Here's a great piece from Money Central that discusses the middle class in America and how they (and anyone, really) can get ahead financially. There's a lot of good stuff in this piece, more than I can post here, so I'll hit the highlights. Let's start with how they define "middle class":
If we define it solely by income, then according to the U.S. Census Bureau, a household income of $36,000 to $57,657 in 2005 landed you squarely in the middle class. If you want to expand the definition to include "lower" and "upper" middle class, the range widens considerably, from $19,178 to $91,704.
Wow. I would have thought $80,000 and above would have put you in the upper class. Maybe it does -- maybe you're just "lower upper class" at that level. ;-)
The article notes that it's hard to base class levels on income alone since an income in one area of the country is not the same as the same income in a different part of the country. For instance, a $60,000 income goes a lot farther in Keokuk, Iowa than it does in New York City.
The piece then lists the things that are holding people back from getting ahead financially:
- There are fewer good jobs for those who don't have college educations.
- The price tag for education is rising.
- Health care and health insurance costs are soaring.
- Lenders don't care who can afford to borrow.
This isn't a bad list, but it's not great either. The thing that holds most people back financially is their lack of discipline. They have needs confused with wants and they simply spend more than they earn. Yes, the items above are contributing factors, but the main problem is that people simply can't (or won't) control their spending.
I was in Wal-mart the other day and I walked in beside two ladies. Now you can't always judge a book by its cover when it comes to finances (The Millionaire Next Door taught us that), but if I would have had to guess, I would have put them into the "poor" to "lower middle class" category financially. Here's the short bit of their conversation I caught:
Lady 1: You know what I want?
Lady 2: What?
Lady 1: One of those big screen TVs.
Lady 2: Yep.
Lady 1: And I mean one with a REALLY big screen.
Lady 2: Me too.
Lady 1: Let's buy one today!
Lady 2: I don't know...
My impression was that Lady 1 was going to sprint to the electronics section while Lady 2 knew that she should probably be spending her money more wisely. Unfortunately, our country has so many Lady 1's that many people are in deep financial trouble. And it's just not people at the lower end of the financial ladder. Even people with very high incomes spend more than they make and go farther backward every year.
The end of the piece then lists five tips for anyone to get ahead financially:
- Spend less than you make.
- Limit your debt.
- Save for a rainy day.
- Plan for retirement.
- Stay sharp.
This is certainly a list I believe in! (especially #1) Anyone who follows these five, simple steps will most assuredly get ahead financially.
For more of my thoughts on the issues discussed above, see these links:
We're upper class then? DANG! I'M RICH!
Posted by: Clever Dude | February 20, 2007 at 08:03 PM
Oh, maybe I should have read further and saw that since we're in one of the most expensive areas in the country, we might not be in the upper class. We're in DC.
I don't care, I'm going to stay deluded.
Posted by: Clever Dude | February 20, 2007 at 08:06 PM
I make well over $100k a year and feel like im in the lower middle class. Im in Newport Beach, CA.
Posted by: CaliRugger | February 20, 2007 at 11:28 PM