Are You Middle Class? (should you care?)

J. Money in the middleI keep seeing these factoids around other finance blogs, so I thought I’d join :) I haven’t looked through them all yet, but I’m going to guess right now that yes – I am Middle Class.  Let’s see if I’m wrong though, shall we?

Here are the stats from Free Money Finance, who got them from Yahoo, who got them from US News & World Report (who probably stole them from Santa Claus).  Followed by my our personal info.  Here we go!

The Middle Class Match Up

  • Income: For the 50% of families in the middle of the scale, household income ranges from $51,000 to $123,000 for a typical four-person, two-parent family. The median is about $81,000. J$ – Between my full-time gig, side hustles, and the wife’s TA position, we fall a little under $100k.
  • Housing Costs: For two-parent families, the typical home is worth about $231,000, accounting for $17,600 in mortgage payments and other costs per year. J$ – Our house is worth about $300k, and mortgage payments around $24,000
  • Home Size: The median size of a new, single-family home jumped by 40% between 1979 and 2007, to about 2,300 square feet. J$ – I think our Townhouse is around 1900 sq ft. Although in our area of the country it probably falls closer to the average.
  • Cars: The typical family spends about $12,400 per year on two medium-sized sedans or the equivalent, with a new-car value of $45,000. J$ – Wow, new car value at $45k?  That’s a lot of car! And debt…scary that that’s the avg for middle class…both our cars total around $12k in value. And we probably spend only a few thousand a year on them (gas, upkeep, etc – they’re both paid for)
  • College Savings: The typical family puts aside $4,100 for college expenses for two kids. J$ – N/A – We don’t have kids… yet ;)
  • Vacations: One week at the beach or another destination is standard, at a cost of $3,000 or so for four. More affluent families can afford two weeks, at a typical cost of $6,100. J$ – We *rarely* spend $3k on a vacation (this year we will for our Eurotrip), but we def. spend $3k on total trips throughout the year – Vegas, Boston, wherever our friends are going and we can stay for free ;)
  • Retirement Savings: A median-income family that saved 3.2% of its income – roughly equivalent to the national saving rate – socks away nearly $2,600/year for retirement. J$ – I haven’t calculated it in a while, but I’m pretty sure we’re close to 40% savings. Haha… drastic, much?
  • Number of Earners: In 76% of two-parent families, both parents work. The higher the household income, the more likely it is that both parents are contributing. J$ – I work full-time, and the wife works part time while in grad school.  Before and after school though she’s full-time.
  • Education: The typical household head has a high school degree, plus about 2 years of college education. J$ – I have a Bachelors, and she’s getting her Masters this year on her way to P.H.D.
  • Household Net Worth: The typical household has a net worth of about $84,000, according to the Federal Reserve. J$ – We’re at $151k (holler)
  • Debt: About 18% of disposable income, on average, goes toward mortgage payments, auto loans, credit cards and other forms of household debt. J$ – We def. don’t spend anything on loans, but our % of mortgage vs income was high the last time I checked.  Around 30% maybe?

Pretty interesting to see these comparisons.  From the looks of it we’re def. middle class.  Not that it really matters much to be honest. Who cares if we’re lower, higher, or just plain ballin’?  Only OURSELVES ;)  If you can get to a point in your lives where you are happy with your situation, and confident, you are on the right track.  Money is great, but it’s only a piece of the puzzle.

How do you all compare?

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  1. Coffeecents April 23, 2010 at 9:15 AM

    Ah, but Jay, you’re not adjusting for cost of living. DC is pretty expensive, right? 50k here versus 50k in Omaha is a big difference in what you can buy.

    I so wish that cost of living was taken into account by these rankings.

  2. Brian April 23, 2010 at 9:22 AM

    Now J… what is the average age of these people? I mean are you old enough to consider yourself middle class… or are you still just starting out?

    I think you are old enough have played flip cup with a pterodactyl.

  3. jolie April 23, 2010 at 9:30 AM

    Very interesting post.

    Income – middle class
    Home – lower middle class or upper lower class. it’s only 850 square feet sadly
    Auto – upper middle class
    College savings – just started. no class? lol
    Vacation – we’ve had one big vacation. ever. rest is just camping
    Retirement savings – i should be ok. Spouse is screwed
    Education – I have a BA/BEd. He has high school

    If I base it on my sons’ classmates’ families we are definitely farther down the food chain than they are in all respects.

