A middle class income is all you need to be happy. However, we are a society who always wants more. Even after we reach an arbitrary income level, we aren't satisfied for very long. This post will go through the various definitions of a middle-class income.
A big part of defining a middle-class income will depend on where you live, your lifestyle choices, and the size of your family. One person's middle class might be another person's champagne lifestyle!
We All Think We're Middle Class
I have a theory the majority of us, no matter how little or how much we make, consider ourselves part of the middle class. When I worked at McDonald's for $4 an hour, I was dirt poor, but considered myself middle class because both my parents had jobs. I also had a bicycle and a cozy home to come home to.
When I finally graduated from The College Of William & Mary and started making more money, I felt poor because all I did was work in expensive New York City!
For example, I shared a studio with a high school classmate for $2,100 a month and that was in 1999. It was the only way I could attempt to achieve financial independence on a modest income. Even though I worked at Goldman Sachs, I felt poor financially my first year.
It was only after I moved to San Francisco did I feel I was part of the middle class again. Money was more plentiful, a starter home back then was “only” cost about $1,100,000. I also had more free time to explore.
I've experienced all three classes to varying degrees: poor, middle class, and rich. I believe there are wonderful merits to each of them.
From the poor Haitian immigrant who goes to college and becomes the first black female mayor in Utah, to the billionaire investor who gives 99% of his net worth to charity, everyone tends to come to center.
My favorite class is the middle class. But first, we must define what middle class means.
Middle Class Income Definitions
Here are the best definitions of a middle class income according to data and the government.
1) Standard Definition Of Middle Class
$25,000-$100,000 a year is what most would consider as a middle class income. The $75,000 spread accounts for the wide cost of living differential between places like New York City and Fargo, North Dakota.
Everybody who lives in NYC or San Francisco will tell you that earning $25,000 a year is poor. There's just no way to get ahead, support a family, and one day retire with that type of income.
If you're making $100,000 and live in Des Moines, Iowa, then you're living large. The last time I was there, I had a fantastic ribeye steak for $20 bucks and saw a 4 bedroom, 3 bathroom, 3,000 square feet houses go for $180,000. When the cost of an entire house is only 80% more than your annual income, you know you've got it made!
2) Republican Definition Of Middle Class
Ex-GOP presidential candidate Mitt Romney came out and said the middle class is “$200,000 and $250,000 or less.” The $200,000 refers to an individual, and $250,000 refers to a couple. Why $200,000 + $200,000 doesn't equal $400,000 still baffles me.
The government is sexist and it takes people to really care before math can change. There just aren’t enough individuals who earn $200,000 each and are married. Hence, the rest of us who are not affected let this sexism continue. Hence, the rest of us who are not affected will let sexism continue.
If you live in an expensive coastal city, $250,000 for a household isn't exactly rich since about $65,000 of your income goes towards taxes. You can afford a car, take a couple weeks of vacation a year, max out your 401K and send your two children to private school.
But if you ask any $250,000 a year couple whether they think they are rich, I'm sure most would privately tell you no. In 2024, it costs $1.8 million here in San Francisco to get a decent house in a decent neighborhood. That's 7.2X a $250,000 household salary.
Related: How To Make $200,000 A Year And Not Feel Rich
3) Democrat Definition Of Middle Class
President Obama's middle class is also $250,000 per household or less. He just didn't say it. Instead, he says “the rich” are those who make $200,000 or more as individuals and $250,000 or more as households.
Strategically, this is a better way of getting more votes because there are mathematically less people to anger. If you say “the middle class is $250,000 or less,” you run the risk of angering a huge portion of the 95% of people who make much less because they might think you're out of touch with reality.
Interestingly, President Biden has raised his definition of the middle class. Biden promised not raise taxes on anybody making less than $400,000. Hence, perhaps thanks to inflation, and definitely due to the desire for power, Biden's definition of middle class is any person or household making less than $400,000.
The Political Middle Class Definition Epiphany
Republicans and Democrats have the same definitions of what a Middle Class income is, but they say it differently. After all, to retain power, politicians must court the middle class the most.
In politics, you have to be careful with verbiage. Math always triumphs at the end. If you can get 50% of the 95% of the population who makes $200,000 or less in America to vote for you, it's much better than getting 100% of the 5% of the population who makes more than $200,000 on your side!
Thankfully, these power-hungry politicians on 1/2/2013 came to a Fiscal Cliff compromise and raised the definition of “rich” to now $400,000 for singles and $450,000 for couples. In 2023, there will be another Fiscal Cliff compromise given we're running up against the debt ceiling again.
