When it comes to income class, many people find themselves somewhere in the middle — neither rich, nor poor, usually making ends meet while struggling to get ahead. Many economic factors come into play as to why this occurs, one of them being purchases that the middle class continue to make, which only keeps them from ascending into a higher tax bracket.
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Are you middle class? If so, check out these five purchases that are keeping you from getting richer.
New Cars
Specifically, the ones with high monthly payments.
“Unless you live in a city with excellent public transportation, you likely need a car. However, if the car you already have is in good working condition, keep driving it,” said Mark Henry, founder and CEO of Alloy Wealth Management.
Henry knows that it can be tempting to go out and buy a nicer, newer car if you know you can cover the down payment, but cautioned that locking yourself into a car payment when your current car works fine is a waste of money you could be saving or investing.
“If your car needs frequent maintenance and you end up dumping money regularly into repairs, it might be a wiser financial decision to upgrade,” Henry added, “but that doesn’t mean you need a brand new dream car.
He highlighted that a used car payment averages about $200 less than a new car payment, freeing up $200 you could use to pay off student loans or deposit into a 401(k) or IRA.
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Unnecessary Fees and Recurring Costs
Monthly subscriptions to streaming services, gym memberships, delivery services and other conveniences often go unnoticed, according to Melissa Murphy Pavone, founder at Mindful Financial Partners. “Combined with lifestyle creep — incrementally upgrading living standards as income increases — they can drain financial resources.”
“Taking stock of your subscriptions regularly can help you save a ton of money,” Henry explained. “Even if something costs just a few dollars a month, that adds up quickly when you are subscribed to 10 things you don’t really need or use.”
Henry pointed out that some bank and credit card apps now have features that will track recurring charges for you, making it easy to keep track.
“If you find that you are struggling to stay on top of recurring charges, find an app that works for you (preferably a free one) and be sure to utilize this feature,” he said.
Impulse Buys
Large or tiny, useful or just for fun — impulse buys are an expense that adds up over time until it becomes a big, bad spending habit.
“If you spend $50 a month without thinking it through, that’s $600 a year,” Henry explained, pointing to such impulsive purchases as clothes, household items or a social media ad for a “must-have” item. “Take at least 24 hours before swiping your card to decide if a purchase is worth it and you’ll not only save money but end up with more meaningful purchases and less clutter.”
Low-Quality Goods
It may seem easier and more cost effective to buy off-brand clothes or household goods, but it often costs more in the long run, in Henry’s opinion, he explained how the price might be lower, but the cost over time will be greater.
“For example, a $30 sweater you have to replace yearly (if not more) will cost $150 over 5 years, versus a $90 sweater of higher quality that will last a decade or more if you take care of it,” Henry said. “Look for deals on high-quality goods, buy them on sale, take good care of them and you’ll end up saving more money than if you had to work replacing cheap items into your budget every month.”
Using Credit Cards Unnecessarily
Credit cards are a great way to build credit and get rewards, as long as you use them wisely, according to Henry.
“A credit card is not a way to buy something you can’t afford — so don’t make big purchases on credit unless you know for sure you can pay them off by the due date,” Henry said.
“Credit cards often have high interest rates, so debt builds quickly,” he added. “High-interest debt is entirely avoidable, but it can be a huge financial blow and a roadblock to ever building wealth.”
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This article originally appeared on GOBankingRates.com: 5 Purchases That Keep the Middle Class From Getting Richer
