People making three times more than me qualifies for financial assistance for their children's tuition, but not me. The reason was that my net worth was high. It is high because I saved more.
ETM, Congrats on getting over 7k listeners! I always learn something when I listen. I appreciate your perspective. My family (married with 3 children) has moved from the lower class, to the middle and now to the upper. I say this so others know it can happen with hard work and being a super saver. Your slide about the amount of income the middle class makes now vs in 1970. Wow to think the middle class lost 19% of the wage growth. That slide that really got my attention. Thanks for always doing wonderful prep work for your videos and providing us with your personal point of view. You video made me ask myself am I giving back enough to help others that are working hard to improve their and their families lives. TfT
It's a rare financial education video that addresses class, and does so in such a holistic way, addressing phenomena like social and cultural capital in addition to economic structure. Class helps give us a conceptual language to think about inequity and wealth distribution, and how political, tax and legal means make that possible. Class is not the sole reason people fail at personal finance or get trapped in debt or low-income jobs -- we have to allow for the bad choices people make -- but it is part of the story, and one often missing in RUclips personal finance channels. Some of the best writers on class in America are Thomas Frank (Pity the Billionaire); on social capital Harvard political scientist Robert Putnam (Bowling Alone); and cultural capital Paul Fussell (Class: A Guide through the American Status System) as well as the theorist Pierre Bourdieu (Distinction). So, thank you for the honesty and for detailing the socio-economic context in which people experience personal finance.
@Benjamin Liles Benjamin, thanks for the response. The place of financial literacy in a capitalist society is fascinating, because in it there is an implicit critique of that system. Not a rejection -- financial literacy doesn't mean you convert your savings into gold bars and store them in your survivalist bunker -- but an acknowledgment that, whether it's advertising and consumer culture, or investing, insurance, real estate, and debt, those entities are not necessarily operating in our best interests or, at a higher latitude, always serving the public good. Combining a more critical consciousness -- hence those books -- with practical financial literacy creates something a little different than understanding the benefits of ETFs versus mutual funds, etc. It's what I try to develop in my own imperfect way.
It's might be worth considering that class is a term that doesn't apply to the the modern era and is just leftover from systems that legally enforced it. The only hurdle I faced was really just my own ignorance. Once the self doubt is gone and you see how things work, money is no longer an issue
I've stumbled upon a gem of a video where the entire comment section is very articulate, thoughtful, and adds value where I'm actually learning something rather than being the one that chimes in with things to say. This was a fantastic video breakdown. Thank you.
Just a fun note when I was in community college most people are on FASFA federal financial aid, and in my economy 101 class the professor asked how many people think they're middle class, most people raise their hand, then she asked how many of you are on financial aid FASFA, most people raise their hand and prof said, well then your lower class cuz if you're middle class you won't qualify for federal financial aid, and that shock on their face were priceless, well they're able to afford a cup of Starbucks frappuccino though, most of them has a Starbucks cups on their desk. Me on the other hand bring lunch and three bottles of water everyday to school cuz I am not spending a dime
Well said my friend, but if I am NOT going to spend a dime, then I don't need to go to college at all. That's because I don't need to make money since I am NOT going to spend it 👍
I'm surprised that the definition of "Middle Class" doesn't factor in one's number of dependents. It seems that a person making $140,000 in Mississippi who is unmarried and without children is "Upper Class" (fair enough); but it seems also that a married couple making a combined $140,000 in Mississippi who are raising four children and caring for an elderly mother are also "Upper Class." Yet the disposable incomes of the two households are very different.
The terms "middle class" and "upper class" are problematic. Perhaps a more precise term like "middle income" would be better at defining the income of the household and less about their family situations.
@@marku5w: I used the term "class" because that's what was used in the video. Certainly I agree that the term "class" can be ambiguous. (I'm not sure if that's what you mean by the word "problematic," a word whose recent usage is sometimes, uh, problematic. 😉) And I agree that "income" is a more precisely-defined concept. But there is something that "income" doesn't entirely cover; namely, financial assets and intangible assets (or liabilities) which directly impact the lifestyle of the most-wealthy persons, but which doesn't get measured as income. And I think that "lifestyle" is what most people have in mind when using the term "upper-class." A guy could live in Tennessee making $160,000 per year, but with eight kids, four of whom are in college, and an elderly relative in early-stages dementia to care for, and a wife just diagnosed with cancer, his lifestyle might be roughly that of a single guy pulling down $60,000. Conversely, the 23-year-old recent college graduate who hasn't found a job and lives in his parents' basement doesn't seem like he's "upper-class," but when you find out his parents own a worldwide shipping company and the "basement" is fully-finished and 8,000 square feet by itself, the picture changes! Those are extreme examples, I grant. But my point is: If the term "class" is intended to be reflective of how these folks live, with what level of creature-comforts and opportunities, then "income" has the benefit of being directly measurable, but the drawback of excluding important details from the picture. So, I don't know if any existing term is ideal, and I don't know which would serve best. Perhaps the best approach is: When communicating using an ambiguous term, define your usage up-front.