Today, we've also abolished the marriage penalty tax for income earners up to about $500,000. This is huge progress. Hence, the definition of a middle class income is going higher and higher, just like our elevated inflation rates.
4) Student Loan Debt Forgiveness Definition Of Middle Class
On August 24, 2022, President Biden unveiled his student loan forgiveness plan. For individuals who earn less than $125,000, they are eligible for up to $10,000 in student loan forgiveness. The student loan forgiveness amount goes up to $20,000 for married households making up to $250,000!
Therefore, President Biden and his administration believes the definition of middle class is any individual making up to $125,000 or a household making up to $250,000. Earning more qualifies you for being rich, which President Biden can't be seen as helping.
Therefore, if you want to earn the ideal income to live a middle-class lifestyle and earn subsidies, make $124,999. $124,999 is a healthy middle-class income.
5) Financial Samurai Definition Of Middle Class Income
Finally, if you make within +/- 50% of your city's household income for your age, you are middle class. For example, the average household income in San Francisco is ~$100,000. Therefore, a person making $50,000 – $150,000 can comfortably consider himself or herself middle class.
You can also consider yourself middle class if you are renting or own + / – 50% of your city's median house price. Using San Francisco again, the median house costs $1.8 million. Therefore, if you are renting or own a property worth about $900,000 – $2,700,000, you are also considered middle class.
The cost of living in Des Moines, Iowa is obviously much lower, and incomes and home prices will adjust accordingly. Income is only one part of wealth. I highly recommend people focus more on building net worth over income.
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Why Most Of Us Consider Ourselves Middle Class
Now that you know the various definitions of middle class and middle class income, let's discover why so many of us think we are middle class when we are not. With the wealth gap widening post-pandemic, many rich people are now learning how to convince people they are middle class as well!
1) We adapt very quickly.
Remember how fast the excitement went away after getting into college, getting a promotion, a holiday present or receiving a nice big raise? After about a couple months, we revert back to feeling like our old selves.
We could be very upbeat selves in general, but we no longer feel that high of a big win. I have a friend who makes a million dollars a year, but considers himself middle class. The reason why is his other friend makes tens of millions of dollars a year! The hedonic treadmill gets us all.
If you want to get rich, you might as well get really rich. If you do, you will gain even more privilege than you already have.
2) Nobody likes to feel inferior.
If we so happen to earn below the median household income of $75,000 in America, we should realize we are “below median” and perhaps “below average” in household income generation.
But, nobody likes to feel below average in anything which is why the term “lower class” sounds derogatory! Instead, we'll find a way to justify our below median income by saying we live great, happy lives, and are doing things we love to do.
We'll tell ourselves making less is a choice, that grades don't matter, and that money isn't everything. There are certainly truths to all these reasons. Happiness stays constant above a certain income range, so there's no reason to justify why we are poorer than average, but we curiously do.
3) We are scared of being harassed, bullied, and murdered.
The more you make above the median household income, the more you need to fear for your life. A lot of wealthy people cannot control the urge to splurge the more they make. It's just natural to buy fancier cars, wear nicer clothes, and live in bigger homes. You only live once is Gen Y love to say!
All is good until you realize there's a stranger standing in your living room with a butcher knife ready to splice open your guts unless you give him all your valuables. We are seeing an uprising by the people against anybody who has more.
We also see the government take away more of our income the more we tell them we make. By projecting we are middle class or pretending we are middle class when we are actually rich, we avoid the uprising! We'll also be able to deflect criticism and get to join in the hunt.
Stealth Wealth is the way of the future! If you are wealthy, your best to blend in with society not stand out. Since the pandemic began, the wealth gap has widened tremendously. As a result, it's better to keep a low profile and stay middle class. Don't stand out!
4) Nobody likes to feel persecuted by the government or the public
Finally, nobody likes to feel like a bad person for making more money than average or having more money than average. You can see plenty of people criticize my household budget after revealing I am no longer financially independent based on my stringent FIRE rule.
If you make above a certain middle-class income, then the government will raise your taxes. Further, politicians and the media, will likely bad mouth the rich for being greedy and “not paying their fair share.”
Therefore, the rich have learned how to carefully convince the public they are middle class. This way, they get to more easily be a part of the best class in the world.
* The above chart is my calculation for the average net worth of the above average person. I use Empower's free financial software to methodically track my net worth. I also use the app to run my investment portfolios at least twice a year.
Empower also has a great Retirement Calculator. You can run your numbers to see whether you are on course. The above average person takes action and leverages free technology to his or her advantage.