    If I base it on my work colleagues/friends, we are just a wee bit farther down the chain methinks

  4. Karmella April 23, 2010 at 9:36 AM

    Yeah, some of those numbers feel off – 45K cars (two of them!) seems high, and a week’s vacation for four people at only 3K seems low.

    I’m steadily average/above average – my 8 year old Honda Civic drags me down ;)

  5. Young Mogul April 23, 2010 at 9:39 AM

    It’s interesting to me that there are specific standards for middle class ranking because for most of society, middle class equals how one LOOKS. Most of society judges middle class based on what neighborhood one lives in, what car one drives, what clubs one belongs to, if kids go to private school, etc. So, by the LOOKS of most people, they may be middle class. But, if they took this test, they would be surprised to find out they are not middle class at all, just deeply entrenched in debt.

  6. FB April 23, 2010 at 10:38 AM

    The savings rates, debt, and car information is insanity. I’m a single dad of two kids in daycare which cost more than my house payment with taxes! I’m in the middle of that income ratio. I save 15% of my income and have no debt and drive a used car and have a net worth of 160K and growing with money left over. Now the kids and I don;t take extravagant vacations for 3K a week no way never.

  7. duddes02 April 23, 2010 at 11:31 AM

    Income-I appear to be middle class for a one person family
    Housing-I’m of the low class. I pay $7,620 a year. woo hoo!
    Home size-gah. Let’s not talk about it. I’m not even close middle class.
    Cars-no car! no class! no shirt!
    College saving-no kids! no clas! no shoes!
    Vacation-gosh, I’ve never spent 3k on a vacation. one day!
    Retirement-score! I give 5% of my income – it’ll be 10% with employer match starting next month
    Number of earners- Just me- no class?
    Education-some grad school.-middle class!
    Net Worth-student loans killed me here
    Debt-about 13% goes toward student loan debt.

    Age should factor into this though . I’m 25..I feel that in 5-10 years my picture will look completely different.

    Great post!

  8. A.B. (Modern Tightwad) April 23, 2010 at 11:33 AM

    Dear Lord! I think we’re the working poor. But we’re less working poor this year then we were last year, so I think we’re headed in the right direction!

  9. nofearingthemoney April 23, 2010 at 11:34 AM

    I have (recently) adjusted to the fact that the numbers tell me we are not middle class, although I still think our lifestyle is middle class.

    Our income exceeds $225K per year, our house is worth a bit over $425K at abt 2200 sq ft, Interestingly enough, the mortgage payments are about right for us.

    Our cars are worth maybe $40K. Hubby just bought a new car this month. We set aside more than $7000 per year for college for our one child and we spend about $4,000 per year for the three of us for vacations.

    We both have BA degrees and our household net worth is just over $1M. This is due largely to our retirement savings and other investments and low debt. Last time I checked the numbers, we were saving about 40% of our net income.

    We have very little debt as a percentage of our household income. It stands at about 9.5%, which includes our mortgage and small car loan. That is our only debt.

    The most important thing is that we are happy with our lives and our choices. Whatever the chart says about middle class or not, it is all good.

  10. Jersey Mom April 23, 2010 at 12:54 PM

    A lot of the commenter has their heads screwed on right. =) Trust me, I see plenty of people who think they’re doing well because they have the big house and expensive cars but have nothing in the bank.

    Back to your topic. Our household income is above the mentioned amount but we still think of ourselves as middle class. Jersey is an expensive place to live. For example, our property tax is just below $10k per year. So I think the stat needs to be adjusted depending on where one lives.

  11. Matt @ Dividend Monk April 23, 2010 at 2:57 PM

    I view the classes in terms of mentality rather than income.

    Middle class people define their wealth by their job income, not their assets. Their vice is to spend, spend spend. That car statistic is ridiculous. $12k a year for two cars, and an average new car price of $45k? I’m horrified.

    Nice post, btw.

  12. Lynn April 23, 2010 at 3:10 PM

    I am also a “Jersey Mom” and I totally agree with the other Jersey Mom. Our income is above the “middle class” but there is no way we are anything but middle class in NJ. Our property tax is also just under 10K and I live in a 1800 sq ft house on 0.2 acres and its worth about 525K. The average property value in my town is 628K and we definitely live in one of the cheaper houses. Middle class definitely means different things in different areas.

  13. Brandon Schmid April 23, 2010 at 3:17 PM

    I heard that money is like food, the only time you think about it is when you don’t have any.