Well. It depends on what credentials you are using I know if you make 80000 a year in Mississippi and no kids or married they are definitely middle middle class and probably live more upper within Mississippi but the minute they vacation to Cali New York the higher costs will quickly show you you definitely not upper middle class and you MIGHT barely cut that middle middle portion. People be like why call it lower middle and upper middle class like what's middle middle class its exactly what it says. But a very broad informal categorization lower middle class isn't poverty where they are struggling day to day. The lower middle does struggle paycheck to paycheck meaning the money they make holds them other for necessities and some luxuries but very infrequently no matter dependents or where you live. I think it's based on how economically stable you are at least nation wide. You can buy a regular Mercedes as a middle middle class person not easily but you can afford it with good credit. Lower middle class nowhere across the country is affording a Mercedes responsibly off the lot new. Lower middle class across the country don't partake in hardly any luxuries they can afford lower end high end bags one example ie at one point doonie and burke take many vacations. Matter fact let's break it to car, house, vacations. People in poverty do and have neither personally. Lower middle class, can afford easily a Honda can afford with struggle new mustangs chargers very low cost used basic foreign whips, may save for a vacation a year, homes are usually less than 100,000 and between 60 to 100. Middle middle class: can easily afford Hondas, corollas etc somewhat can also afford maximas, Acura, lower end Lexus, camrys more expensive middle class cars. Can afford with some struggle regular basic bmws, Mercedes, can vacation twice a year typically a neighboring or close state and can travel across the country for a vacation per year. Homes cost typically between 100,000 and 300,000, (Louisiana adjust for your area) upper middle class: can easily afford basic foreign whips, can afford with some struggle an exotic whip or 2 even if its a higher end BMW or Mercedes, porche, range rovers etc, vacations somewhere every quarter including some international vacays, and homes are typically 350,000 to 600,000. After that you getting to rich then wealthy. Difference between rich and wealthy a rich person may or may not be rich all of their lives depending on the choices they make but they typically make at least half a million to 20 million then wealthy are folks who likely will never be broke in poverty or even middle class. Wealthy people have been rich so long they have money everywhere all over the world hundreds of millions they have stock in a little of everything so if one tanks they have the competitors stock as well. Im telling yall too much lol.
@@just_another_bot0110 high paying jobs that could pay off student loans in the long run. However that is very difficult to do in the modern age unless you start off with extremely high paying, high demand jobs like Tech
I suddenly stumbled on your channel, I subscribed right away. I guess, RUclips algorithm is working well. You have a great content, and your channel deserves more subscribers. This is my first time watching your video and it’s calming to watch. I smashed the 👍 button.
We're always seeing categories for different ways to compare ourselves and others but the real concerns for most people: 1. Do we have enough food to eat? - 2. Do we have a place to live? - 3. Do we have a source for income? - 4. Do we have shoes/clothes? - 5. Do we have any friends/people to talk with? - 6. Are we reasonably safe from harm?
That's the main reason I work on growing my wealth. Life is so much better when I don't have to worry about those things. I never once thought I'm going to grow my wealth so I can buy a huge house and a sports car.
@@katrinamillings3651 Yes. We make the effort to provide for ourselves & family but we want to avoid breaking our backs to impress people we don't really care about.
@@CAbbott71 That Maslow guy sounds familiar. I think I learned as much (more?) useful information from my mother & father as I learned in elementary, high school, and college. Probably learned more actual important stuff. I was a lucky kid although I lost my dad in 1951 but I think of him often.
Both the the Vanguard 500 and total market are available as ETFs. There is no $3000 minimum on ETFs and they may be more tax efficient in a taxable account. There is no brokerage fee if held in a Vanguard account, they can be brokerage fees if bought or sold in another brokerage company account. If someone is retired and needs income they might consider VYM, Vanguard High Dividend Fund, an ETF. High quality companies that pay dividends. Currently the fund has a 2.73% dividend. It has a good history of raising the dividend.
According the link I am middle income (take home high of 36,500), but my net worth says I'm wealthy (from another one of your videos). 20 years ago a financial advisor told me the importance of investing in my companies 401k in wealth building, this is 100% why I am considered "wealthy".
yes!!! super savers for life!!! I just got started in my career and make $46K but I hope to be in the $140K range when I get married and advance my career, thanks for the video!!
I'm glad to have been recommended your videos. As someone who studied engineering (and made my living thus), numbers and data are important to my analysis of life. Your presentation of such puts a lot into perspective. In this video, you make a point on wealth distribution. It certainly is a point of social contention. And as someone who has risen through the economic ranks from the bottom to the top (at least of the levels that you describe), I have struggled with not joining popular distain for the wealthy. I believe that we took advantage of normal opportunities to educate ourselves, work, and invest our way from poverty to wealth. And as such, don't think that we should have to feel ashamed of what we have accomplished.
These numbers are actually even more skewed when you take into account that the only reason they are that high now is because of the push for higher pay. I remember hearing years ago that my family was considered “middle class” and my mom only made about $25k a year, if that much. So $42k a year, even though people try to make it seem like it’s a lot, is really nothing when you take into account all of the monthly expenses that most families have. That’s why I don’t understand how people are thinking that $15 an hour is so much money. Actually, when you do the math, the $15 an hour STILL isn’t putting you in that middle class category. It’s only around $31,000 a year, which according to these statistics, stills means that you’re poor.
Respectfully disagree. When I was making $15 an hour I lived fairly comfortably. The issue is people’s expectations and their inability to manage their own financial situation. When I was making $30k-$35k my friends who were making $80k consistently called to borrow money.
I'm making $13 an hour full time. I'm in a big city so I don't need a car,I have basic internet and don't need cable(Netflix,HBO Max)just Roku,a digital antenna and a few annual subscriptions below $120. I'm not cheap just budgeting. If I was making $15 per hr+ it would be a great improvement and $40,000 a year is pretty good money. I think it's a bit snobby to cry about "only making" $40,000 per year. Just don't try to live over your head and keep what you need.
Yes, I started way down on the low end but managed to work myself way onto the upper end 🥳 I also agree about being a super saver - I appreciate all the spenders keeping my stocks up though 😜
@@vg7985 I’m 52 now and yes I think I could do it all again - but quicker! Get certifications in AWS cloud computing and Salesforce. Both very reasonable financially - especially compared to formal university education. Get in at the bottom of a largish company, move around to get the experience. Don’t stay anywhere more than 5 years. Avoid lifestyle inflation, save and invest as much as you can in low cost index funds and just ignore them for next 15-20 years. Retire early and relax and thank the Gods you were born with some brains and the ability to grab every opportunity that even vaguely came near you!
Good video. One thing to note is that when you overlay income statistics with age you get a more normalized picture. Sure, there are the super rich, and the poor, but much of the difference between those that fall in vast middle of the income strata is explained by age. Like most, I was in the lower end in my teens and 20s and am in the upper end now that I'm in my 40s.
