Reaching the upper class after being poor means you move on from stretching every dollar to enjoying more financial freedom.
“Our behavior tends to change quite a bit as our income shifts from scraping by to having a bit more wiggle room,” said Tom Bruzek, land buying specialist at Selling Land Fast.
We’re No Longer Watching Every Penny
“One thing that always strikes me is how closely people watch their spending when funds are tight,” said Rhett Stubbendeck, finance and insurance expert at Leverage Planning.
“I had a client who knew exactly where every cent of his paycheck went. But as he became more comfortable, he let go of tracking every little expense,” said Bruzek.
“Back when money was tight, we’d scrutinize every dollar. But as things improve, that tight grip on the budget tends to loosen up,” said Bruzek. “Suddenly, we’re not sweating over every latte or impulse buy anymore.”
We Place Greater Value On Time
“Then there’s the shift from clipping coupons to valuing time over small savings,” said Stubbendeck. “This same client used to spend hours looking for the best deals. As his financial situation improved, he realized his time could be better spent elsewhere, like growing his business or enjoying moments with his family.”
We’re Less Focused On Careful Budgeting
“Being super careful about budgeting is one financial habit that those who move from the lower to upper class often stop following,” said Carter Seuthe, CEO of Credit Summit.
“While it’s understandable that a person who’s not living paycheck-to-paycheck may not need to be as strict with following a tight budget, it can end up being a slippery slope into bad habits should this habit be lost altogether,” said Seuthe. “It’s a big reason why so many people end up falling out of the upper class–they stop thinking they need to be strategically planning their budget and finances.”
We Value Investing Over Consuming
“One consistent trend I’ve noticed is the shift in spending habits as people move up the financial ladder,” said David L. Blain, CFA at BlueSky Wealth Advisors.
“Initially, there’s a significant focus on consumption–buying the latest gadgets, dining out frequently, and prioritizing immediate gratification,” said Blain.
However, he observes that as people transition towards greater wealth, there’s a clear pivot towards investment.
“This doesn’t just mean stocks and bonds; it includes investing in their health, education for themselves and their children, and even in experiences that enrich their lives rather than just filling them with possessions,” said Blain.
We Leverage Debt For Financial Growth
Another observation Blain has noticed among those who have climbed the socioeconomic ladder is the change in their approach toward credit.
“Initially, credit cards and loans are often used out of necessity, to make ends meet or fund emergency expenses,” said Blain. “As financial stability improves, the use of debt shifts towards leveraging for growth. It becomes a tool to finance investments such as real estate or business opportunities that provide a return, rather than a means for immediate consumption.”
He says this strategic use of debt is indicative of a more sophisticated understanding of financial tools and how they can work in one’s favor.
We Become Less Risk-Averse
Another common trait seen among those climbing the social ladder is the transformation in managing risk and uncertainty.
According to Blain, their attitude towards risk changes dramatically.
“In the beginning, there’s often a hesitancy to invest in anything perceived as risky, stemming from a fear of losing hard-earned money,” said Blain. “However, with greater financial literacy and the guidance of a fiduciary advisor, there’s a realization that calculated risk is a vital component of wealth accumulation.”
He notes that diversifying into different asset classes, including those with higher volatility, becomes an accepted practice for long-term growth.
“This evolution from a risk-averse to a risk-aware mindset is crucial for transitioning from merely having money to truly building wealth,” said Blain.
Jonathan Feniak, general counsel at LLC Attorney, agrees this also translates to their openness in investing.
“In my experience, those in the lower-income bracket are generally hesitant or unable to invest in stocks, bonds, or real estate,” said Feniak. “As their financial situation improves, they become more open to diversification and recognize the benefit of different investment avenues,” he added. “This switch from a saving-only mindset to an investing-oriented one is a notable evolution.”
