When it comes to classifying people there are three classes – upper class, middle class and lower class. To start with, I’ll admit that it is ridiculous to put all of the country and world’s population into these three classifications, but let’s face it, it is done all the time. The real question I pose in this article is what is the middle class?, and more importantly, how do you see yourself? In other words, are you middle class?
Let’s start with a simple definition of what middle class is: Middle class is defined as a household with an income of between 50% and 200% of the average annual gross household income for that country.
Let’s think about that in terms that I can relate to. I live in the U.S., where the average household income is about $52,000. That means that middle class household income is between $26,000 and $104,000. It also implies that income below $26,000 is lower class and that households that earn more than $104,000 are upper class.
Let me start by saying that while these numbers probably make sense in certain areas of the country, they are completely inaccurate for many. For example, I lived in San Francisco for quite a few years and know that even making over $104,000 (upper class) in that area is nowhere near enough to afford a better than average lifestyle. The same can be true for those making less than $26,000 (lower class). In certain areas of the country (mainly small towns or rural areas) they could still lead a middle class lifestyle.
So with a little quantitative data out of the way, we can get back to the questions: Are you middle class? And do you feel like middle class?
I live in the United States so the above data should correspond to me. And according to my income level I fall into the range of middle class. And to be honest, sometimes I feel like middle class, sometimes I feel like upper class, and sometimes I feel like lower class. I’ve thought about why I feel these ways and will point out a couple points before turning the discussion over for comments.
I feel middle class most of the time because: Normally I am able to afford the most important things in life but rarely splurge on any large purchases. One off costs like auto or home repairs are a nuisance and a big setback, but I can usually manage to pay for them with savings. Most of the time I feel like I am living the average lifestyle. It is easy to see all the people doing better than me but it is also easy to see all the people that are struggling more than me.
I feel lower class when: There are a few times a year when I fall behind and my income can’t cover my expenses. Particularly, the end of the year when property taxes come due, annual insurance premiums need to be paid, and holiday expenses start to add up. These are the times that my bi-weekly paycheck barely makes a dent in my expenses and I need to dig into savings to pay for it all. Spending more than I make is a terrible feeling that makes me feel like I’m not in the middle class.
Every now and then I feel upper class because: There were times in my life when I did really well for myself. I used to make almost 3 times as much as I make now and at times had investments that did very well, adding to the upper class feeling. Those times are long gone and most of the money I invested has been lost through the financial crises and by overspending during the good years. However, every now and then when I look at the amount that I still have saved in my 401Ks, and at the assets I’ve acquired (a house with decent equity and a vacation home that is over half paid off) and compare them to others in my age group, I sometimes get the feeling that I’ve done better than average. Of course that feeling doesn’t usually last long, but it does appear every now and then based on my emotional state and any positive developments in my investments or income levels.
There you have it. Those are the reasons that I sometimes feel like I’m middle class and other times better or worse. I hate to classify people in a class, but if you want to share with us how you feel and where you fit in please drop us a comment below.