There are several wealth studies out there that state the following:
“The poor buy necessities.”
“The middle class buy things.”
“The upper class buy income.”
What does this mean?
Without judging one group over another, I think it means that the lower income levels spend all or most of their income on housing, clothing and food. The middle or upper middle have enough income to have extra after they have paid for housing, clothing and food – so they spend their extra income on things like cars, boats, memberships, eating out, entertainment and other things. The upper class have enough income to pay for food, clothing and housing as well as the things – so they spend their extra income on income producing enterprises such as real estate, gold, silver, stocks, bonds, businesses, etc.
Where do you stand in this?
Another way to view this is:
“The poor live from pay check to pay check. Many a time trying to decide which bills to pay and which can wait.”
“The middle class also live from pay check to pay check. But there is usually something left over after paying the bills. So they buy things.”
“The upper class do not get pay checks. They have a financial statement which tells them how much cash flow they can work with when they buy income.”