What’s A Middle Class Income? Bet You Don’t Know!
The majority of us are middle class, defined as neither rich nor poor. Seriously, that’s the official definition of middle class, because depending on who you talk to and where they live, you’ll get different answers. A $50,000 household income for a family of four is absolutely middle class in Des Moines, Iowa but is closer to poverty in New York City.
Statisticians say middle class is a household income between $25,000 and $100,000 a year. Anything above $100,000 is deemed “upper middle class”. It’s funny how there’s no usage of the categories “lower class” and “upper class” isn’t it? It’s as if someone didn’t want to hurt someone else’s feelings. In cities such as San Francisco and New York, middle class income might very well extend all the way up to $250,000 given the median house price in San Francisco is $700,000 and it regularly costs $1,000+/sqft in New York City to buy.
Whether you make $30,000 a year or $250,000 a year, I venture to guess the majority will consider ourselves middle class. There’s an important psychology involved, and that is when it comes to financials, nobody wants to stray too far from the core. If you consider yourself rich, you will be hunted down. And if you start considering yourself poor, others will ridicule you for being dumb or lazy. Classifying yourself as middle class keeps you safe and warm!
WE ALL CAME FROM SOMEWHERE
As a kid, there were only two things I ever wanted: 1) a Nintendo console and 2) a camera. I never got either because my parents wouldn’t allow me to waste my time on video games, and a camera was a grown up toy. It’s a shame, because it would have been great to capture my childhood and reminisce. Ah, the inability of the middle class to have everything they want unless they work for it!
My family was by no means poor, they just weren’t rich. In fact, we had everything we needed – food, clothing, love, and shelter. We lead very simple lives, buying second hand clothes, living in a suburbian townhouse, and driving beater cars. I still remember the paint-less, 15 year-old Nissan Datsan my father drove. I’d duck in horror whenever he’d drop me off at school. I even snuck the metal beast out in a torrential downpour and two hubcaps flew off while I was doing burnouts. My parent didn’t even know, the car was that pitiful!
Most wealthy people didn’t grow up with a Butler named Belvedere. Instead, they grew up middle class just like many of us. I’m always so disappointed when President Obama pits the rich against the poor since the chances are very high that we’ve all been in the same middle class once before.
The top 1% might even have more perspective than the majority of us. They know what it’s like to not have much, and now know what it’s like to afford almost anything. We should draw on their experiences. After all, “the rich” are also the ones who donate the most to charity, provide jobs, and provide investment capital for our start-up ideas.
MIDDLE CLASS IS A WONDERFUL CLASS
Growing up middle class lets me appreciate all the things I have today. I can’t imagine growing up rich because I would probably always feel inadequate compared to my parents. Imagine living in a 8,000 square foot mansion your entire life, only to be able to afford a 800 square foot fixer several years after college? Imagine rolling around in a S500 Benzo with a driver, but only afford a Toyota Yaris upon graduation. Imagine eating toro sashimi and prime rib every weekend with the folks, and all you can afford now is the occasional Panda Express. Yuck.
The middle class is what makes America hum. We’re either a part of the middle class now, or have been there once before. In other words, we’re all about the same, so let’s treat each other the same. No more bickering between different socio-economic classes. We all have the same rights and freedoms to do whatever we want, forever.
Readers, anybody else proud to be a part of the middle class? Any of you grow up poor or middle class and are now in one of the higher tax brackets?
What constitutes the middle class in your opinion?
Best,
Sam
Financial Samurai (724)
krantcents (27)
retirebyforty (23)
JT (22)
Mike Hunt (20)
Money Infant (19)
Untemplater (18)
David M (17)
Janna (17)
shanendoah@The Do... (17)
I haven’t decided what I am yet, honestly. Single guy taking home 20k in a city of 20k. Lower class? Maybe. Cheapest half-decent apartment runs $650/mo, or 500 if you go with the local slumlord (or go out to the boonies).
Funny story, that – someone introduced themselves to me at a cookout of a mutual friend, telling me they see me go past their place on my way to work every day. I said “oh yeah, I know that place – what’s with the caution tape all around the front porch?” His answer started with “well, our landlord is ____ ____” and I stopped him there.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:33 am
Hmmm.. “in a city of 20K”? Then you are for sure middle class! If you got a roof over your head, and aren’t eating ramen every day, then middle class it is. The great thing about earning 20K is that you have a roadway to earn much more.