Middle Class Is A Wonderful Class
I've been rich and I've been poor and I will unequivocally tell you that being right in the middle is wonderful. Earning a middle-class income will provide for a comfortable life in any developed country. A middle-class income is also the best income in my opinion.
When I was poor, I was insecure about my future. I wondered whether I'd ever be able to earn enough to buy a home and raise a family. I worried I'd amount to nothing in my parents' eyes after spending so many years in school.
Envy, a feeling I despise often entered my body as I saw friends take wonderful vacations and drive new cars. Why them, not me? Protesting big corporations and those who have more made me feel better.
When I was rich, I wondered whether I really was as evil as people painted out rich people out to be. Self-doubt began entering my mind as I questioned whether I really deserved to make what I was making.
There is so much poverty in the world, I began to feel guilty about my wealth. As a result, I worked harder by getting into work earlier and leaving later. I then spent hours at night working on my online endeavors, so that one day I would no longer have to work and return to the middle.
Now that I'm back in the middle in “fake retirement,” life is more carefree. I know politicians are now more on my side because they need the middle class vote to remain in power. I no longer fear being ostracized by others for earning an above average wage because I am average.
There is also less insecurity about my future because I have a house, enough clothes, a reliable car to get me around, and an affordable life insurance policy to protect my children.
I now spend time connecting with others online through my sites, sharing my knowledge and learning what I can from all of you. There's no need for me to fill Financial Samurai up with sponsored posts and affiliate advertisements.
Middle Class Is A State Of Mind
The income definition of middle class is whatever we want to project! We work hard to provide for ourselves and our families. Saving money is part of our DNA.
We realize the importance of community and rely on each other to flourish. Don't let anybody ever tell you that being average is not good enough. Being middle class is what makes all our countries great! And feeling rich is often a state of mind.
Finally, one of the best ways to get ahead is to start a business if you believe in your abilities. There's nothing better than being your own boss and seeing maximum correlation with effort and reward.
Not a day goes by where I don't give thanks for starting Financial Samurai in 2009. Start something special on the side while you have a job, and work on it until it gains traction. You might surprise yourself and reach a new class!
And if bing middle class isn't good enough for you, then shoot to be upper middle class! That's not a bad place to be either. Just make sure your household earns less than $400,000. This way, you don't have to pay more income taxes under Joe Biden.
Surviving off $400,000 in an expensive city with kids may already be tough enough. Once you add paying more taxes, you might as well downgrade yourself back to the middle class! There's really no point working so hard if you're not happy. Never forget that money is a means to an end.
Achieve Financial Freedom Through Real Estate
If you secretly want to rise above the middle class, you need to invest consistently and aggressively.
Real estate is my favorite asset class to build wealth. It is a tangible asset that is less volatile, provides utility, and generates income. With elevated inflation, real estate benefits from higher rents and property prices. Further, the cost of debt gets whittled down while asset values get a nice tailwind.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $954,000 with real estate crowdfunding platforms. I believe there will be a “spreading out” of America thanks to technology.
Best Private Real Estate Investing Platforms
Fundrise: A way for all investors to diversify into real estate through private funds with just $10. Fundrise has been around since 2012 and manages about $3 billion for 380,000+ investors.
The real estate platform invests primarily in residential and industrial properties in the Sunbelt, where valuations are cheaper and yields are higher. The spreading out of America is a long-term demographic trend. For most people, investing in a diversified fund 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 and higher rental yields. These cities also have higher growth potential due to job growth and demographic trends.
If you are a real estate enthusiast with more time, you can build your own diversified real estate portfolio with CrowdStreet. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor's track record and experience is vital.
Both platforms are sponsors of Financial Samurai, and Financial Samurai has invested over $300,000 in Fundrise so far.
Stay On Top Of Your Money
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The savvy middle class track their money carefully so it can be optimized.
The Definitions Of A Middle Class Income is a FS original post. To get more wealth knowledge, join 65,000+ others and subscribe to my free weekly newsletter. I've been helping people achieve financial freedom since 2009.
I am upper middle class.
arrogant show-off!
I am middle class in sf and I always strived to have more than what was stated below. I compare myself to rich people who can afford to throw caviar parties and take their kids out every weekend to say “pier 39” and have a decent meal for $250 for 4 people for lunch, carousel ride included! And spend another $300 for dinner at the embarcadero. Unable to do that even with $200,000 a year, it’s depressing. So yes, I feel poor…having to bring lunch to make do every weekend if we want to experience an outing in sf…sucks….
“If you live in an expensive coastal city, $250,000 for a household isn’t exactly rich since about $65,000 of your income goes towards taxes. You can afford a car, take a couple weeks of vacation a year, max out your 401K and send your two children to private school.”
