has just announced a purchase of a massive 63 tonnes of Good Delivery gold bars, and in doing so tripled the nation’s gold holdings from 31.5 tonnes to 94.5 tonnes.
In its press release about the huge transaction, published 7 April, the Hungarian central bank explains its rationale for the dramatic purchase of what is approximately 5040 large (400 oz) gold bars, highlighting that gold has no credit risk and no counterparty risk, and so reinforces sovereign trust over all economic environments (normal and extreme), while being one of the most crucial reserve assets that a central bank can hold.Read the article HERE
Here’s info on Central Banks buying gold:
While dozens of the world’s economic leaders participate in extreme monetary easing policy, central banks have also been hoarding gold. Central banks accumulated over 668 tons in gld purchases this year, which is more than 2018’s record numbers. In fact, key drivers in gold demand this year stemmed from central bank purchases, most of which were bought (390 tons) during the first two quarters of 2019.Read the article HERE.
Why are countries and central bans buying so much gold? Why isn’t this discussed in mainstream news? This should make you think.
Another potential option is if the stock market crashes, these forms of money become more valuable, and can be used to buy assets that are now on sale. For more tips on saving for retirement outside of the stock market, read this previous post HERE.
3. Become a producer. The average person has a job and the income they receive from that job is fixed. The key to being able to survive inflation is by being a producer. This simply means to create products or services where you dictate the price. As inflation rises, you can raise your prices as well. This can help you keep up with both inflation and the cost of living.
Listen here as I discuss more about avoiding the middle class squeeze:
The key to saving the middle class depends on changing the mindset on how money works. Unfortunately topics of this nature aren’t discussed in school. As a result, people simply don’t know they exist. It’s critical a person be proactive and seek this information on their own. What choice do we have?
Creating multiple streams of income is more important than ever. Get more tips in my books Invest For Success: Millionaire Wealth Strategies Not Taught in School, and Planting Seeds: The Children’s Guide to Entrepreneurship. Both Available on Amazon.
Get more tips in the Yes We Did Online Course “Tired of the 9 to 5? How To Retire Early With Passive Income.”