[Reply]
I absolutely grew up poor and am now in one of the higher tax brackets.
I’m from a family of 9 siblings and my father died when I was about 4 months old. My father was an engineer with a Master’s degree from Massachusetts Institue of Technology – thus if he had not died I probably would have grown up – upper middle class.
However, the house I grew up in – was only purcased a few years before my father died. Thus my mother made payments for about 17 years while raising the nine children on ONLY Social Security benefits for the first 10 years. When I was about 10 years old she went out to work but never made the “big bucks”.
I worked my way thru college – I studied real hard and worked about 20 hours a week while in school and 60 hours a week during the summers. I paid cash for most of my college education – it was a lot of work – but definately worth it!
I’m very happy that I grew up poor as I now realize the value of a dollar. I realize that I can spend it now or save it now and spend it later on something else. When I was a kid – I tried to stretch my $.15 at the 5&10 store as far as I could. I still try to get value in whatevery I purchase.
I think I can determine for myself what it is “worth” spending money on since I have been poor and now have some extra dollars. For example, when we vacation we often travel to South East Asia or India. In these countries, we often stay in $20 a night rooms and often go to 5 star hotels like the Taj Mahal in Bombay and the Oriental in Bangkok for lunch or dinners that cost $50 to $100.
I love being able to have ownership over my $ rather than my $ have ownership over me. I think growing up poor and then earning my own $ has given me a respect for money that I would not have had I grown up with more $$$$$.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:35 am
Wow, a family of 9 is large! Glad you were able to bust on through with your mom supporting y’all.
The appreciation of $ is so key.
[Reply]
I grew up in a solid middle-class family. However, I consider myself lower-middle-class and completely admit it. Not due to laziness (I’ve been working non-stop since 13) but due to choices. I took the path less traveled -started my own business at 26 – handed it off to Mr. LH. Then, picked a low-paying career path that I enjoy – teaching. Along the way I’ve made some very poor financial choices that I’ve only just begun to correct in the last few years. Maybe someday I’ll consider myself a solid-middle-class person. But I think that’s a few years off still.
[Reply]
Financial Samurai Reply:
October 31st, 2011 at 9:28 am
The teaching class is the highest class ever! Thanks for educating our youth!
[Reply]
My University Money Reply:
October 31st, 2011 at 3:37 pm
A fellow teacher? Nice! Here is the perfect example of the fluidity of the term “middle class.” I live in Manitoba, Canada. As teachers we make 50-85K a year (max out after 10 usually), and that is without your masters degree or anything. I know that this is substantially more than my teacher friends in MN and ND make, but I’m not sure about the other states. My significant other is in her final year of her education degree, and then she too will be a teacher (or so the plan goes). In NY, or even Toronto, Canada, we would be the definition of middle class; however in rural Manitoba, we will likely have one of the top 5% household incomes in the area. Does this mean we are actually upper class? Regardless, I have pretty much everything I want, so I’m not too worried about how others define my pay bracket.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:35 am
$50-85K a year for a teacher sounds pretty good! Wish the US payed most of their teachers that!
[Reply]
Little House Reply:
November 1st, 2011 at 7:00 am
That would be great if that was the US average. I think the average in the US is around the mid-30′s. However, in the LA area, it’s around the mid-50s’s. So once I actually get a job (which is very unlikely right now), things will be grand. ;)
My University Money Reply:
November 1st, 2011 at 8:23 pm
I’m certainly not complaining (actually… don’t tell my union this, but I think we could probably afford to take a pay freeze for a few years in order to restore the infrastructure deficit and budget problems)
[Reply]
I absolutely grew up with little $, it seemed. We had, as you say, the important things; but not much more. Never really had a lot of ‘wants’, just ‘needs.’ I was usually embarrassed by our house (the structure) as well as our vehicle. We maintained everything we had well.
My dad always made education an imperative. To me he stressed math & science. But then I always kind of liked those a little more anyway. I think my dad would’ve liked to see me go into compu-sci, but that wasn’t for me. He was killed in a car wreck when I was in my early teens.
