The Shrinking Middle Class: The Top 3 Reasons Why Are the Rich Getting Richer And the Poor Are Getting Poorer

“The rich are getting richer!” Have you ever heard this phrase? Yes, it’s true. Even with a bad economy and stock market crashing, rich people are getting richer. There are several key reasons for this. Here are the top 3 reasons the rich are getting richer, and the middle class is getting squeezed.

Reason #1. Financial Literacy is Not Taught in School

Schools teach us how to be employees. We are told to get good grades and get a degree to become more “marketable.” There is very little emphasis placed on being an entrepreneur or how to start a successful business. it’s also important to note many of the educators in the school system are employees themselves, so they may not be qualified to teach subjects on entrepreneurship.

Since these important topics aren’t discussed in school or frontline news in mainstream media, people aren’t aware of the opportunities available to them.

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Reason #2: Wealthy People Have Multiple Streams of Income

The average person has one job. Why? because that’s what we are taught. Get a nice paying job, deposit money into your 401k or IRA, work for 40 years, retire, then live happily ever after. Meanwhile, that one job is supposed to pay for all the following expenses:

  • Rent/mortgage
  • Food
  • Clothing
  • Electricity
  • Transportation/insurance/gas
  • Leisure activities

If a person needs more money, they will either work a second job, or attempt to get a better paying job.

On the other hand, wealthy people don’t follow this principle. Instead of relying one job for all their financial needs, they will have multiple streams of income. Not multiple jobs, 7 or more income streams. Having multiple revenue sources decreases their reliance on a single source of income. In addition, if one income stream is low, they have others to pick up the slack.

In addition, while the average worker gets paid 2x per month (the 1st and 15th), wealthy individuals with multiple income streams can get paid 2-4 times per week or more.

The Power of Passive Income

In addition to multiple streams of income, many wealthy people have passive income, which is money they can make without actively working on the income. This is different from the average person who works a job that pays them hourly or by salary.

In other words, if they don’t work, they don’t get paid. this can be a difficult position for individuals who want to work but can’t. This is where passive income come into play.

Top Examples of multiple streams of income and passive income include the following:

  • Rental property
  • Published books/royalties
  • Business ownership/franchises
  • Laundromats
  • Social media: monetized websites and online businesses
  • Bonds
  • Dividend paying stocks and mutual funds
  • Vending machines

By having multiple streams of income from a variety of non-related sources, a person can increase their probability of generating wealth and avoiding the middle-class squeeze.

Reason #3: They Own Assets

In addition to having multiple streams of income, one of the biggest reasons the rich get richer is they own items that retain their value and could increase in value over time.

Assets are important because they tend to perform well during times of economic uncertainty, inflation, or market downturns.

Top assets owned by the wealthy include the following:

  • Rental property
  • Precious metals (gold and silver)
  • Stocks and bonds
  • Businesses
  • Fine art

While the average person may stock up on toilet paper, bottled water, and paper towels, wealthy people stock up on gold and silver in addition to those essentials.

Central banks own tons of gold
Central banks own tons of gold

In other words, the average person spends the bulk of their money on items that lose value while wealthy people invest in items that can retain their value: items that can potentially make money for them.

See the source image
Rental property is an income-producing asset that can be passed down for generations.

What the wealthy do with these assets is the key: For example, gold and silver could then be liquidated to purchase rental property during a real estate crash or stocks during stock market crashes. Individuals who spent all their money on essentials like toilet paper or bottled water may not be unable to take advantage of these situations.

Another option for wealthy individuals is to use the proceeds from one asset to create or purchase additional assets, such as those described in Reason #2.

This is key to how the rich get richer and the middle class lose ground.

Call To Action

None of this information is taught in school, which is a big reason this problem exists. Ironically, this investment strategy has been quietly passed down from generation to generation at dinner tables and among wealthy families. It’s critical people understand the options they have and how to make their money work best for them. The middle class is shrinking, and the issues described above are key reasons for this dilemma.

Ask yourself these important questions:

  • Do you have any assets? If so, what are they?
  • Do you have multiple streams of income?
  • Are you working to create multiple streams of income?
  • If prices continue to rise, how will you maintain your standard of living?

Do you have any investment strategies you’d like to share? If so, leave a comment below.

Learning this info is critical to a person’s financial success and independence. Get more tips in my book Invest For Success: Millionaire Wealth Strategies Not Taught in School. Available on Amazon in paperback, eBook and audible formats:

Want more? Sign up for one of my online courses on entrepreneurship or passive income strategies on Udemy. See my library of courses HERE.

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