SL Munney, you are correct. It is also interesting that the 'lower-middle' income class, remained the same and was left off Erin's analysis (that showed shrinking middle class). The nation has aged, over this time period, which impacts the shift upward. I would bet that at least half or more of the changes are related to the average age of America. Media loves to create divisiveness. Providing, complete data, adjusted for age, does not incite the hate and envy, that media lives on.
I am in the middle class - but I definitely save more aggressively than the average person! And I am working (hopefully) to get to the upper class one day! 😀
@@ErinTalksMoney respectfully, "middle income" is more accessible data, but it is different than "middle class." Historically, class distinction has been between those who rely on "wage income" (working for someone else) versus those who rely on "investment income" (some else works for them). "Self-employed" represents something in between, which is why it is known as _"petite bourgeoisie."_
The "cultural capital" you mentioned is an interesting topic, and I think it involves more than just the way you speak and behave. I've seen plenty of well-to-do people who behave like truck drivers, and vice versa. So I think it's more than just being polite, "classy," cultured, things of that nature. It's more about "attitude," outlook, philosophies, THINKING. Having the right attitude determines to a large extent how your life is going to go.
I know exactly what she meant by “social/cultural capital “ without having to say a thousand words. This thing about show me your company and I will tell you who you are plays a big part in our attitudes and goals. That said, crude uneducated people can become wealthy and refined educated people can live hand to mouth but that it not the norm.
1. It’s not who you know, it’s who knows you. 2. If you are in America you aren’t poor. Just over $32,000 in annual income puts you in the top 1% worldwide.
Thanks James!! (Although my hubby tried to make me feel old today by telling me that I was born during the cold war 😂😂 - apparently that went until 1991). I'm so glad you enjoy the vides, thanks for watching!!
Here are three ways that saving is good for the economy. 1. It smooths out spending which helps people spend more money when there is an economic dip and the economy needs spending most. 2. Most savings are invested in one way or another which boosts the economy. 3. Savings contribute to philanthropy which is disproportionately good for the economy.
That’s all well and good, except the working class is being squeezed to the point that they have _just barely_ enough to cover rent/essential food&medicine/utilities after taxes and none extra. Even if they work overtime or a second job. If you’re in a _position_ to save money, fantastic, by all means. But a lot of lower class people that get told to “just save money!” Are really not in a position where they can do that thanks to inflation, shrinkflation, and stagnating wages.
Your insights are spot on. I would have guessed middle class because I compare myself to others I am surrounded by. It has me tagged as upper class oddly enough - now I feel like I should be saving more!
Many of the lower middle-class people are first generation to the US. It is estimated that there is over 20 million which have entered the US from the Southern border. Many of the upper top 20% are highly educated and older. As one gets older one's assets tend to generate more income due to compound interest. This helps explain the large wealth gap.
Income means nothing in relation to class. Net worth is a much better measure of wealth and class. There are people that make 70k a year and are millionaires because they are frugal. There are others that make 200k and spend it as soon as they get it.
I I know someone that made less than 48k, had a family of 3 children and is saving about 12k each year. The place their savings in market funds and are on track to reach before they reach 60. All depends on living humbly and putting savings somewhere other than ‘the bank’ so it grows at a respectable rate (I.e. the market, etc.). They also recently bought a small home (1200 sf), which will be part of the net worth as well. Seems that most people just don’t have the patience or discipline to do this in today’s society, so yes, it is not the norm. My sense is that the issue is when people don’t understand money and as a result live outside of their means. Sometimes this is low paying jobs (and low annual income), but I would venture to say that a lot of the
@@barrykima.3641 you told their entire story without saying the most important part. They basically lived in the middle of nowhere because that’s the only way you could make less than 48k with a wife AND 3 kids and then on top of that save 12k a year. And that’s 48k BEFORE taxes lol. Even living in the middle of nowhere that story is extremely hard to believe
They garden, put up tons of food. Build their home with lots of sweat equity and lived with family until they could afford to start (I think it was 2-3 years).
interesting - i thought i was doing well and definitely do not feel like i'm struggling , but the calculator says i'm on the lower class. i do not have house/car payments (paid in cash) and live in an area where the household income is like 35k. many more variables than just a number honestly.
Varies greatly depending on location. Your area household income is 35k but your area living expense is also low. Imagine making 100k in CA, get taxed out the ass, then squeezing your butt cheeks every month to pay 3-4k/month for rent. Number without context is misleading. I could be wrong but how much money you have left after expense might be a better indication of middle class ranking.
There is a demographic in pew unaccounted for high school and apprenticeship graduates. This demographic has no student loans and most of us senior in our trade are 2.5 or more than the median Income level
We feel middle class. We’re 81 and have a net worth of $2.2 million but still think twice about expenditures. It a habit that got us here, not easy to change. But one retirement change is we no longer save, just keep our principal constant.
Another factor is job benefits. Two people can make the same amount of money and live in the same town, while one person has to buy health insurance, and the other gets it through their job.
For me the simplest way of defining upper middle class and if you’re “successful” is if you make $100k/year. Which equates to about $50/hour. You can add exceptions here or there or adjustments, but that tends to be about the average gauge I’ve always used to determine “successful” and upper middle class. Give or take
That’s about right. A six-figure income is definitely upper middle class. Most people who make half that consider themselves middle class. You’re not really poor unless you make less than a third of that.
Thank you so much for putting this information into such a concise and comprehensive video. I find it difficult to research this topic and you've made an easily digestible updated format for me to learn. 👍
This was very interesting to hear, very thoughtful an well presented with respect to subject matter. I am subscribing to your channel. Your presentation has earned it. Thank you.
Net worth is more complicated because you have to be everyone's accountant to know their net worths. Using incomes is not ideal, but it does give us somewhat of an indication.
@@rabidfollower income is complex too. What about gains inside of retirement accounts or unrealized gains in a brokerage account? For me, net worth is much less complex than income, just home plus investments minus mortgage.
