Friday, February 12, 2010

What is Middle Class?

Yesterday, I promised to tackle the reasons why the rich get richer, in contrast to the previous post - Why the Poor are Poor.

I'll delay that point for tomorrow's post. Today, allow me to give light to another category of people in the world of finance, the Middle Class.

To many, the Middle Class are neither rich nor poor. But for me, I consider them as still Poor for one simple reason. They are very vulnerable to becoming poor, simply by not doing anything. Becoming rich for them is difficult because they only know employment or self-employment.

A middle class is typically a person who has a high-paying job (example: a 6-digit salaried employees). Those who are self-employed / small business owner falls in this category.

Similar with the poor, they live a life of struggle. Their struggle is not because their income is not enough. As I said, they are high-income employees (the keyword there is 'employee') whose source of income is usually measured based on time spend in his or her job, or the amount of product or service he or she can deliver in exchange to their effort and time as a small business owner.

Maybe you're wondering why they are struggling despite their high-income.

The struggle comes from two primary sources:
  1. The manner of earning it 
  2. The habit of spending it.
As stated, middle classes earn their income through employment which require them to spend at least 5, 10 years or more, to get to a high-paying position, such as supervisor or manager or director or whatever.

When they get promoted, their income increases in proportion to number of rank and file employees they handle (this contributes to their headaches and stresses). Still, they are waged according to the time spend in the company.  In short, their income is directly proportional to the time they spent in their job. The corporate ladder is their life, where oftentimes office politics is the name of the game. They spend their time at work, working for somebody else's business, competing with their colleagues to get promoted. After several years, they realize they been working all their life that they've gotten old already, missed a lot of time away from the ones that are dearest to them.

The habit of spending their 6-digit salary often get themselves further to deep financial trouble. During paydays, middle classes spend their income with "stuff" they mistakenly refer to as assets or investments. They allow themselves to get strained with credit cards - a two edge sword - because they can't control their buying habits. They buy fancy gadgets, such as sophisticated cameras, cellphones, cars and sometimes a house - "stuff" that they think will make them look rich and not poor. These doodads drains money out from their pocket in a form of mounting credit card bills, loans and mortgages. When they do, they go back to their jobs and work themselves off (even if they vomit at the sight of their job) until they get burned, stressed out, and sick.

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