I have since moved on, I am now back in college finishing a bachelor’s. Even w/ the education I have, I make what my family did annually. My wife and together bring in quite a bit more. Where we live, we are doing well. If we were in NYC, Boston or LA our situation would not be as good.
We consider ourselves in the M/C; good jobs, nice enough house, cars that work, etc. I think sometimes that some people we know think us ‘richer’ than we are. Perhaps b/c of our work, or other things.
We have 2 rental properties which may contribute to their thinking. If anyone were to look at our financial data for everything, they would certainly re-think that position. Point is, we do well enough for us. Certainly better than when I was growing up. I worked hard, studied hard. My wife has done the same. We continue to work and study to improve on what we have. We have a long-term view; our shortest outlook is probably about 3-5 years.
Growing up w/ less certainly makes me appreciate not only what I have, but the effort of attaining it all. I also have an appreciation of the flip side, w/o all the effort and learning, I do not think I could have gotten this far. I am excited to think what further education & training will bring me.
As a previous poster said, it gives us control over our money/ cash flow; not the other way round. It gives us a certain sense of freedom that we enjoy.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:37 am
Thanks for sharing your thoughts JR. I can see how two rental properties would uptick others wealth perception of you. Given your story, I’m assuming you find the 99% movement a little frustrating then.
[Reply]
Ally Reply:
November 1st, 2011 at 9:26 am
He’ll respond to your comment, I’m sure, but as his wife, I had to respond. The 99% movement and OWS annoys the **** out of both of us!! He’s working full-time while finishing his bachelor’s. I worked full-time both in undergrad AND law school. Our free time (some of it anyway) is spent cleaning out the gutters at our rental properties, for example, while other people are out having a good time. We don’t have a ton of money, but we WORK for it and we plan ahead. Nothing is handed to us, nor do we expect it to be.
[Reply]
JR Reply:
November 1st, 2011 at 11:30 am
I very find the 99% movement and the Occupiers irritating. I hear little more than a group of misguided individuals with only time on their hands looking for another hand out. Some seem to have legitimate complaints, however their actions are just about worthless to any end.
Our rental properties were houses we would rather have sold at the time; however, given the housing market we found our only real option was to rent them out. We do not ‘rake in the cash’ as some seem to think. We’ve put our own time & effort into each property; add that time to full-time jobs and school makes for some long days. Yet there are some who think we ‘have it pretty easy.’
Sure, if by ‘easy’ one means ‘learning the in-depth workings of the law’ and ‘how the body human functions’ all while working (job), commuting, maintenance (properties) and learning all the codes for the properties. No worries. I sleep very well.
I am of the opinion that the Occupiers need a firm boot placed far enough “so that the water from my knee will quench [their] thirst.” If they were to put a portion of there energy into something productive, imagine what they could achieve! Instead they threaten those who live and work in the area and otherwise generally pester the average working joe. They violate doorsteps and other public areas w/ bodily excretions… I could go on, but it just gets worse. These are the folks I offer up as poster-children for why the gene pool needs a life guard.
If you are in want of something, find a productive way to work towards setting and achieving it. Don’t sit idly and expect things to be given just b/c you there. I guess that is my soap box view.
Financial Samurai Reply:
November 1st, 2011 at 2:48 pm
A wife / husband reader tandem! First time I think this has occurred. I’m honored to have you guys!
It’s amazing the division that has been created here in America. I don’t think there’s ever been so much divide, well since racism was rampant perhaps.
I tend to agree that the term “middle class” has much less meaning than it once did. Incomes and occupations used to go hand in hand. If you moved the money or ran the company, you were upper class. If you did manual labour, you were lower class. Everybody in between was middle class.
But so many manual labourers make more than the people “in between”, that I the term “middle class” has much less meaning any more.
[Reply]
It’s funny – I’ve heard it said that a recession is when your neighbors lose their jobs and a depression is when you lose yours. The concept of the middle class is the exact opposite – the country is losing it’s middle class, but yes, you are still middle class. Funny how that works, eh?
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:38 am
If the country is losing their middle class, who are they losing it to? To me, there seems to be much more opportunity now, thanks to the internet, than ever before!
