Middle-class problems: why we keep making this expensive mistake
Social conditioning has this way of making us dumb with our money. I think it’s time we smarten up.
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If you want to understand the most obvious (yet the most overlooked) difference between the “very wealthy” and the middle class, take a look at the way they finance their luxuries.
If you look around, you’ll see that the middle class — not just here in BW but everywhere — always ends up paying for their luxuries from their primary income source.
In other words, their salary pays for everything.
Think back to when you got your first serious job, or your latest promotion, or had some unexpected growth in your business.
Within days you were excitedly making copies of your pay-slip so you could secure the loans you needed to get new stuff — using your salary (your primary income source) as collateral for this lifestyle upgrade.
Full disclosure: I did this too.
Whether it’s a bigger, better car, a new wardrobe, furniture or electronics... the middle class is rushing headlong into debt on a daily basis to fuel this lifestyle obsession.
As they do, they deplete their earnings and cripple their ability to get to the next level financially.
And that's why they stay middle class.
I understand: you work hard and deserve to indulge.
It feels great to enjoy the fruits of your labour and the social status that comes along with it.
Please don’t get me wrong. I want you to have all the best things.
But…
These long-term financial obligations create no revenue of their own.
In other words: they don't pay their own way.
Not only do these luxuries create no income, they are also rapidly depreciating in value with every passing day.
And overnight, you wiped perhaps hundreds of thousands off your net worth at a time when you should be amassing real wealth and growing fast.
The middle class mentality routinely exchanges real capital for social capital…
Sacrificing the opportunity to build sustainable, generational wealth — all for the short term thrill of looking wealthy.
Don't fight me, please. I told you I did these things too.
It’s important to understand that this is not how truly wealthy people play the game.
When the time comes to be extravagant (most likely after years of sacrifice and self-discipline) the truly rich will pay for their luxuries using their investments.
In other words, through their secondary sources of income.
This is money that they’ve made on their money — and passively, too, barely lifting a finger.
In this way, they keep their primary source of wealth untouched.
And so, despite the acquisition of the newest and most instagrammable, envy-inducing luxuries like cars, designer clothing and overseas holidays…
They still get richer.
I’m not a financial advisor but I can tell you from experience that it’s always better to hold back on any non-essential lifestyle accessories until you can pay for them using money you’ve made on your money.
Your salary is sacred. Never deplete the primary income source.
Trust me, you’ll enjoy the finer things in life even more when you pay for them effortlessly (and risk-free) in this way.
Let me know if this simple shift in thinking is making sense for you.
Parting shot: Drone pilot and photographer Lucian Coman has been capturing the essence of Botswana for more than 20 years. To view his portfolio and make an order for your personal or business use, contact him by email using the button below.