9 Things Upper-Middle-Class People Do With Their Money That Defy Common Sense

I’ve spent twenty years working in and around startups—first as an early employee, then in advisory roles, now as someone who’s seen enough funding rounds and exits to know what happens when regular people suddenly have real money. Along the way, I’ve gotten to know a lot of upper-middle-class and wealthy people. Some built it themselves. Some inherited it. Some got lucky with equity at the right time.

What’s surprised me most isn’t how smart rich people are with money. It’s how often they’re not. The financial decisions I’ve witnessed over the years defy everything you’d expect from people who should know better. Having money doesn’t automatically grant financial wisdom—it often just gives you more room to make expensive mistakes.

Here’s what I’ve observed up close.

1. They buy houses they can technically afford but shouldn’t

I watched a friend clear $400K from a startup exit and immediately buy a $1.2 million house because the mortgage payment was “doable.” Technically accurate. But now he’s house-rich and cash-poor, stressed about property taxes, and can’t take advantage of investment opportunities because everything’s tied up in a building.

Upper-middle-class people do this constantly. They max out what the bank will approve instead of buying significantly under their limit. The psychology makes sense—your home is a status signal, and these are status-conscious people. But the math creates fragility. One bad year and everything gets tight.

2. They ignore obvious red flags in investments

You’d think having money would make people more careful about protecting it, right? Wrong. I made a terrible investment in my mid-30s that taught me this lesson the hard way, but at least I learned from it. Some people never do.

I’ve watched wealthy acquaintances pour money into obvious pyramid schemes because their golf buddy recommended it. They invest in businesses they don’t understand because the pitch sounded sophisticated. They trust financial advisors who clearly have conflicts of interest because the office has nice furniture. Having money doesn’t automatically grant financial literacy, but many people act like it does.

3. They overspend on kids’ activities to absurd degrees

Travel sports. Elite tutoring. Private coaching. College consultants charging five figures. I know families spending $30,000 or more per year per child on enrichment activities, often financed by reducing retirement contributions or carrying credit card debt.

The arms race mentality is wild. Everyone in the social circle is doing it, so opting out feels like failing your kid. But research on child outcomes doesn’t support most of this spending. It’s anxiety dressed up as investment, and I’ve seen it strain marriages and retirement plans alike.

4. They renovate houses they’re going to sell anyway

A former colleague dropped $150,000 on a kitchen renovation, then moved two years later. The house sold for maybe $50,000 more than comparable unrenovated homes in the neighborhood. That’s $100,000 essentially lit on fire for two years of enjoying a nicer kitchen.

This happens all the time. Upper-middle-class people treat renovations like investments when they’re usually consumption. You rarely get the money back, especially on high-end finishes. But the HGTV fantasy is strong, and keeping up with the neighbors’ kitchens feels mandatory.

5. They lease expensive cars instead of buying reliable ones

The startup world is full of people driving leased BMWs and Teslas while their net worth is mostly illiquid stock options that may never vest. The monthly payment is “manageable,” but they’re essentially renting status symbols while their actual financial security remains uncertain.

Behavioral finance research is clear that cars are terrible wealth-building vehicles—they depreciate immediately. But upper-middle-class social circles apply intense pressure to drive certain things. I’ve had conversations with people who openly admit their car is stupid financially but feel trapped by expectations.

6. They don’t have wills or estate plans

This one floors me. I know people with seven-figure net worths, multiple kids, and complex asset structures who haven’t spent the few hundred dollars to set up basic estate planning. They’ve been “meaning to” for years.

When I ask why, the answers are always vague: they don’t want to think about death, they assume they’ll get to it later, the paperwork feels overwhelming. Meanwhile, they’ve just exposed their families to potential legal nightmares. It’s procrastination with massive downside risk, and it’s shockingly common among otherwise smart people.

7. They confuse high income with wealth

I’ve known surgeons making $500K who were essentially broke—massive mortgage, private school tuition, car payments, lifestyle spending that consumed everything. And I’ve known people making $150K who were quietly building serious wealth through disciplined saving and boring index funds.

Income is not wealth. Wealth is what you keep. Upper-middle-class people often fall into the trap of lifestyle inflation that perfectly tracks their raises. Every income increase just means a bigger house, a nicer car, a more expensive vacation. The hamster wheel spins faster but you never actually get ahead. Research on lifestyle creep shows this pattern is incredibly hard to break once established.

8. They hold too much company stock

This one I’ve seen devastate people. You work at a tech company, the stock does well, and suddenly 70% of your net worth is in one ticker. You know you should diversify, but selling feels like betting against yourself. Plus the taxes would hurt.

Then the stock drops 60% in a year, like a dozen I could name from the past few years, and that concentrated position turns into a concentrated disaster. Financial advisors universally recommend against holding more than 10-15% in any single stock. Upper-middle-class people in tech routinely ignore this and pay the price.

9. They help adult children in ways that hurt everyone

The Bank of Mom and Dad is open for business well into their kids’ 30s. Down payment gifts. Rent subsidies. Bail-outs from bad decisions. I know parents who’ve compromised their own retirement security to fund their adult children’s lifestyles.

The intention is love. The effect is often enabling. The kids don’t develop financial resilience because consequences keep getting cushioned. The parents end up with less security than they should have at 65 or 70. Everyone loses, but the pattern continues because saying no feels cruel.

None of this is meant to mock or judge. I’ve made several of these mistakes myself. Money is emotional, status pressure is real, and financial education in this country is basically nonexistent.

But after two decades of watching how money actually moves through upper-middle-class lives, I’ve learned that income level doesn’t predict financial intelligence. Some of the dumbest money moves I’ve witnessed came from people with MBAs and high salaries. Some of the wisest came from people who never made more than $80,000.

Having money gives you more options. It doesn’t automatically teach you to use them well. That’s a separate skill—one that plenty of smart, successful people never actually develop.