Perhaps the goal is to not compare yourself to rich people.
Check out these posts:
How To Make $200,000 A Year And Not Feel Rich
Scraping By On $500,000 A Year: Why It’s Hard To Escape The Rat Race
I love money for what it does. It has bought much happiness for my family. My family tells stories when we are together about our wonderful experiences on vacation. Without money there would have been no vacations and no stories.
Arrogant show-off.
Perception.It is only a perception.
When my family of 3 came to US my wife was making $8/h(5.15 minimum wage in 1996) and I was making 6.But rent/w utility was 600. Food – 200. I had to work only 140 h/month to survive.We had 800 to splurge.400 immediately went to the saving account… I know how to be rich like a king.
Then I became a truck driver.It was my childhood dream. And some bloodsucker was willing to pay me for that $10/h 45-50 h/week( sometimes 70-80). What a fool. Spent $80.000 to buy me a toy and pay me for playing with a toy.
But then I wanted more. Over the road drivers make more.
I found another rich woman, who spent $180.000 just to keep me happy and $40.000/year to my wife. What a wonderful country USA are.
Am I a middle class now by income and savings? Hell, no.
I am an affluenza.
After 5 yeas of driving I got bored an went to IT.
But I remember who gave me several very expensive toys. Investors.
I love rich people and hate poor people.
Boy, Ann — I’m looking at these numbers and wondering. You truly can’t find a great meal for four in SF for less than $250 or $300???
I have trouble believing that…and if it’s that important to you, surely cutting back on dining so you CAN go to the Embarcadero once or twice a year would make more sense (and have more meaning) than hitting up Red Robin or Applebee’s regularly.
why are you so status conscious. why complain about your income when you are making more than $200,000. By making that much, you are in the top 1%.
$200,000 is more like top 10%. Top 1% income is above $470,000 nowadays.
Wow, I guess that really puts me out in left field. If 10% of people are making 200,000 or more, it almost seems that just about everyone is making a high salary. (over 100,000)
You get no pity from me. You’re making $200,000 per year puts you in a pretty high social status. I’m a CPA with a Masters degree in business administration from San Diego State University. The firm I work for maxed me out at just over $78,000/year in spite of my education and credentials. If I were working in San Francisco, I would most likely be making the same $78,000/year. Does that make me a low class unsuccessful person especially compared to you? So please, when you knock a 200,000/year salary, think of all the people who make a lot less than you in spite of being well-educated with professional credentials.
I clear $100,000 a year and I don’t let anyone around me know. I also live in what I would consider a lower income apartment complex, but the people here are fantastic neighbors. It also doesn’t hurt that I pay $1000 a month for a two bedroom with all utilities included unit, especially since I run the AC constantly in the summer because Phoenix is well….hot. I have my old condo in Chicago I rent out and will eventually buy again down here with the next market correction, but the Phoenix market is in my opinion overheated again. I make what is considered middle class for a family of two and I consider middle class similar to what Peter says. If I can make 40k off of my assets while sitting on my a$$ then I’ve hit middle class because I can actually retire with no worries.
“You can also consider yourself middle class if you are making + / – 50% of your city’s median house price. Using San Francisco again, the median house costs $1.1 million. Therefore, if you are renting or own a property worth about $750,000 – $1,600,000, you are also considered middle class.”
Not exactly sure what you are saying here. Median house price is 1.1 million then the +/- 50% range would be 80-120k median house price using 80k median income, but then the conclusion is drawn with owning a property?
Would I need to make 733k-1.1 mill to be middle class in San Fran? Or is this an either/or statement rather than an ‘and’ ? Now that I think about it, its probably an “if not this then that” statement.
I believe that the source of the income is more indicative of middle class income/status. For example, my spouse and I earn around 240K/year working for a living. My spouse or I could lose our jobs or be downsized. We have to save for retirement and pay for our children’s college. However, if I earned 240k/year on SOMA ( Sit On MY A–) income, I would consider myself wealthy. If I can generate 240k in dividends, then I would have 8 Million in the market with a 3% yield. Furthermore, I would be paying only 15% tax and not ordinary income tax rates plus social security taxes. Just a thought.
