Dave Ramsey on How to Tell if You’re Rich, Poor or Middle Class

We’d all like to be rich.

Unfortunately, as finance coach Dave Ramsey will tell you, “the rich get richer and the poor get poorer”.

Key Points from 24/7:

• As Dave Ramsey will tell you, “the rich get richer and the poor get poorer.”
• According to the St. Louis Fed, the top 10% of U.S. households by wealth had about $6.9 million on average. The bottom 50% of households had $51,000 on average.
• While the 2026 Social Security COLA was set at 2.8%, revised 2027 projections have climbed toward 4.2% due to persistent inflation.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Consider this. According to the St. Louis Federal Reserve, the top 10% of U.S. households by wealth had about $6.9 million on average. As a group, they held 67% of household wealth. The bottom 50% of households had $51,000 on average. As a group, they held about 2.5% of the total household wealth in the country.

So, why is the wealth gap so big?

According to Dave Ramsey, it has a lot to do with financial moves, which will keep you in the middle, poor, or upper class.

The rich don’t ask questions such as: How much per month?

Instead, they simply ask: How much? They’ll pay for things upfront to avoid interest payments, which can chew a big hole in your wallet. Doing so keeps them rich, added Ramsey.

Meanwhile, the middle class will make payments, such as monthly car payments. They think they can make a fortune on airline miles from their credit card payments. They may even take out loans to pay for home improvements.

In addition, Ramsey says that poor people use payday lenders and pawn shops, take out title loans and use rent-to-own services to “buy” furniture and appliances. People who stay poor focus on playing the lottery with the belief that it will “make them rich.” In fact, he said that 78% of lottery tickets are sold in poor zip codes.

However, none of this is set in stone. You can change how you spend and save.

If you want to build wealth, there are some big steps you can take

One, try to increase your income with dividend stocks, for example. You can even take on a part-time job if time allows for it.

Two, create a budget. This is crucial. Without a budget, many of us lose account of what’s coming in financially and what’s going out. When others have asked me for financial advice, my top question is, what are you spending on? Unfortunately, I’m often met with the deer in the headlights stare and a response of “I don’t know.” Unfortunately, not knowing will destroy you financially.

Three, if you don’t already have an emergency fund, create one.

While traditional advice suggests starting with $1,000, modern cost-of-living increases in 2026 suggest a “Modern Starter Fund” of $2,500 is more realistic for major household or automotive repairs. If you can put away about $210 a month, you’ll reach that goal within a year and have much-needed wiggle room. However, be sure to store this in a separate “don’t touch” account, automatically depositing money every time you’re paid. Plus, if you ever receive another source of income, such as a bonus or a gift, put it directly into that “don’t touch” account instead of spending it immediately.

Fourth, pay off your debt if you can.  That includes credit card debt, mortgage debt, and student loan debt. If you want to get better control of that debt, according to Dave Ramsey, use the debt snowball method – where you pay off your debts in order of smallest to largest. In doing so, list out all of your debt, including student loans, car payments, mortgages, credit cards, etc.

2027 COLA and Inflation Outlook

For those planning their retirement income, it is essential to track the annual Cost-of-Living Adjustment (COLA). After a 2.8% increase in 2026, analysts are currently projecting a 2027 COLA between 3.9% and 4.2% based on rising energy and healthcare costs. The wealthy often use these adjustments to recalculate adaptive guardrails for their withdrawal rates, rather than sticking to a rigid 4% rule, to ensure their portfolios outpace real-world inflation.

Five, live below your means. As Suze Orman has said, live below your means to achieve financial freedom. Identify your needs and your wants, eliminating part of the expenses tied to wants. Automate your savings. Figure out your savings goal.

Six, invest in your retirement plans.

An Individual Retirement Account (IRA) allows you to save for retirement with tax-free growth or on a tax-deferred basis.

You can invest in a traditional IRA, for example. While it’s best to check with your financial advisor, many times you can deduct contributions on your tax return. There’s also the Roth IRA, where you make contributions with money you’ve already paid taxes on. With a Roth IRA, your money can grow tax-free with tax-free withdrawals. But again, check in with your financial advisor before doing anything.

Or, if you’re self-employed, look into the Solo 401(k), a variation of the 401(k) plan but specifically set up for those who work for themselves.

Editor’s Note: This article has been updated to include 2027 Social Security COLA projections ranging from 3.9% to 4.2% and a revised recommendation for a $2,500 modern starter emergency fund. The update also introduces a new section on adaptive withdrawal guardrails and the specific impact of 2026 inflation data on household wealth categories.