4 Ways the Upper Class Handles Inflation That the Middle Class Could Learn From

4 Ways the Upper Class Handles Inflation That the Middle Class Could Learn From

Inflation is a persistent economic force that affects everyone, but its impact can be particularly challenging for the middle class. While the upper class often has strategies to protect and grow their wealth during inflationary periods, many middle-class individuals struggle to keep up with rising costs.

However, by understanding and adapting some of the methods used by the wealthy, the middle class can better navigate inflationary pressures and potentially improve their financial situation. Let’s explore four key strategies the upper class employs to handle inflation and how the middle class can learn from and implement these approaches.

4 Inflation Tips from the Upper Class for the Middle Class

Here are four ways the upper class handles inflation that the middle class could learn from:

  1. Diversify Investments:
    • Upper Class: They often diversify their investment portfolios, including stocks, real estate, commodities, and other assets that can outpace inflation.
    • Middle Class: By diversifying investments and not relying solely on cash savings or a single type of investment, the middle class can protect their wealth against inflation.
  2. Invest in Real Assets:
    • Upper Class: They tend to invest in tangible assets like real estate, which often appreciate over time and provide rental income.
    • Middle Class: Purchasing property or investing in real estate through REITs (Real Estate Investment Trusts) can offer similar benefits as a hedge against inflation.
  3. Leverage Debt Wisely:
    • Upper Class: They often use low-interest debt to finance investments that yield higher returns, effectively using inflation to their advantage.
    • Middle Class: Learning to use debt wisely, such as taking a mortgage for a property investment, can help manage inflation and increase wealth over time.
  4. Focus on Income Growth:
    • Upper Class: They prioritize increasing their income through businesses, investments, or high-paying careers.
    • Middle Class: Investing in skills development, education, or side businesses can help increase earning potential, making it easier to keep up with rising costs.

Implementing these strategies can help the middle class better manage the impact of inflation and potentially build greater financial resilience.

Keep reading for a deeper look into each of these inflation management strategies.

Diversify Your Investment Portfolio

A diversified investment portfolio is one of the most powerful tools in the upper class’s arsenal against inflation. Diversification spreads investments across various asset classes to reduce risk and potentially increase returns.

The wealthy understand that relying on a single type of investment or keeping all their money in cash savings can leave them vulnerable to inflation’s eroding effects.

The upper class typically diversifies their investments across various assets, including stocks, bonds, real estate, commodities, and sometimes alternative investments like art or collectibles. This approach allows them to balance risk and potentially benefit from growth in different sectors of the economy.

For middle-class individuals looking to adopt this strategy, starting small and gradually building a diversified portfolio is critical. Consider beginning with low-cost index funds that provide exposure to a broad range of stocks and bonds.

As you become more comfortable investing, you might explore real estate investment trusts (REITs) or commodity-focused exchange-traded funds (ETFs) to diversify your holdings further.

When creating a balanced portfolio, it’s essential to consider your personal risk tolerance and financial goals. A general rule of thumb is subtracting your age from 100 to determine the percentage of your portfolio in stocks, with the remainder in more conservative investments like bonds. However, this is just a starting point; you should adjust based on your circumstances.

Remember, the goal of diversification is not just to maximize returns but to create a portfolio that can weather various economic conditions, including inflation. By spreading your investments across different asset classes, you’re more likely to have some investments that perform well even when others may be struggling.

Embrace Real Assets for Long-Term Growth

Another strategy favored by the upper class is investing in tangible assets. Tangible assets are physical assets with inherent value, such as real estate, commodities, and infrastructure. These assets often serve as an effective hedge against inflation because their value and overall price levels in the economy tend to rise.

Real estate is perhaps the most common real asset investment among the wealthy. Property values and rental income typically increase over time, often outpacing inflation. The upper class may invest in commercial properties, residential real estate, or even undeveloped land with potential for future appreciation.

For middle-class investors, directly purchasing investment properties might seem out of reach. However, there are more accessible ways to invest in real estate. Real Estate Investment Trusts (REITs) allow you to invest in a diversified portfolio of properties without the need for large amounts of capital or property management responsibilities.

Some online platforms also offer fractional real estate ownership, allowing you to invest in portions of properties for a lower initial investment.

Beyond real estate, consider other tangible assets that might be within reach. This could include investing in commodity-focused funds that track the prices of goods like gold, silver, or agricultural products. These assets often increase in value during inflationary periods, providing a hedge against rising prices.

Historically, tangible assets have shown resilience during inflationary periods. For example, during the high inflation of the 1970s, real estate and commodities generally outperformed stocks and bonds. While past performance doesn’t guarantee future results, this historical trend demonstrates the potential value of including tangible assets in your investment strategy.

Strategically Use Debt to Your Advantage

At first glance, taking on debt might seem counterintuitive as a strategy to combat inflation. However, the upper class often leverages “good debt” to their advantage, especially during inflationary periods.

The key is understanding the difference between good debt – which is used to finance investments that have the potential to appreciate or generate income – and bad debt, which is used for consumption and typically doesn’t provide long-term financial benefits.

The wealthy might use low-interest debt to finance investments that they expect to yield higher returns than the cost of the debt. During inflationary periods, this strategy can be particularly effective because the actual value of the debt decreases over time while the asset’s value potentially increases.

For middle-class individuals, this might translate into considering a mortgage to purchase a home or an investment property. With a fixed-rate mortgage, your monthly payments remain the same over time, while the property’s value and potential rental income may increase with inflation.

Similarly, a low-interest business loan to start or expand a side hustle could be a good debt if it increases your income-generating potential.

However, it’s crucial to approach this strategy with caution. Taking on debt always involves risk, and you should carefully evaluate whether the potential returns justify the cost and risk of borrowing. Consider factors such as your job security, overall financial situation, and the specific terms of the loan.

When used responsibly, strategic borrowing can be a powerful tool for building wealth and combating inflation. The key is to ensure that the debt you take on has the potential to generate returns that exceed the cost of borrowing and to have a solid repayment plan.

Prioritize Income Growth and Skills Development

Perhaps the most fundamental way the upper class protects itself against inflation is by focusing on increasing income. While this might seem obvious, the wealthy often take a multifaceted approach to income growth beyond simply seeking raises in their primary job.

The upper class typically diversifies its income streams through business ownership, investment income, and high-paying careers. It also tends to continuously invest in itself, acquiring new skills and knowledge to increase its earning potential.

Adopting this mindset can be transformative for middle-class individuals. Start by looking for ways to increase your primary income. This might involve asking for a raise, seeking a promotion, or even changing jobs for better opportunities.

However, don’t stop there. Consider developing side hustles or freelance work that can provide additional income streams.

Investing in your skills and education is crucial for long-term income growth. This doesn’t necessarily mean going back to school for an expensive degree.

Online courses, certifications, and workshops can often provide valuable skills at a fraction of the cost. Focus on developing skills in high demand in your industry, which could open up new career opportunities.

Remember, increasing your income is one of the most effective ways to combat inflation. While you can’t control the overall inflation rate, you can work on growing your income to outpace it. This not only helps maintain your purchasing power but can also provide more resources for saving and investing.


While inflation presents challenges, adopting the strategies the upper class uses can help middle-class individuals better navigate inflationary periods. Diversifying investments, embracing tangible assets, using debt strategically, and focusing on income growth are powerful tools for protecting and growing wealth.

However, it’s essential to implement these strategies gradually and responsibly, always considering your financial situation. While these methods can be effective, they also involve risks, and it’s always wise to consult financial professionals for personalized advice.

By learning from and adapting these upper-class strategies to your circumstances, you can work towards greater financial resilience in the face of inflation.