This is a couple of years past the date of this article, but it’s fascinating…so I’m posting. Where I am, which is the suburbs of small town America, 100K is more then enough to live on. However, in other states, that changes. We do just fine and fall somewhere between 100-150K. But if we moved to say…Hawaii…that would change dramatically. There are so many variables involved in deciding what qualifies as the lower, middle or upper. Not to mention what the middle has to pay out. It’s 250$ to walk into an ER. BlueCross has recently raised all of it’s deductibles and co-pays. If money defines the class, it’s wrong. Health is the most important thing there is. Having free healthcare and being able to walk into an ER for free Tylenol…seems the better option at this point. I’ve got a kid with Epilepsy. It doesn’t matter what we make…at the end of the day, hospitals get it all. Just too many variables and factors to consider, all across the board.
“Radical Ideas” is spot on! I grew up in the South Bronx and watched my parents sacrifice their hearts desires(dad, a musician and my mom-an artist) in order to afford 2 kids and a path out of the ghetto. I am sure they thought it was the thing to do–its what was expected in the 6O’s.
We had poor but happy lives and they did a fabulous job. My brother went to Princeton and I, to Harvard and neither of us decided to have children. My brother would always say “I can’t afford a wife” and for me–I just wanted to “own” stuff.
Although we could, no doubt afford kids… having no children has made my life more like I had always envisioned. Property, car(s), terrific vacations, and any fashionable clothes and accessories I like. I have a terrific husband, age-old friendships, and new ones too.
From what I have experienced…no one ever goes to the nursing homes as often as they should, and as much as their family members there would like. That’s why there is sooo very much depression among the residents. With or without children, make choices true to your heart and you will be happy no matter what your “class”.
Thanks for the support–R.I.
Very well said – glad you are sharing with the world that there is a wonderful life that you would never imagine by taking the road less taken. Just as there is a wonderful indescribable experience as to be a parent – there is an equal one (blissful freedom) also.
Making choices true to your heart and being happy no matter what your “class”, is easy for a successful person with a Harvard education to say. In the real world, if you don’t have the great college education and are in less than successful circumstances, happiness is a very elusive unattainable goal.
In my book a middle class lifestyle is one where you can afford a house, can raise a family, have some “fun money”, can take a trip every now and than, and can set aside a little for retirement each month. Where I live that means middle class for a family is about 100-150k/yr.
Where do you live?
Raise a family? “fun money”?? Buy a house? That’s a tall order in Silicon Valley.
In Boston or New Jersey or just about any other major city, $150K would do it.
In SV that will cost you $300-$400K/yr minimum for a normal upper middle class you’d be used to anywhere else.
Everyone seems to be raising the bar as to what qualifies as “middle class”. If the lower bound for middle class is now over 100,000/year, it translates to being low income if you make anything less than 100,000/year anywhere in the U.S. – Making 78,000/year, I guess I’m more of a looser than I thought.
Everyone seems to be raising the bar as to what qualifies as “middle class”. If the lower bound for middle class is now over 100,000/year, it translates to being low income if you make anything less than 100,000/year. Making 78,000/year, I guess I’m more of a looser than I thought.
I find this tends to be particularly the case in the UK – people don’t like to think of themselves as poor but conversely virtually nobody would ever admin to being upper class if their life depended on it!
Ok this is a crazy concept but a factor this humankind seems to over look is that children cost $250,000 each to raise. If you can’t afford a 2nd home how can you afford a child? We never seem to consider cloning ourselves as a “financial” decision. It’s taboo in this society. I chose not to have my own children and am enjoying pure bliss in my late 50s w/o any stress, money issues, or obligations. I have several friends that made this decision early on and it’s paying off for all of us now. Just something to consider – I know it seem way too bizarre to some. But soon it will seem more normal. Pass it on!
Who will visit you in the nursing home?
The same NO ONE who will visit those who had kids.
Yes it is a poor reason to take the huge risk in having children just to make sure someone takes care of you. You may never get that old. Your children could pass on before you. There may be no nursing homes in the future. Why are the elderly not living with their families?
There are so many things that can go wrong when you have kids….just look around. I have rarely seen a family that I think “now that is a great family”. Everyone I know have had some sort of major challenge that I would just as soon skip in this life. I see a bunch of stressed out moms with out of control kids that they worry about constantly.
pls explain the math behind the $250K price tag.
A report from the Department of Agriculture puts the cost at $233,610 over 18 years for the first child. (Subsequent children cost less because so much can be shared.) Most of this is from added housing costs, food, child care, and transportation. It doesn’t include college costs. The early years are the most expensive, when kids aren’t in school yet.
However, this is only an average cost. The amount varies by location and income level. It is certainly possible to raise a child for much less than this by making strategic choices, such as split-shift parenting.
Overall, I think the decision to have kids or not should not be based on money. I don’t have any because I’ve never wanted to be a mom, and yes, that decision has no doubt helped me financially. But if I had wanted kids, I’m sure I could have found ways to raise a family and still get ahead. It would just have taken a little more creativity.