@@matthewharrigan3568 Incomes are on tax returns because we are required to report them, but not "net worth." That makes incomes easier to track. All your CC debt, student loans, car loans, unpaid bills, and any liabilities are part of your net worth too.
@@rabidfollower taxable income is on a tax return, which can be dramatically different than a lay person's concept of income, for reasons I listed in the previous comment. Second, those aren't part of my net worth because I don't have those
I want to say, I am studying 3D computer animation, I love the art and technology being blended. I believe I am lower class because I rely on FAFSA and scholarship, but I am very grateful for the opportunity to be able to study in college when they liked my art portfolio and accepted me. I'm in my last year of college and excited to graduate soon, will be debt free. I also wanted to learn coding and get a certification as well after college. I am planning on saving and learning how investment works. My goal in life is to have a higher income, have savings so I won't worry about struggling. I enjoy being able to learn new skills because to me it means I am preparing myself for the future. I am nervous for the job hunt but I will do my best, plus improve my portfolio. I see the news about job insecurity and it doesn't help the COVID pandemic makes it worse, so I am nervous about that, I want to be able to have my first job, and I am also considering starting a side hustle as well.
You raise an important qualifier to these statistics. The income classes aren’t static-meaning that a LOT of us who are comfortable now were poor as young adults. I was as a law student, and even fluctuated in and out of the lower class as a young attorney. And at the highest end, people are breaking their way in while descendants of the rich squander inheritances.
Good news! The job market right now is outstanding for new grads. It sounds like you've worked hard, so hopefully you'll be rewarded with a job you like that pays well in a city you like.
@@Iffy50 Really? That sounds great! While I have been hearing job uncertainty due to the pandemic, I am looking forward to job openings and will apply right away when I am complete with college. If I don't get jobs right away I will focus on improving my portfolio and learn new skills so hopefully it will make the job search easier. While I am glad to be studying for a degree, I also want to learn coding and get a certification so I have more knowledge to add into my skillset, I always wanted to have multiple skills.
@@paolaanimator Hi I always wanted to be an animator for Disney, I love drawing. I'm not a computer person and always wondered. How good do you have to be on computers to pursue 3D animation? Do they teach you everything in school, or do you need to be a computer/tech nerd before hand? I've heard coding is hard. What types of jobs can you do with coding? Could coding be applied with animation? (Just curious)
@@cheryl-lynnmehring8606 Hello Cheryl! Before I got into computers, I did various drawings and clay sculpting, did a little bit of stop motion animation. My biggest advice for drawing is to study anatomy, as well as art fundamentals and 12 principles of animation. When you have a good understanding of how the human body moves, or different poses, it can help a lot in computer animation. Even when I took college classes, I ended up pretty much Googling or relying on video tutorials to observe how other 3D artists or animators solve technical issues or how to create 3D art with different tools, and I would follow along. No, you don't need to be a tech nerd, you start off with small steps, and go from there. Plus backing up any important project in the cloud or in an external portable SSD are good habits to form to keep your work safe, in case something happened to the computer or somehow the data gets corrupted (I has data corrupted before, and someone spilled water on my laptop, not fun, had to get a new laptop but have my work safe and backed up). When you start with a new program, you should look up beginners tutorials so you can follow along, get to know the program. Even in my four years of college, I still don't know everything, honestly. I still rely on research. In fact, every time there's a huge update and new tools are added, you have to learn it to keep up with the industry. Basically the learning never ends. As for coding, I'm not used to coding since I'm more of an artist, plus I'm busy with college. But when I have more free time after college, I'm thinking of learning coding that will benefit me with my 3D animation skills. Coding isn't required when it comes to 3D modeling or animation, but there are few 3D programs that does have coding in there. The best thing with college is mostly building connections and the Professors can act as someone to recommend in the job search process. When you have someone that can recommend you to work at a team or in a studio, it really helps a lot. Professors will give lots of feedback, and it's good to follow feedback because it will help improve the art/animation skills. Never be afraid to learn something new, and make your own small projects so you can add it into your art portfolio and also your resume. You can join in art concerts for animation, get into a Saturday programs, join a club, or look up free tutorials or websites online to help start learning, that's what I did when I started. It's a learning process but I love it. I know this is a long response but I hope my rely helped you a lot! Remember learning new skills takes time, and enjoy the process and journey. It's okay to make mistakes, it is part of the process. Good luck!
Lower class people with multiple kids actually have more money than lower-middle class working people because of food stamps, housing aid, free medical, free grants for school/college, etc. So if you are a couple with 3 kids making $25,000 per year, you actually have just over $50,000 of actual income when considering food stamps ($800 + per month) housing assistance ($900 + per month) etc. The system is designed to keep most people poor and punish them when they try to better themselves and make more income to be part of the middle class. They can work less, have less education and end up with more money than someone that is better educated and makes more on paper, but keeps far less. Plus, single people are heavily punished with taxes. Single people with no kids are the ones paying higher taxes and sending other people's kids to school. The more kids someone has and the more of a drain they are on the system, the less they pay. It is backwards from how it should be. I have worked the exact same job at the same place as my friends. I actually got paid a little more since I worked there longer, but since I don't have kids and they do, they each get to keep an extra $400 per month after taxes. It is totally unfair.
While I agree the system makes it very difficult for a person to rise out of poverty, I'm not sure that I would say it's "not fair" for someone with children to get a tax break. Raising children is important for society. While you see it as a drain on the system, you need to consider that those kids will be the labor force when you are older and reach retirement. Look for example at the one child policy in China. It has seriously hurt their economy as the population ages. There are less people to care for the elderly. The government is offering massive incentives to having more children, but it was so ingrained in their culture that people don't want to have more children if any.
@@shortermama8099 How is it fair that I am taxed more for the same work to pay for OTHER people's kids? That is completely unfair and illogical. It rewards irresponsible behavior and punishes people for other people's poor decisions.
💯. We are providing assistance and services for others. Yet when we are elderly, sick, injured, or recovering from surgery, we get no help. We get told to go pound sand, and “oh, by the way, keep paying taxes to provide for others.”