[Reply]
Definitely grew up middle class (my father was an immigrant who came here to study in grad school with $50 in his pocket). Still consider myself to be middle class from the attitude and lifestyle.
-Mike
[Reply]
Wrote about this today, too.
I think there are three criteria for the lower bound:
1) Stable employment, and the ability to find a new employer in the same field in your geographical area.
2) The ability to purchase a home that you live in.
3) Kids. Having kids is definitely middle class. Though not necessary to be middle class, having them and being able to afford them is a long-term “investment strategy,” if you will.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:39 am
With your #2, then given I would say at least half the people can’t afford to buy the house they live in right now… does that mean half the people are all lower class?
[Reply]
JT Reply:
November 1st, 2011 at 7:30 am
Hmm…logic test.
Can’t afford to buy the house they live in means they’re overextended on their rental payments (since rents are rising while home values are falling) so it’s more or less the case that they are, eventually, going to find themselves in the lower classes.
[Reply]
I had no idea the range was that wide for middle class, but it makes sense with the crazy price of living in big cities vs small towns. I came from a lower middle class family and used to be embarrassed by it, but it doesn’t bother me anymore. I like your point about starting out with less as a kid and working your way to making more as an adult. I can totally relate to your embarrassing school drop off memories. My dad’s car didn’t have a muffler on it and oh man the whole school knew when we were coming!
[Reply]
Financial Samurai Reply:
October 31st, 2011 at 9:26 am
Oh yikes! That musta been embarrassing! However, I think it is an absolute BADGE OF HONOR to grow up lower middle class. It puts great perspective and appreciation on everything!
[Reply]
I never thought about income level that much because it is relative to geography. Middle class seems to be that area between rich and poor. By definition, you are a homeowner, educated and a professional or manager. If you do not own a home, but earn $500K, what is your class? I see middle class as a general classification to identify a group of people who are not rich or poor.
[Reply]
I grew up quite poor. We emigrated to the US and struggled for years. My parents eventually saved up enough to purchase a business and work for themselves. That enabled the kids to go to college and get an education. Now I’m middle class and very thankful for the opportunity the US gave us. I don’t think I want to join the upper crust, I wouldn’t fit in.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:40 am
I think you’d be a good upper crust guy Joe! Don’t sell yourself short! haha
[Reply]
I grew up poor in a single parent household in the ghetto of Philadelphia. My backstory would be too long to type here. But let’s just say I went from poor to what I consider upper middle class / rich. My household income is 300k, I live in D.C and I’m only 27 with 0 kids. Due to my humble begginings I know what is is to struggle. I’ve been in situations where my mother didn’t eat so I could. Growing up poor and in the inner city has given me a huge advantage.. When you’re poor you know how to live without. When you grow up in the city you know how to hustle.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:41 am
300K income is excellent. How did you do it? Has your income peaked, or is it still on the upswing at age 27?
[Reply]
YFS Reply:
November 1st, 2011 at 7:49 am
I currently have 3 sources of income. My salary as an IT engineer (125k), My wife’s salary as a IT Project Manager (115k), Our real estate portfolio/Financial services/event planning (60k). Our income has yet to peak in any of those 3 buckets. But I would say, I probably will top out at 150k for IT income. The real estate/financial services and event planning still have huge upside.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 7:56 am
I thought 150-200k was the peak for IT too until I came across the 400k Google software engineer!
That’s cool you have a side business making 60k/yr profit! How many hrs a week is that? Why don’t more people do that? Is it a choice in America to make less than 33k a yr (50% cutoff)?
I noticed the picture you used for this post was He-Man. Was there a reason you used he-man?
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:41 am
Nostalgia. I had a different message in the beginning and changed it. The new post is in the queue.