Oh, and to answer Babygyrl’s question: my nieces, my nephews, my much younger friends. Or, I’ll just have fun hanging out with the other old folks. I love playing bridge.
Why can’t children be a financial decision? It’s just our society’s decision that makes it “taboo” to EVER put a $$ amount on this “right” and therefore perpetuates alot of the world’s problems. Parents that have children they cannot financially manage just creates more stress in their lives (parent and child), less time to give the proper attention to their children, etc…and guess who suffers because of a decision that is basically made on instinct (the lower regions of our body…) vs. our brain? Great comments on this subject that is not spoken or thought about much.
Because… children simply aren’t a financial decision. Sure, finances play into it, and there are extremes, but children are an emotional decision. We have two, and by the time I’m in my late 50’s we’ll be hitting FI just like you. Well, technically we probably already have, if we were willing to downsize. Kids probably slowed us down by 10 years, but that’s not a choice I regret at all.
Well that’s my point. It’s a belief. If you believe you are better off you are. It’s YOUR truth. If we decided as a society or believed as a society that you don’t get to reproduce unless you complete a degree in parenting or you cannot be on welfare or you are responsible for their behavior through their entire life not just 18. Guaranteed our prisons would be emptier and we probably would not need addiction rehab centers for instance. But our brains our a blank disk when we start in this world and we are programmed by what we are exposed to. Change is difficult as well as acceptance of any idea that is not the “norm”.
Bottom line – childfree = more$$ and less stress :)
I’m in my mid-40s and work in Silicon Valley at a large tech company. I make $250K a year. My wife makes about $10K/year out of the house. We have a small child. We live in a below market rate rental house. It just worked out that way because I have a great relationship with the landlord. Rent is $2100/month (should be $3500+) for a 1100sf 2Bed/2Ba. We’re on a busy street in a 3rd tier town with terrible schools (95% of kids at the schools get reduced lunch prices).
Housing costs in a decent 2nd tier town (forget 1st tier) would be so astronomical they would basically bankrupt the rest of our lives which are more or less comfortable now. We don’t live extravagantly, but we don’t worry about monthly bills and take a couple of family vacations every year and I’m able to max out my 401k.
A decent house in a 2nd tier town would be around 1100sf, need a good amount of work and cost around $1.4M minimum. I could theoretically swing it, but then we’d be strapped in all other areas of life including education.
Schools in CA are really bad. I’m from the east coast and a general rule is the best schools in CA are still worse than the worst schools back east due to a number of factors like tenure, terrible tax base (ie, no money)
By continuing to rent in our little Silicon Valley ghetto, we can at least afford to send our kid to private school for roughly $20K/year. A drop in the bucket compared to trying to afford a house in a decent school district here.
CA is a strange place. Almost like a banana republic. There are the well off folks here making $700K+/yr that live like middle class anywhere else in the country. If you make less than that, then you live in old dilapidated (1950s) one floor stucco shacks that noone is ever incentivized to fix since housing prices go up here double digits year after year (with the rare tiny downturn). At least at my salary I can afford a house for my family to rent. Most people in our neighborhood are living with multiple families in the same size apartments/houses.
Prop13 ensures that the folks that got here a long time ago stay put and pass their houses generation to generation paying $1000/yr in property tax on a paid off house that are now worth $1.5M+. There’s hardly any housing stock here which, with the larger (not mine) salaries in the area accounts for those few homes being snatched up at crazy land prices.
So how do I feel living here? I feel like I live in a pretty poor/poverty-stricken area (95% reduced lunches is a good indicator), but I feel like I’m somewhere between lower-middle and middle-middle class for the area. I’m hoping I can scrape together enough additional savings somehow to keep up with the pace of appreciation on houses here to save up enough to maybe buy a little starter home here some day, but it feels almost out of reach.
I feel like I could move to somewhere else like Boston or New Jersey/Fairfield county CT (Where the bankers of NYC tend to live) or even parts of LA or Chicago and be clearly in the upper-middle class. Then there are other places in Florida and Texas I could practically buy a house for cash and live like a ‘rich’ person on this same salary.
So the definition of “Middle Class” is, IT DEPENDS on where you live.
True. Ever thought of moving?
As a small business owner, I’ve decided to make $250,000 a year gross, just like you. But for some reason, I’ve had no problems buying property over the past 14 years (bought 4). But, I’m also a super saver.