@@Awesome_Force Because we need the next generation as a society. People are worth money to a country - they will work jobs in the future and pay for your social services when you are old. An individual person is richer without kids, but society is wealthier with educated and fed kids. It has a strong ROI since each human is worth a few million to the country over the course of their lifetime if they are sufficiently educated to work. Each child is actually becoming worth more nowadays since our population is starting to decline and each child will need to support more elderly taxpayers.
I guess you could say its all about perspective by this video my wife and I are upper class by your net worth video we fall THOUSANDS below the poverty line with an actual negative net worth. Im an airline Captain and my wife is a lawyer and when we add that student debt to our liabilities is absolutely scary
There is a suburb town in our city that has used zoning and schools to keep house prices very high. Almost every person in that town thinks they are "middle class", but every calculator shows them upper class. They have no clue about the world outside their bubble.
Your videos are great. You are so conscientious about your articulation. I record all of my videos in one take, and usually the first take. I figure that when we are conversing in life, we don't redo our conversations. You've got one chance to make it count and make it right. Life doesn't hold rehearsals.
Saving can drive the economy if that money is used by banks to lend to other people or invested in private businesses. It is a really good thing for people to be super savers, because it means they produce for more than they consume.
The situation where an income differs by region is the problem with the federal government changing tax code based on the “rich”. The value of your income is different by state, the federal government cannot discriminate based on state so it’s the same across the board
Assets are a better indication of class than income. People could make a large amount of money yet could have a negative net worth. On the other hand, a low-income person (retired, etc.) could have millions in assets.
Net worth is a more accurate determination of one's comparative financial position IMO. It's not how much you make, it's how much you keep and how well you manage what you keep. For the USA, to be in the Net Worth top 1% in 2022, you need a minimum net worth of $10,815,000. If your net worth is $522,210 or less, you're in the bottom 50%.
Absolutely right. The “Millionaire Next Door” series of books refer to “balance sheet affluent” and “income statement affluent”. Yes, a million dollars isn’t what it used to be when the first book was written, but the points Dr. Stanley raised are still worth keeping in mind. If you spend everything you earn and have no real savings, you may be poorer than the person who has saved 10x their salary over decades.
@@Whineboy Exactly. While a million dollars isn't what it used to be now that net worth is counted in billions, I think it's still a good benchmark and goal. Someone in the USA in 2022 with a net worth of $1M is in the top 5%
@@xenonsan3110 Many things "could be" which means they "aren't". Actual net worth is more indicative and valuable than projected or estimated net worth. Given the choice between having a $1M net worth vs the potential of having $2M net worth, I'd choose the former. Bird in the hand is worth two in the bush. IMO.
To further complicate it, places like NYC have very complicated rent regulations and welfare programs. Making $60K,paying $2K a month for a market rate apartment, and $1K a month for health insurance may be a similar quality of life to making $30K, but only paying $900 a month for a rent stabilized apartment and getting free healthcare through the state. The median household income in my neighborhood is less that’s $50K, but the median market rate rent is $2,500 and the median home price is over $1 million.
I’m single and I made 97k in 2023. My coworkers household income is 275k with 2 kids. He has nicer things than me and does more exciting things than I can afford, but at the end of the day his 275 with a family really isn’t much more than my 97 all to myself
Being in the upper and middle class while working for companies and businesses is hard work especially too maintain it. The upper class business owners got a tremendous return on investment with workload and income. Its important too understand how difficult it is too get there and actually maintain this way of life
Even though our household income is only 120000 which will place us on middle class, we get to keep about 2500 dollars a month to save and invest. I bet we are doing much better than a lot of high middle class Americans
Given the stock market correction, the new categories could be middle class, lower class, and poverty. Although, below the middle class, little to no participation in the stock market.
@@johngill2853 LOL! Well as of a few days ago, the S&P index was down by more than 10% YTD. I suspect there will be more "correction to come" as a result of the Fed policy to raise interest rates, to stave off inflation. However, if we can fix some of the supply chain issues, this could be a good year on the S&P.
@@DaveM-FFB 100 of the last three bear markets have been predicted by people guessing what the market will do. You should expect the market to do anything possible and your portfolio should reflect this. Your portfolio should match your need ability and willingness to take risk
@@johngill2853 I didn't say there would be a "bear market". Just an overdue correction. Every portfolio is either exposed or not exposed. The only difference is the degree of exposure. We'll do just fine.
I am a Call Center agent from the Philippines, handling credit card issues with American customers, what I found out is an average American is having a credit card debt of an average of 4000 Dollars, and they are ONLY paying a Minimum of 100 Dollars per month, can you imagine for how long an average American can PAY OFF all his credit card, it will take him an average of 5 years to just pay his credit card debt...Lesson learn from them, DO not squander your cash, because cash is KING...
Cost of living in the area you live impacts this immensely. $250k in the Midwest is a lot of money, $250k in some areas of California is basically poverty.
I think I knew where we sat, buy I still tell people that we're just doing ok . That quote about people you surround yourself with says it all. The people I surround myself with also invest, buy homes outside the US, fly FC, drive nice cars, have larger homes, etc. Great video!
That's what we always say as well. But we are still in our hustle years for sure. But....I am trying to be ok with a bit more spending. In fact last week I told Steve maybe we should splurge and get Amazon Prime. haha 😂
@@ErinTalksMoney, HAHA! We have Prime, Disney+, HBO Max, Showtime, RUclips TV, discovery+, Paramount, Hulu, Netflix, and I forget the other ones if there are any left. HAHA! The numbers also make me realize that we will never be in the middle class again, something you and Steve will feel once he's retired. Even if I didn't work, my wife's salary and my retirement we would still be well above the high medium class number. I feel very fortunate to be in this position! I still find it hard to believe low $40s is middle class. That can barely keep you afloat here in Utah. The median home price is well in to the $300/$400K range and we're not considered a HCOL area.
