Finance lessons middle class can learn from the rich: CA explains wealth preservation strategies to protect money

Across societies, the gap between how the middle class and the wealthy handle money is often striking. For the middle class, financial stability usually depends on a steady job and cautious saving, leaving them highly vulnerable to sudden shocks like job loss, medical bills, or debt defaults. The wealthy, on the other hand, often manage to safeguard their assets even in the face of bankruptcy or downturns. The difference lies less in income and more in financial strategy.

Why the Middle Class Is More Vulnerable

According to Chartered Accountant Nitin Kaushik, the middle class tends to pool all sources of income—salary, savings, and even business earnings—into the same account. While this may appear simple and convenient, it leaves the entire family’s wealth exposed. A single financial disruption can therefore erode everything built over years, Kaushik explained in an X post.

He stated that unlike the middle class, the wealthy do not rely solely on personal accounts. Instead, they separate ownership from control. For instance, while a house in an individual’s name can be claimed by creditors in case of default, placing the property under a trust or company shields it from direct seizure. The asset remains with the family, but legally it is protected.


The Role of Private Trusts and Holding Companies

Kaushik explained that private trusts serve as an invisible shield. Through this structure, a settlor creates a trust, appoints family members as beneficiaries, and transfers assets such as investments or property into it. A trustee then manages these assets. The family can still retain control as trustees, but since they no longer “own” the assets in the legal sense, creditors cannot touch them if personal financial troubles arise. This ensures continuity of wealth across generations.

Why the Middle Class Loses Wealth & the Rich Never Do

A single job loss, a hospital bill, or a loan default — and the middle class can lose everything.

Meanwhile, billionaires go bankrupt on paper… but still live in mansions.

What’s the difference?
It’s NOT LUCK. It’s… pic.twitter.com/gk2nnGEIc0

— CA Nitin Kaushik (@Finance_Bareek) September 18, 2025

Businesses of the wealthy are also usually not directly in their personal names. Operating entities are often owned by parent holding companies, sometimes through multiple layers. If one company fails, the holding entity’s wealth remains unaffected, ensuring that a single setback does not threaten the family’s broader fortune.

Borrowing and Insurance Strategies

Another contrast lies in borrowing habits. Middle-class families commonly take personal loans, car EMIs, or rely on credit cards, which tie debt directly to their personal wealth. In contrast, the wealthy borrow through their companies, ensuring liability remains with the business rather than the individual. Unless they give a personal guarantee, their homes and assets remain secure.

Insurance further strengthens this safety net. Kaushik noted that the rich often protect against risks such as business interruptions or the loss of key individuals before taking on major ventures. This allows them to leverage assets with reduced exposure, while middle-class families often lose years of savings to a single medical emergency.


Asset Placement and the Knowledge Gap

Wealthy families also diversify asset ownership, often holding property and investments in trusts, layered companies, or under different family members’ names. This dispersal shields wealth from being tied directly to one individual’s liabilities.

Kaushik underlined that the fundamental difference lies in approach: the middle class strives to earn more, while the wealthy focus on safeguarding what they have already accumulated. Structures, not just money, ensure that wealth survives beyond one lifetime.

While tools such as trusts, holding companies, and other legal structures can offer significant protection, they also involve complex legal and tax rules. Kaushik advised that individuals should seek professional guidance from a Chartered Accountant or lawyer before attempting to adopt such measures.