Just bought a fixer in Golden Gate Heights in 2014 for about $1.25 million, and spent $120,000 so far fixing it up. I love it, and it’s not that big around 1,900 sqft. But, it’s cheaper than what you are describing. Maybe pursue a fixer and put some elbow grease into it?
Sam
SF would be a bit of a haul for me to commute every day. I’d prefer to stay on the peninsula. I’ve looked everywhere(?) down here but haven’t found a spot like GGH. Great schools there but not much available in that or surrounding neighborhoods. Thanks for the tips!
My wife and I make about the same amount of money in the Midwest, but we have plenty of student loans so we don’t really think of ourselves as above middle class.
Anyway, some of the better private schools around here also have a price tag around $20k per year. Must be a popular number these days. We decided that we were better off simply buying a house in a good school district. Homes range from roughly $170k to $1 million+. So, in my case, there is a lot to be said for living in a lower cost of living area. For silicon valley types, however, that may not be a realistic option.
You are a reasonable person. The bad part about the people screaming for tax raises because someone somewhere lives like a king on 100k is unreasonable and quite frankly, stupid. I live in Texas with my parents, going to college, and we live very comfortably. My dad as IT for Fedex makes 110k a year and my mother makes 20k as the Assistant Director of a daycare facility. We live in a 750k home (that we got for 500k). My family includes myself, my two younger brothers, my younger sister, and my parents. To top it off, when my grandmother’s rent was too much in the Colony, she and my Uncle moved in with us and they don’t make any money. So we are fitting 8 people on roughly 140k pre-taxes, and living very nicely. Once we sell our second property that we moved from, life will be even better (hard to have flexibility with two mortgages).
The problems with middle class incomes I feel started with the signing of NAFTA on December 8th, 1993 by President Bill Clinton. The result was the migration of millions of middle class jobs leaving the country that were in the production and manufacturing sectors which made the USA an industrial and financial Goliath. Ross Perot stated during its formation that if it was passed Americans would hear a “giant sucking sound” of American companies fleeing the United States for Mexico, where employees would work for less pay and without benefits.
In addition we have 10’s of millions of illegal immigrants that have called the United States home over the last 30 to 40 years, the majority of which have low education, minimal skills sets and often limited language skills competing with Americans with higher educations (GED/high school or greater) for lower income job. They are willing to work for lower wages without benefits and tax our social services especially when it comes to healthcare.
I would also be negligent if I did not mention the effects left by the Great Recession, or as I call it “The 2nd Great Depression” we’ve been living in since 2007 and is still taking its toll on the middle class today. This resulted in another devastating roll back for the middle class due to the lack of oversight by our Federal government, rollback of rules and regulations of big business and the financial industries which has had a devastating impact and will for decades to come.
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My wife and I will clear $125k combined this year. We will be buying a home soon. We both have graduate degrees, have our own car. Our goal is to turn our side project into a full time business and generate more income that way. My wife works for a major university so we get an 80% tuition remission for our children. I think the main difference between the classes is access to opportunities. A person in the lower classes has a harder time digging themselves out as their time is spent on survival. A perdon in the upper class with a warchest of $500,000 in reserve cash can do whatever they want. Money buys choices and the more time you have to spend just surviving, the less choice you have.
I would say that’s a very balanced view.
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IT IS NOT ABOUT WEALTH REDISTRIBUTION!!!!! IT IS ABOUT FAIR WAGES AND PAYING YOUR FAIR SHARE OF TAXES!!! IT IS NOT THAT COMPLICATED-IS IT?
Roger, I assume you would be OK with everyone paying the same percentage in taxes. Say 15% for everyone. Would that be fair? Factoid, the top 5% of tax payers pay 95% of all taxes collected. So I would like for you to tell me exactly what is my fair share.
Signed me
5 percenter
I think that most of us in America have the opportunity to become wealthy “if” we start making good choices at a young age. I believe there is also a little luck involved as well. I am 43 years old and my wife and I combined make around $150k. Both my wife and I made some choices along the way which we will never really be able to recover from financially. Although we are making it and if things go right, we will be safely able to retire in our early 60s, we could have done better had we done things differently. A series of bad choices in life can make the difference between being wealthy and struggling for the rest of your life. I try very hard as a parent to make sure my kids understand this concept. I think I have given them the tools and the foundation to be successful and wealthy adults, but it all depends on their choices after they leave the house.
I demand that the term “Middle Class” be eliminated no matter what category it is related to.
I am a “First-Class ” citizen who makes middle income and there is no “class” in putting me
in the former. I don’t know who determined that we were “middle-class” this or “middle-class” that but either you are low-income, middle-income or high income. Of course the media, the “upper-class” see things their way and my way will find itself in some dark dungeon.