Hi Erin. Good insight and video! And your bloopers at the end always are funny! I definitely have seen the shrinking of the middle class out here in California over the last 10 to 20 years. The high cost of living, extremely high taxes for everything, extreme regulations and very poor government leaders here have driven so much of the middle class to other states. I see the gap getting much bigger here between the rich and the poor in the coming years as well. So sad to see from a once really great state.
Hey Tim!! 👋 I feel the gaps are far more noticeable in major cities and higher cost of living states. In the more rural area or lower cost of loving states it just easier for everyone to sort of blend in, if that makes sense? It’s unfortunate what’s happening in California. My brother actually wants to live in Cali. But ultimately he decided to work in another state because he said he could retire 10 years sooner by opting not to live and work in Cali.
@@ErinTalksMoney Tell your brother that was a wise and best decision. I have lived in Southern California all 56 years of my life and the weather is incredible all year long and a lot of things to do. But I know if I had moved to a lower cost state when I was younger I would be in a much better place home wise as well as for retirement.
Living in the DC metro has skewed my thinking on income especially since everyone I know makes six figures and while the Pew calculator puts me at the upper end I don’t necessarily have the net worth that the wealthy have around here. Also I’m a divorced woman with no dependents in the home, a degree and no car payment. I’d love to take my income and move out of Maryland one day. It’s so expensive here.
The first few minutes show us that the majority of the middle class shift is up. I would say that’s positive news. And to address the lower class, you have a platform here. You could teach them the principles of the wealthy so they can pull themselves up too.
Well knowledge make stuff more possible but I think many of the lower class will have to retrain for different careers. There are whole career paths that never lead to 100K each year jobs. In my experience people who do not have marktable skills tend to have a very hard time "shifting up."
One thing that is rarely considered when this topic is raised is wealth. People who already have several million in assets can live a much higher standard of living than others with the same income. Frequently this wealth advantage is inherited, and is “old money”…..
It's not just about income numbers, consider how life in general has improved. Nowadays many "poor" people have air conditioning, iPhones, cable television, etc. Although they may live in an apartment and not own a suburban home I would say this is at least lower middle class lifestyle. They have everything they need, and some things that they don't. Therefore, I say the middle class has actually grown over the years.
I think your poor if you can't afford luxury items. If all your money goes to the things you need to survive then your poor regardless of the $ amount. Like, AC units come standard. You arnt going out and buying one if you can't afford it, we wouldn't have stories about people dying from cold or heat in their homes
0:20 - aftr research
4:00 - mid- class - $42,000 - $126,000 yr.
Lower less than $42,000 yr.
Upper over $126,000
I used to think income was such a big deal until I realized net worth is key! 😍
Agree.
People making three times more than me qualifies for financial assistance for their children's tuition, but not me. The reason was that my net worth was high. It is high because I saved more.
Income is a big deal to build net worth!!
@@ChicagoAustinDC Yes, but not if you spend the same amount as your income.
@@howellwong11 how you spend your income is a deliberate choice. Deliberately chosing to build net worth is an option. So yeah, income is a big deal.
You are very wise. Thanks Erin for sharing your knowledge with stats.😊
ETM,
Congrats on getting over 7k listeners!
I always learn something when I listen. I appreciate your perspective. My family (married with 3 children) has moved from the lower class, to the middle and now to the upper. I say this so others know it can happen with hard work and being a super saver.
Your slide about the amount of income the middle class makes now vs in 1970. Wow to think the middle class lost 19% of the wage growth. That slide that really got my attention. Thanks for always doing wonderful prep work for your videos and providing us with your personal point of view.
You video made me ask myself am I giving back enough to help others that are working hard to improve their and their families lives.
TfT
Hey Tony! Thanks, it's quite the milestone for my little channel here 😊 A lot of really great things can happen when you are a super saver!!
It's a rare financial education video that addresses class, and does so in such a holistic way, addressing phenomena like social and cultural capital in addition to economic structure. Class helps give us a conceptual language to think about inequity and wealth distribution, and how political, tax and legal means make that possible. Class is not the sole reason people fail at personal finance or get trapped in debt or low-income jobs -- we have to allow for the bad choices people make -- but it is part of the story, and one often missing in RUclips personal finance channels. Some of the best writers on class in America are Thomas Frank (Pity the Billionaire); on social capital Harvard political scientist Robert Putnam (Bowling Alone); and cultural capital Paul Fussell (Class: A Guide through the American Status System) as well as the theorist Pierre Bourdieu (Distinction). So, thank you for the honesty and for detailing the socio-economic context in which people experience personal finance.
I'll have to check out those writers!
@Benjamin Liles Benjamin, thanks for the response. The place of financial literacy in a capitalist society is fascinating, because in it there is an implicit critique of that system. Not a rejection -- financial literacy doesn't mean you convert your savings into gold bars and store them in your survivalist bunker -- but an acknowledgment that, whether it's advertising and consumer culture, or investing, insurance, real estate, and debt, those entities are not necessarily operating in our best interests or, at a higher latitude, always serving the public good. Combining a more critical consciousness -- hence those books -- with practical financial literacy creates something a little different than understanding the benefits of ETFs versus mutual funds, etc. It's what I try to develop in my own imperfect way.
It's might be worth considering that class is a term that doesn't apply to the the modern era and is just leftover from systems that legally enforced it.
The only hurdle I faced was really just my own ignorance. Once the self doubt is gone and you see how things work, money is no longer an issue
I've stumbled upon a gem of a video where the entire comment section is very articulate, thoughtful, and adds value where I'm actually learning something rather than being the one that chimes in with things to say. This was a fantastic video breakdown. Thank you.
Thanks for watching! The viewers and their comments are wonderful…some agree, some disagree and offer critiques - all are welcome!😊
You might also like the Money Guy and its community of commenters. I find on Ramsey, people are very resistant to learning.
@@genxx2724 I'll check it out. Thanks!
Just a fun note when I was in community college most people are on FASFA federal financial aid, and in my economy 101 class the professor asked how many people think they're middle class, most people raise their hand, then she asked how many of you are on financial aid FASFA, most people raise their hand and prof said, well then your lower class cuz if you're middle class you won't qualify for federal financial aid, and that shock on their face were priceless, well they're able to afford a cup of Starbucks frappuccino though, most of them has a Starbucks cups on their desk.
