This is what my finances look like

Although the exact threshold fluctuates based on factors such as the local cost of living and inflation, those who belong to the upper middle class typically have an estimated household income of $150,000 to $250,000. That income level it’s much higher than what the average American earns. According to US Census Datathe real median household income was $74,580 in 2021.

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However, with their above-average incomes, upper-middle-class professionals manage their finances differently or also live paycheck to paycheck, such as nearly 50% of Americans? Let’s take a first-person perspective.

What are the finances of someone from the upper middle class like?

“Even though I earn $250,000 annually, I still think it’s best to keep things simple. I don’t like sophisticated financial schemes. It’s all about knowing what’s coming in, what’s going out and making sure there’s always enough room for a rainy day,” he said. Bryan Clayton, CEO of GreenPal.

This is what your finances look like:

• Investment Strategies: “Here’s my move: buy a single-family investment property each year, aggressively pay off the debt, rent, and repeat. Without overthinking, without jumping from one strategy to another. Consistency is key,” Clayton said. Of course, purchasing a single-family investment property may not be feasible for everyone, but you can still adapt Clayton’s philosophy to your own circumstances and establish a routine that aligns with your financial capabilities and investment goals. This may involve regularly setting aside a portion of your income for investment purposes, whether in real estate, stocks or other avenues.

• Monthly Budget and Savings: “My monthly budget is quite disciplined. I’m not one to fuss over unnecessary things. Most of my income goes to savings and investments. It’s about building that wealth over the long term, not just living it today,” he explained. So, despite earning well above the national average salary, Clayton does not spend more. Instead, his financial philosophy revolves around maintain a disciplined monthly budget and avoiding unnecessary costs.

• Financial Challenges: “One challenge I face as someone from the upper middle class is not getting caught up in lifestyle inflation,” admitted Clayton. Lifestyle inflation, also known as lifestyle growth, refers to the gradual increase in a person’s spending and lifestyle as their income increases. What helped Clayton face this challenge was staying strong. “I try to remember my roots and focus on growing my wealth, not just showing it off,” he said.

The story continues

As someone from the upper middle class, Clayton has learned how to preserve and maximize his wealth by focusing on budgeting, investing, staying consistent with his financial strategies and not blindly following trends. “Remember, the goal is long-term financial security, not just short-term gains. It’s not about being flashy. It’s a matter of being smart and firm with your money,” he said.

To read More: 7 Ways the Upper Middle Class Can Get Rich in 2024

How to Manage Money Like an Upper-Middle Class Professional

While there is no one-size-fits-all approach to managing your finances in the upper middle class, the following strategies can help you gain greater control over your financial life and make the most of your six-figure income.

Track your spending

Regardless of your income level, being aware of how much money comes in and goes out of your bank account each month is a valuable habit. By regularly reviewing your bank statements or using a budgeting app like Mint To monitor your spending, you can identify toxic spending patterns, identify areas for potential savings, and make informed decisions about budget allocations.

If you notice that you are spending most of your income on unnecessary expenses, it’s time to create a budget. Many financial experts recommend using the Budget 50/30/20which divides your income into three categories: 50% for needs, 30% for wants and 20% for savings.

So, if you earn $10,000 monthly, $5,000 should go toward necessities like housing and transportation, $3,000 could go toward clothing, travel expenses, dining out, etc., and 20% should go toward retirement, emergency funds, or other savings.

Explore different ways to maximize your wealth

With inflation and economic fluctuations, it is more important than ever to preserve and maximize your wealth by generating passive income, build a well-diversified investment portfolioor exploring other ways to make your money work for you.

For example, even if Codrin Arsène — an upper-middle-class professional who works as a fractional CMO at Digital Authority Partners — has no experience in the real estate industry, he took the time to learn about it and began buying, renovating, and maintaining multifamily properties after discovering that the multifamily market remained something consistent even after the increase in interest rates at the beginning of 2022.

“I have purchased several 3-4 unit buildings in Lakeview, Chicago. Although this investment required a lot of time and capital, it generated a much greater return than anticipated. After renovating the first building in 2022, the revaluation was $600,000 above the purchase price, with only $200,000 in investment on my part (in addition to the 20% down payment), he said.

Last year, he bought a building for $500,000 below market value, and now he’s up $1 million with just $450,000 invested. In both buildings, he generated nearly $1 million in additional equity.

Meet with a financial planner to map out your future

With increasing income often comes increasing complexity, and financial planners are experts at untangling these knots. Whether you need help optimizing your investments, dealing with taxes, or charting the perfect path to retirement, a financial planner can work with you to find the best course of action for your specific financial situation.

Just know this meeting with a financial advisor may come with an additional cost, so it’s not something you to have pendency. However, having them by your side can be beneficial if you’re feeling stuck or unsure about how to achieve your financial goals.

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This article originally appeared on GOBankingRates. with: I’m part of the upper middle class: this is what my finances are like