At over 2 years past the first comment is this comment:
My financial position: 28 year old accounting college grad, single parent making $53,000 in Los Angeles. Well my financial position is not ideal and is not mediocre, but like the ambitious person I am, I want more.
With college debt, day care, and rent it seems impossible to get by-yet with some stroke of good luck I survive month after month. This year I am studying for the CPA and if all goes well, becoming a CPA. I have visited the idea of going back to school to get a masters, but adding more debt sounds like a huge downside.
At several points in my life I was saving, contributing to a retirement, and not this stressed out about money…but now that I am a single parent money (lack there of) is my biggest source of stress. What advice would you give to someone in my position, so that I may not be so stressed about money? When does it get easier?
First of all, there’s no better multi-tasker than the single parent. Props to you for making ends meet and holding it together.
I’m not sure when things will get easier until you find another partner to help you. I wouldn’t take on debt to get a masters. Do it on the side, if possible. I really think the answer is to try and spend time finding that teammate in life, rich or poor.
I’m 23 years old, i make around 25-30k a year after taxes working at a restaurant i know it’s not ideal forever but it is while i’m going to college i live in between reading and Philadelphia. I thought i made decent money compared to everyone else. It seems like no one around here makes more than 40-50k a year… i don’t get it.
I made $40,000 base at 23 year old living in Manhattan, which means that was like making $25,000 a year! But through kicking my own ass and getting in at 5:25am and staying until after 7pm every day for two years, I got a promotion and a raise at a new firm, and away I went.
Just got to do more with the amount of hours given. If normal people are waking up at 7am, wake up at 5am and work two hours on something. Two hours a week day ads up to an extra 400+ hours of achievement and expertise over a year. Surely that is valuable!
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It makes no sense to define classes by how much money one brings in each year. There are geographical differences and life cycle differences that determine your lot in life. The “classical” definitions are roughly:
Upper Class = You have enough in assets to live very well without working, but are expected to do good charitable works and support broad communities of people due to building productive enterprises. You are either well insured or have enough assets so that you and your family have no worries of defenestration.
Middle Class = You own property. Period. You own a house or a business and have enough assets and insurance to be relatively comfortable during your & your families lifetime. You may or may not have to work, but have a good trade or profession that will ensure employment if required.
Lower Class = You don’t own anything. You have no savings. You don’t have any great skills or knowledge and your existence depends on you working 50 weeks year in, year out. You live under constant fear of your job being obsoleted or becoming unable to work or dying and leaving your family with nothing. THERE IS NO AMOUNT OF MONEY THAT THE GOV’T COULD GIVE YOU TO RAISE YOU OUT OF THE LOWER CLASS. YOU HAVE TO IMPROVE YOURSELF, BUY PROPERTY, SAVE MONEY, AND WORK HARDER. Sorry, but that’s the short answer to all of the gov’t idiots who think they can redistribute the wealth of hard working folks to non-productive folks.
These classes are not rigidly defined but, rather, define what your life is like without resorting to an income chart that says nothing about where you’ve been and where you’re going. These classes are a continuum and people pass through classes during their lifetime (unless you’re very unlucky). But, feel free to disagree with this and use a dollar amount if you need to.
I think your class definitions are right. I wonder if you meant to say that lower class people don’t work hard, as in “hard working” middle class people and “non-productive” lower class people.
Haha… well in sociology there’s two theories about the existence of poverty and other classes.
the functionlist theory
Some jobs require more work, education or have more importance therefore should have greater rewards.
and the conflict theory.
Basically the bigger cooperations get rich off the little people and control them. Ect ect Karl Marx stuff..
However.. I doubt anyone posting on this is in the upper upper class such as people with “old money” and many Generations of wealth like the Rockafellers ect.
Idk I’m in college still only took an into to sociology… and learned about this… I just took an exam over it 2 weeks ago… I just remembered and it’s almost christmas and I do not want to end up writing another essay about social stratifcaton . Lol merry xmas.
Ah, to be in college again. Enjoy your time there. The real world is tough once you get out!
As a 33 year old single woman in the Boston suburbs I make 70K and consider myself middle class. Yes, I invest in my 401K, have a nice place to live (rent, cannot afford to own in this market) and decent car but I am, and always will be, a few paychecks away from being homeless unless I were to cash out my 401K. I shop at Market Basket, look for sales and try to live BELOW my means…that is key.
Hi Emma, thanks for sharing. Save, save, and save some more. It will be easier if you team up with someone, but it’s also good you’ve got your head on straight about the impermanence of money.
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