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. However, in New York City, a $50,000 household income is closer to poverty. Being middle class depends on where you live!
What Is A Middle-Class Income?
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 $300,000 given the median house price in San Francisco is over $1,600,000 in 2020. Further, 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 MIDDLE CLASS
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 paintless, 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.
Wouldn't it be nice to roll around around in a S500 Benzo with a driver, but only afford a Toyota Yaris upon graduation. After all, Americans are gobbling up average new cars prices at $50,000 today! Only the rich or fools are paying so much for a car in my opinion.
How about 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.
Related posts about the middle class:
Great Richer Through Real Estate
Being middle class is nice. But it's better to be rich. Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income.
With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common. Real estate should be in high demand for years to come.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Recommendation For Building Wealth
Sign up for Empower Personal Capital, the web's #1 free wealth management tool to get a better handle on your finances. You can use Personal Capital to help monitor illegal use of your credit cards and other accounts with their tracking software.
In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms.
I've been using Empower Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.
More Recommendations To Keep In Touch
Pick up a copy of Buy This, Not That, my instant Wall Street Journal bestseller. The book helps you make more optimal investment decisions so you can live a better, more fulfilling life. You can pick up a copy on sale at Amazon today.
For more nuanced personal finance content, join 55,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.