[Reply]
YFS Reply:
November 1st, 2011 at 7:51 am
Man.. you should have used Rocke’m sockem robots or an etch-a-skecth lol
[Reply]
Love this post. I’ve thought about this a lot lately — esp since right now I’m in a situation where, although unlikely, I have an opportunity to “strike it rich” with the company where I currently work, as an early employee of a potentially lucrative venture. Although chances are still against my being a millionaire+ before 30, I daydream about what it would be like if I was. Approaching my 30s, I’m getting ready to settle down and have a family — being a “millionaire” won’t be enough for me (in the San Francisco area) to consider myself “rich,” but would certainly put me in the middle class or upper middle class. I figure you have to make $200k a year here to be upper middle class. Even if I end up with a few million dollars in the bank, I wouldn’t want to raise my (future) kids in the upper class — like you, I’m glad I grew up middle class (or upper middle class) as I still feel like that lifestyle is obtainable if I work hard and get a little bit lucky. It would be terribly depressing if I grew up rich. I’d end up like Kim Kardashian or Paris Hilton or worse.
[Reply]
Financial Samurai Reply:
November 1st, 2011 at 6:43 am
I agree with your 200K assessment to be “upper middle class” here in SF. $3,500/month 2 bedroom apartments ain’t cheap!
You should come out to the next SF blogging/tweetup whatever function one day. There seem to be one every 4-5 months or so.
[Reply]
Maggie@SquarePennies Reply:
November 3rd, 2011 at 12:01 am
We always felt that we gave our kids a huge advantage by not raising them in a rich lifestyle. ( Not that we could afford it!) However they were able to do on their own they could easily feel that they had done better than we did! It’s a lot more difficult to go down in lifestyle than to go up in lifestyle. Living below one’s means helps with all of this too!
[Reply]
It depends on the prism you’re looking through, but if using a “statistician’s” viewpoint, I’d think it would simply be the “middle” of the median family income, so you might say, the cohort of 25%-75% of earners in the country. Then there’s the cost of living adjustment to apply on top of that.
Now most people that make 80% of the median income may feel uncomfortable with that because they’re then “upper class”. For us, I don’t know, I’m guessing between salary and side income, puts me top 8-12% somewhere or something. Does that make us “upper class”? It sure doesn’t feel like it. Many of our friends make double or more what I make because they’re dual earners or lawyers or business owners or those “rich Wall Street fatcats”. And hanging with them, they don’t seem upper class either? After daycare, new car payments, paying for their sizable homes and vacations, etc., they’re not putting away much money either… but by the numbers, they’re probably pretty damn upper class – like top 4-5%. But they don’t “seem” to match the description.
So, it depends if you’re looking at it from a purley statistical standpoint or some other subjective means.
Based on how Americans perceive “upper class”, it almost seems like it really is the top 1-2% or so to get there because everyone I know in the 3% or below seems to live a relatively routine life.
[Reply]
Financial Samurai Reply:
November 3rd, 2011 at 7:15 am
Exactly… so the middle class is like the 10%-98%, instead of what’s normally the 60% or 75% of the population.
So in essence, since more ID with the middle class, the stronger the country has become!
[Reply]
I love being from the middle class – I had what I needed and a few luxuries. During college I got used to living outside my income, but once I got out of grad school, I just looked back to my roots to get back within my income.
Right now, my wages put me in the statistical middle class, but where I come from I feel like I earn quite a bit. I’ve got plenty of money left over every month to use to visit friends and family, and I enjoy every bit of it. There’s even some left to pay down debt.
[Reply]
I grew up poor in the Soviet Union. We did not have a middle class. We had poor and party members (nowadays they would be considered upper middle class and beyond.) Now, in the US I am what is considered middle class and in a higher tax bracket than I wanted (or imagined!) to be :). I am more than grateful for all the opportunities this country gave me. Happy to be where I am. :)
[Reply]
Financial Samurai Reply:
November 3rd, 2011 at 7:13 am
That’s awesome Aloysa. It’s great you have your perspective. It helps a lot. If only everyone had similar perspectives…….
[Reply]
Although I completely enjoy the topic, the designation is somewhat trivial because even when well-meaning people come up with quantifiable economic class cut-offs, there always seems to be a “yeah, I know, but in my ‘x’ I am considered middle-class because…” regardless of the income.
I guess just about “everyone” is middle class, and almost “no one” is lower or upper class, right? Still, there are some middle-class lifestyles that are way better than others no matter what you call them.
Cheers!