    I think economics is only one part of the equation when assessing if someone is middle class or not. I think one should also look at spirituality, mindset and conscious awareness.

    Look at Tiger Woods. He is certainly better than the middle class at golf but then just terrible at being a husband.



  14. DD April 23, 2010 at 5:46 PM

    Very interesting post, and timely since I’m evaluating all aspects of my financial life right now. Here goes:

    • Income – Upper middle class
    • Housing Costs – I live in Silicon Valley and my rent is R-I-D-I-C-U-L-O-U-S!!!. It’s a trade off for top schools, but OUCH! My housing costs are approximately 23% of my yearly income.
    • Home Size – I rent a townhome that’s approximately 2,000 square feet. I live there with my two sons. Median
    • Cars – I’m driving a 2007 Nissan Versa and completely happy with it. I still owe on the note, but almost close to finishing. No plans for a new car anytime soon. This one only has 36K miles on it, so its got a lot of life left.
    • College Savings – I didn’t plan well at all for my oldest and my youngest isn’t going to be in too much of a better place when he graduates in terms of Mommy’s help. I’m thinking scholarships!
    • Vacations – My weakness! We spend about the median average for a family of four. This is on my budget chopping block.
    • Retirement Savings – I was putting the max in my 401k plan, but recently stopped since I’m going through a life transition. I have to focus on debt repayment, so retirement savings could possibly be on hold for awhile. When I did contribute, it 10% so I think I’m well above the median on this.
    • Number of earners – One income family now. It’s just me.
    • Education – finishing up my Bachelor’s this year. WOOHOO!!! Personal goal. Almost…middle class.
    • Household Net Worth – I’m not even close to the median which is deflating because it’s a reminder of how all the debt impacts the bottom line. On a mission to do better. One plus is that I’m not in the negative. Thinking positive thoughts.

  15. J. Money April 23, 2010 at 7:43 PM

    @CoffeeCents – How do you know they’re not? If it’s truly an average of the country then it should, right?
    @Brian – Hah! I INVENTED Beer Pong :)
    @jolie – Cool to learn more about you financially like that :)
    @Karmella – $3k vacays seem low? wow, seems so high to me…maybe I should go on one of yours though! haha…
    @Young Mogul – “for most of society, middle class equals how one LOOKS.” – that is SPOT ON! Sad, but spot on.
    @FB – Oh man, daycare is no joke…hopefully we will figure something out when the time comes!
    @duddes02 – Haha yes, 5 years from now will be WAY different for you :) Damn youngin’.
    @A.B. (Modern Tightwad) – Hooray!!!! Keep it up!
    @nofearingthemoney – YES! It is most definitely important that you are happy with your lives and choices, well said :) These charts are just fun for a little comparison action. Oh, and well done on that 40% savings! That’s incredible.
    @Jersey Mom – Did you know I used to work in Jersey? Been a few years, but Def. like certain parts of it….kinda like every state, really.
    @Matt @ Dividend Monk – Mentality vs.Income eh? I can dig that…def. some truth in it.
    @Lynn – I like it that Jersey Moms are visiting my blog :) I’m gonna call you two cougars from now on…half of the women I’ve ever dated were from Jersey so I’ve got nothing but love for the state!
    @Brandon Schmid – haha…oh man, you crack me up dude…seriously that’s some funny stuff.
    @DD – I want to move to Silicon Valley sooooo bad! Or at least have some reason to visit every year…went out for the first time last month and almost didn’t come back ;) You guys have so many SMART and creative people/companies out there! Love it.

  16. Darwin's Finance April 23, 2010 at 9:10 PM

    Interesting analysis. It’s tough to compare without factoring in age and location. A 23 year old making 75K in the midwest is a rock star while a dual income family in NYC making 120K at age 50 is not in the same league. It’s easy to overgeneralize without considering pertinent facts like that. I’m curious to hear what percentage of Americans are considered “middle-class” and whether it’s a Normal, Gaussian, other distribution.

    By these measures we’re middle-upper in most respects, but as of now my wife isn’t working (home w kids). when she goes back, income jumps obviously, so that’s another pertinent consideration…

  17. Simple in France April 24, 2010 at 7:33 AM

    So. . .does buying a more expensive car or a larger house make you more or less middle class automatically or does it depend on how in-debt you are? This whole thing doesn’t seem to make much sense anymore.