Me on the other hand bring lunch and three bottles of water everyday to school cuz I am not spending a dime
There are no fafsa income limits
That’s wrong.
@@TheFK8Life there is, some people qualify for the loan not the grant.
Well said my friend, but if I am NOT going to spend a dime, then I don't need to go to college at all. That's because I don't need to make money since I am NOT going to spend it 👍
Do not forget to enjoy life as you go. I garden, it feeds me. When I decided I was rich, I bought an expensive plant.
I'm surprised that the definition of "Middle Class" doesn't factor in one's number of dependents. It seems that a person making $140,000 in Mississippi who is unmarried and without children is "Upper Class" (fair enough); but it seems also that a married couple making a combined $140,000 in Mississippi who are raising four children and caring for an elderly mother are also "Upper Class." Yet the disposable incomes of the two households are very different.
Very good points! I agree 100%
The terms "middle class" and "upper class" are problematic. Perhaps a more precise term like "middle income" would be better at defining the income of the household and less about their family situations.
@@marku5w:
I used the term "class" because that's what was used in the video. Certainly I agree that the term "class" can be ambiguous. (I'm not sure if that's what you mean by the word "problematic," a word whose recent usage is sometimes, uh, problematic. 😉)
And I agree that "income" is a more precisely-defined concept.
But there is something that "income" doesn't entirely cover; namely, financial assets and intangible assets (or liabilities) which directly impact the lifestyle of the most-wealthy persons, but which doesn't get measured as income. And I think that "lifestyle" is what most people have in mind when using the term "upper-class."
A guy could live in Tennessee making $160,000 per year, but with eight kids, four of whom are in college, and an elderly relative in early-stages dementia to care for, and a wife just diagnosed with cancer, his lifestyle might be roughly that of a single guy pulling down $60,000. Conversely, the 23-year-old recent college graduate who hasn't found a job and lives in his parents' basement doesn't seem like he's "upper-class," but when you find out his parents own a worldwide shipping company and the "basement" is fully-finished and 8,000 square feet by itself, the picture changes!
Those are extreme examples, I grant. But my point is: If the term "class" is intended to be reflective of how these folks live, with what level of creature-comforts and opportunities, then "income" has the benefit of being directly measurable, but the drawback of excluding important details from the picture.
So, I don't know if any existing term is ideal, and I don't know which would serve best.
Perhaps the best approach is: When communicating using an ambiguous term, define your usage up-front.
Well. It depends on what credentials you are using I know if you make 80000 a year in Mississippi and no kids or married they are definitely middle middle class and probably live more upper within Mississippi but the minute they vacation to Cali New York the higher costs will quickly show you you definitely not upper middle class and you MIGHT barely cut that middle middle portion. People be like why call it lower middle and upper middle class like what's middle middle class its exactly what it says. But a very broad informal categorization lower middle class isn't poverty where they are struggling day to day. The lower middle does struggle paycheck to paycheck meaning the money they make holds them other for necessities and some luxuries but very infrequently no matter dependents or where you live. I think it's based on how economically stable you are at least nation wide. You can buy a regular Mercedes as a middle middle class person not easily but you can afford it with good credit. Lower middle class nowhere across the country is affording a Mercedes responsibly off the lot new. Lower middle class across the country don't partake in hardly any luxuries they can afford lower end high end bags one example ie at one point doonie and burke take many vacations. Matter fact let's break it to car, house, vacations. People in poverty do and have neither personally. Lower middle class, can afford easily a Honda can afford with struggle new mustangs chargers very low cost used basic foreign whips, may save for a vacation a year, homes are usually less than 100,000 and between 60 to 100. Middle middle class: can easily afford Hondas, corollas etc somewhat can also afford maximas, Acura, lower end Lexus, camrys more expensive middle class cars. Can afford with some struggle regular basic bmws, Mercedes, can vacation twice a year typically a neighboring or close state and can travel across the country for a vacation per year. Homes cost typically between 100,000 and 300,000, (Louisiana adjust for your area) upper middle class: can easily afford basic foreign whips, can afford with some struggle an exotic whip or 2 even if its a higher end BMW or Mercedes, porche, range rovers etc, vacations somewhere every quarter including some international vacays, and homes are typically 350,000 to 600,000. After that you getting to rich then wealthy. Difference between rich and wealthy a rich person may or may not be rich all of their lives depending on the choices they make but they typically make at least half a million to 20 million then wealthy are folks who likely will never be broke in poverty or even middle class. Wealthy people have been rich so long they have money everywhere all over the world hundreds of millions they have stock in a little of everything so if one tanks they have the competitors stock as well. Im telling yall too much lol.
did you watch the video? it does. at 5:00 when shows the class calculator it literally ask that.
I love your bloopers at the end lol Thank you for sharing all this great info. I enjoy your channel!
Thanks so much for the video
Surprised you only have 28k subs
Should have a lot more
I was lower class, got into college with scholarships and a decent amount of federal aid, and now at almost 50, solidly upper middle class.
@@just_another_bot0110 high paying jobs that could pay off student loans in the long run. However that is very difficult to do in the modern age unless you start off with extremely high paying, high demand jobs like Tech
I suddenly stumbled on your channel, I subscribed right away. I guess, RUclips algorithm is working well. You have a great content, and your channel deserves more subscribers. This is my first time watching your video and it’s calming to watch. I smashed the 👍 button.
Welcome to the channel Stranger Granger! (Cool name 😊) Thanks for watching!!
@@ErinTalksMoney I’m looking forward for more, and your welcome😉😉😉
We're always seeing categories for different ways to compare ourselves and others but the real concerns for most people: 1. Do we have enough food to eat? - 2. Do we have a place to live? - 3. Do we have a source for income? - 4. Do we have shoes/clothes? - 5. Do we have any friends/people to talk with? - 6. Are we reasonably safe from harm?