[Reply]
Financial Samurai Reply:
November 3rd, 2011 at 7:13 am
Exactly. Everyone is middle class, so in actuality, the middle class is getting larger and the economy is getting better then! :)
[Reply]
I think home ownership is a big part of what it means to be part of the middle class. The quintessential aspect of the American dream. Of course this is largely determined by geography. Someone making 30-50k in Texas or Florida can afford a decent house and live a middle class lifestyle. 30-50k a year in some cities like Palo Alto or San Francisco where properties values are 1 mil plus, probably wouldn’t get you very far.
[Reply]
Financial Samurai Reply:
November 3rd, 2011 at 7:12 am
Exactly, which is why the middle class in SF or Palo Alto are closer to $250-$350,000 if a home is averaging $700,000…. and that’s a REALLY crappy hoe.
[Reply]
Robin Reply:
November 3rd, 2011 at 1:04 pm
Yup, the reason I mentioned Palo Alto is because thats where I’m originally from. The properties my parents bought there is basically what enabled us to move from “poor” to the “middle” class.
My parents bought a home there in the early 90′s. My dad was getting his PHD at Stanford at that time and was befriended by one his professors who was an American. He was really old and lived by himself, and my mom and dad use to go and help him cook his meals, clean his house and do his gardening. When the time came to buy a house, my dad had excellent credit but we didn’t have enough income to buy a 300,000 house. My Dad’s professor was kind enough to co-sign for him.
To this day my parents still visit his grave every year out of gratitude and respect. Because of that opportunity to own that first home, my mom was able to open a lucrative day-care business catering to the young professional couples of silicon valley. We were able to buy a second home in the city, investment properties in Vegas, shanghai and Beijing.
[Reply]
Some of these figures really surprise me. I think the whole scale is out of whack in some ways. However when I compare life in North America to life overseas in some countries we are part of the 1% for sure.
[Reply]
Financial Samurai Reply:
November 3rd, 2011 at 7:11 am
I don’t know if there really is a scale. It’s more of an identity really since there is no such thing as the terms “lower class” and “upper class” in America.
[Reply]
Miss T @ Prairie Eco-Thrifter Reply:
November 3rd, 2011 at 11:37 am
I guess your right although so many people I know still associate themselves with a class. I guess that is where that whole identity things comes into play. For me I would hate to be identified by what I owned or what my salary was- I would rather people know me for the things I do and what I contribute to a relationship.
[Reply]
So true! Some people even identify themselves as middle middle class! We want to be treated with the respect that comes from being a typical citizen of a democracy. Yet, no one wants to be considered “average” in other ways. Some countries have used a class system to keep people from upward mobility. In the US we’ve been proud that you can rise as far as your hard work and innate intelligence and talent will take you. Opportunities in any given area are not as good as some in other areas of the country. As we drive through many places in the US we notice there is still a lot of poverty in much of our country. A strong middle class seems to be essential to a healthy democracy; I certainly hope we can strengthen our middle class in the near future.
[Reply]
I totally relate to your Nintendo story.
Me: “But Dad! Nintendo helps improve eye-hand coordination.”
Dad: “So does playing catch. Now GET OUTSIDE!”
I read an interesting opinion from a libertarian blogger who claimed the term “middle-class” was invented by mainstream politicians and called it nothing more than language specifically meant to be divisive.
He also wrote about how his family used food stamps, and still considered themselves middle class. His mother even told him “There are no excuses for failure in this country; success is the direct result of hard work.”
That’s true most of the time – and even though I think this nation could benefit from making some changes, it would be great if more people still believed in the American dream.
[Reply]
lehoang Nguyen Reply:
November 10th, 2011 at 11:07 pm
I think American dream will happen when pigs know how to fly…lol
[Reply]
I came to America 10 years ago with my family… things was tough when i first move here but got better years later. My mom own a business and my dad working for a golf course they earn about more then 90K a year together+ my brother just got a job as a book keeper around 30k a year but they till can’t even buy a house& i live with my god father he’s a superintendent of a golf course and get around more then 100k a year but he got pay like crazy taxes he&me live in a small house… any way we all from Long Island New York Southampton, and out here in the summer time i see allot of lamborghini+bentley+ferrari+rolls royce… and it make me feel like we are so poor compare to them.
[Reply]