  18. David April 25, 2010 at 1:33 PM

    Well, right now I’m in the “college student in extreme debt about to graduate into a terrible economy” class so I guess middle class is just something I have to aspire to ; )

  19. Monevator April 25, 2010 at 6:45 PM

    It’s funny (and maybe better) how money is the class divider in the US.

    Here in the UK — where we invented the anglo-saxon class system I’m afraid – it’s still more defined by other things, like how you say certain words or were educated, or what TV channel you watch. You can be working class and rich, or a poor aristocrat.

  20. ctreit April 25, 2010 at 9:22 PM

    You say, “I keep seeing these factoids around other finance blogs” about being in the middle class. Maybe we are all geared towards comparing ourselves to others, which is apparently also the source of our happiness. For example, if we think that we do better than our peers, we feel happier. This is also the core of Jonesitis, i.e. keeping up with the Joneses. – I like how you end it. We are “Only OURSELVES ;)” Well said!

  21. Money Reasons April 26, 2010 at 12:16 PM

    Thanks for sharing!

    Being that stats geek that I am, I love to read about this kind of stuff (though I have no idea why)…

    According to list above, I’m pretty a “middle of the road” middle class kind of guy. Though I plan to be a bit more, and that’s the reason I joined your Million Dollar Club (yeah baby)!

  22. Tiffany April 26, 2010 at 12:43 PM

    If you look up middle class in the dictionary you’ll probably see us!

    • Income – Upper middle class
    • Housing Costs – MA is NOT CHEAP! We just bought our first house for 319,900
    • Home Size – We got a GREAT DEAL. 2100 sf. for us and 2 dogs. Yay economic downturn!
    • Cars – 2005 Hyundai Tucson. I’m going to drive it til it drops. Fiancee has a 1997 Toyota Corolla…also driving until it drops
    • College Savings – lets label this college debt. combined we have about 120,000 in student loans…i’m thinking college education is overrated…maybe i’ll push my kids into a profitable trade?
    • Vacations – The most we’ve spent on a vacation is 1300. We usually do local weekend trips. This year we’ll be camping in the new back yard.
    • Retirement Savings – He is WAY ahead of me on this. 13% of pretax income since college graduation 5 years ago. I just started, 8% of pretax income for the past year
    • Number of earners – Two.
    • Education – Me: BA and BS. Him: BS
    • Household Net Worth – oh waayyy negative. but, we’re JUST starting out. so this will go up! we don’t mind being middle class. we don’t aspire to fancy cars or flashy things. we aspire to be debt free with money invested and in the bank! we’ll get there…slowly but surely :)

  23. J. Money April 26, 2010 at 1:00 PM

    @Monevator – In that case I’d def. be the “poor aristocrat!” haha….My language would scream it :)

  24. Lauren Jade April 27, 2010 at 4:13 AM

    you listed your Net Worth at $151K….but you may want to reconsider that figure if you try to include your house’s equity and mortgage, cars and property…..because those are all LIABILITIES….and depending on what area of the country ur living even ur house may be losing you money right now…and your cars will be almost worthless by the time you think about selling them since they depreciate in value so fast, and and until your house is completely paid off its own by the bank technically, so its a hugge liability… your only assets should be ocunting if they are actually MAKING you money….not sucking it away from you…

  25. J. Money April 27, 2010 at 10:13 AM

    If you look at the breakdown of the net worth you’ll see that both ASSETS and LIABILITIES are accounted for. I could very well strip away the liabilities and still be up in the $100k range – but to me that’s not what “net worth” means. I like to see that overall picture of everything going on in our financial lives.

  26. FB April 27, 2010 at 11:53 AM

    I also included my liabilities .. I have zero debt so only the mortgage and a used car which is not worth squat. I live in Texas and in my area values have not changed. If was not to include those items I would be over 250k in value … Can I retire at 35 please say yes lol …

    Its really a tough balance retire much earlier or live a little more extravagantely now?

  27. L @ Smart Money August 27, 2010 at 2:39 AM

    Houses in the US(excl. NYC and Boston) is cheap! We’d be lucky to buy a house anywhere within the 15-20km radius for less than $770k. Studios, 1 bedders and 2 bedroom apartments range from $280k-$650k on average.

    24 Lauren Jade April 27, 2010 at 4:13 am – pobably reciting what she read & learnt from Kiyosaki’s book and taken his definition of assets/liabilities as gospel. The way she considers housing equity, cars etc as liabilities is wrong. Even though the cars depreciate and the house may be be losing value, if there is housing equity or the car runs, that is still considered an asset nevertheless…despite being a ‘depreciating’ asset. J.Money – you’re calculating your net worth the right way. Kiyosaki’s/Lauren’s definition of an ‘asset’ is a more simplistic version for beginners so that they can understand the game.

    Anyway, interesting post about averages/medians in the US. The numbers are nowhere near applicable for life in oz. Down here, amongst the ppl I know, most of us are ‘upper class’ according to that list but life is expensive down here.

  28. J. Money August 28, 2010 at 8:06 PM

    Wow, I never really knew that about Australia. But I can’t imagine all parts being that wealthy, right? Do you know what the average “middle class” would come out across the entire country there? Would be interesting to see. Thanks for sharing :)

  29. L@ Smart Money August 29, 2010 at 10:58 PM

    As a country, we’re pretty often overlooked because our economy is smaller than China/Japan/UK/US/Europe. So we’re not as influential on the world stage :p

    *Average income is about $60k for 2010. Our last comprehensive statistics about income etc can be found at:

    *Average wealth of an Australian household in 2003-2004 was $468,000. Median net worth (i.e. the mid-point when all households are ranked in ascending order of net worth) of all households in Australia in 2003-04 was $295,000 (ABS Stats).

    Houses are relatively cheap ($250-$350k) if anyone wants to risk growing up in ‘ghetto’ style neighbourhoods (government housing, high unemployment rates, gangs, youths skipping school, drugs etc). Pretty much the whole of Australia has gone through successive property booms so all CBDs are hideously unaffordable. I know ppl whose mortgages are around $600k-$800k on average.

    To be fair, there is also a lot of wealth disparity/inequality in oz. “Household saving in Australia declined from a peak of 18.0 per cent of household gross disposable income (less depreciation) in the March quarter 1975 to a trough of -4.4 per cent in the June quarter 2002” ** Although it is now a positive percentage again due to the GFC.

    Oz is really the lucky land in some ways. I have read about the 99ers/6monthers in the US and how unemployment income is not indefinite. Here in Oz, you can be unemployed for an entire lifetime and still receive government welfare. We also have a 9% compulsory superannuation (for retirement) unlike the US where you have to make your own contributions.

    *Our minimum wage is a lot higher than the US: Our national minimum wage is $569.90 per week (before tax), or $15 per hour (as rounded to the nearest 10 cents). Nothing like the $6 or $7/hr hourly wage that I read about in the US.


  30. J. Money August 30, 2010 at 10:09 PM

    Holy crap, your place is wealthy!!!! Wow. $250-$350k in the ghetto? $15 minimum wage? That is incredible. Are these OZ dollars and not US dollars? :) Thanks for all the info on this, very eye opening.

  31. apd June 20, 2015 at 9:25 PM

    It’s an old post but I came across it while doing a google search.

    I wonder how your situation has changed. Not having kids was a huge plus that allowed you to save insane amount of money. Good for you. I wasn’t making that much when my daughter was born. However, she is now 6, and our incomes shot up (almost 3X now), so we are now saving that kind of money *without having a second kid*. Both of us are still in comfortable 30s, so we still have a decent few years before having a second kid.

    For a typical “family of 4”, if you live in a major metro area (NY/NJ, DC, the bay area, LA, Houston etc), here is what needs to happen for you to be at the upper end of the middle class:

    1) Household income of at least $200K OR
    2) One or more major liabilities paid up such as the house, kids education funds, and/or student loans

    Without both conditions, you will simply not fund your retirement enough. You should then not have a “family of 4”, just save whatever you make, pay up that house, fund your kids college and then think about having kids.

    1. J. Money June 28, 2015 at 3:52 PM

      Old post indeed! Maybe I’ll do a follow up on how our situation is now – that would be pretty fun :)

      But yeah, having kids is no joke on the wallet. We took a beating for a couple of years trying to adjust to things ($2,000/mo in daycare alone! with only 1 source of income!) but fortunately we’re back on the up and up again earning more and saving more. It was definitely an adjustment. In a perfect world you’d be able to plan and save for kids and then have them on demand, but unfortunately it doesn’t work like that :) Same with marriage/career/etc. Sometimes you never feel like there’s a “right time” for stuff too and then you magically adapt just fine once you’re there. It’s kinda cool actually.

      Thanks for breathing fresh air back into this article – was fun to re-read and remember what my former self was like :)