That's the main reason I work on growing my wealth. Life is so much better when I don't have to worry about those things. I never once thought I'm going to grow my wealth so I can buy a huge house and a sports car.
@@katrinamillings3651 Yes. We make the effort to provide for ourselves & family but we want to avoid breaking our backs to impress people we don't really care about.
Exactly. Well defined as "Maslow's Hierarchy of Needs"
@@CAbbott71 That Maslow guy sounds familiar. I think I learned as much (more?) useful information from my mother & father as I learned in elementary, high school, and college. Probably learned more actual important stuff. I was a lucky kid although I lost my dad in 1951 but I think of him often.
1. Yes
2.no
3. Yes
4. Yes
5. Yes
I don’t know who you are or why I clicked on this but you did fantastic with it. And no background music!
Hi Bill! 👋 I'm glad you took the time to watch! Thanks for the kind words! 😊
Both the the Vanguard 500 and total market are available as ETFs. There is no $3000 minimum on ETFs and they may be more tax efficient in a taxable account. There is no brokerage fee if held in a Vanguard account, they can be brokerage fees if bought or sold in another brokerage company account.
If someone is retired and needs income they might consider VYM, Vanguard High Dividend Fund, an ETF. High quality companies that pay dividends. Currently the fund has a 2.73% dividend. It has a good history of raising the dividend.
Thank you Erin for Talking Money, with honesty in the beginning and Talking Funny at the end, with humility
According the link I am middle income (take home high of 36,500), but my net worth says I'm wealthy (from another one of your videos). 20 years ago a financial advisor told me the importance of investing in my companies 401k in wealth building, this is 100% why I am considered "wealthy".
It also depends on where you live, what expenses you have, and how much you have in savings, assets, and investments.
Exactly. I’m in a HCLA.
yes!!! super savers for life!!! I just got started in my career and make $46K but I hope to be in the $140K range when I get married and advance my career, thanks for the video!!
I'm glad to have been recommended your videos. As someone who studied engineering (and made my living thus), numbers and data are important to my analysis of life. Your presentation of such puts a lot into perspective.
In this video, you make a point on wealth distribution. It certainly is a point of social contention. And as someone who has risen through the economic ranks from the bottom to the top (at least of the levels that you describe), I have struggled with not joining popular distain for the wealthy.
I believe that we took advantage of normal opportunities to educate ourselves, work, and invest our way from poverty to wealth. And as such, don't think that we should have to feel ashamed of what we have accomplished.
These numbers are actually even more skewed when you take into account that the only reason they are that high now is because of the push for higher pay. I remember hearing years ago that my family was considered “middle class” and my mom only made about $25k a year, if that much. So $42k a year, even though people try to make it seem like it’s a lot, is really nothing when you take into account all of the monthly expenses that most families have. That’s why I don’t understand how people are thinking that $15 an hour is so much money. Actually, when you do the math, the $15 an hour STILL isn’t putting you in that middle class category. It’s only around $31,000 a year, which according to these statistics, stills means that you’re poor.
Respectfully disagree. When I was making $15 an hour I lived fairly comfortably. The issue is people’s expectations and their inability to manage their own financial situation. When I was making $30k-$35k my friends who were making $80k consistently called to borrow money.
@@problackpatriot3425 If I was making 35K and my "friends" who made 80K continued asking me for money...I'd get new friends. Just sayin
I'm making $13 an hour full time. I'm in a big city so I don't need a car,I have basic internet and don't need cable(Netflix,HBO Max)just Roku,a digital antenna and a few annual subscriptions below $120. I'm not cheap just budgeting. If I was making $15 per hr+ it would be a great improvement and $40,000 a year is pretty good money. I think it's a bit snobby to cry about "only making" $40,000 per year. Just don't try to live over your head and keep what you need.
@@problackpatriot3425 $15 an hour is pretty good.
Excellent content.
Yes, I started way down on the low end but managed to work myself way onto the upper end 🥳 I also agree about being a super saver - I appreciate all the spenders keeping my stocks up though 😜
Congrats Fiona! That’s what I love to hear!! 👏👏
How old are you? Do you think you can do same if you start today.
@@vg7985 I’m 52 now and yes I think I could do it all again - but quicker! Get certifications in AWS cloud computing and Salesforce. Both very reasonable financially - especially compared to formal university education. Get in at the bottom of a largish company, move around to get the experience. Don’t stay anywhere more than 5 years. Avoid lifestyle inflation, save and invest as much as you can in low cost index funds and just ignore them for next 15-20 years.
Retire early and relax and thank the Gods you were born with some brains and the ability to grab every opportunity that even vaguely came near you!
@@vg7985 It is easier today!
@@tompain2751 Access to the internet is a game changer (easy access to information). Prior to the internet we were all 'flying blind'.
Love the bloopers!
Good video. One thing to note is that when you overlay income statistics with age you get a more normalized picture. Sure, there are the super rich, and the poor, but much of the difference between those that fall in vast middle of the income strata is explained by age. Like most, I was in the lower end in my teens and 20s and am in the upper end now that I'm in my 40s.
Good point!
SL Munney, you are correct. It is also interesting that the 'lower-middle' income class, remained the same and was left off Erin's analysis (that showed shrinking middle class). The nation has aged, over this time period, which impacts the shift upward. I would bet that at least half or more of the changes are related to the average age of America. Media loves to create divisiveness. Providing, complete data, adjusted for age, does not incite the hate and envy, that media lives on.
@@rickflair80s Excellent point and analysis/ I could not agree more.
Excellent video. I saved, shared, thumbs up and subscribed. I especially liked the last 3 minutes. More on the social and culture capital stuff.
Hey Lonnie! Welcome to the channel! 😊
I am in the middle class - but I definitely save more aggressively than the average person! And I am working (hopefully) to get to the upper class one day! 😀
You got this!
@@ErinTalksMoney respectfully, "middle income" is more accessible data, but it is different than "middle class." Historically, class distinction has been between those who rely on "wage income" (working for someone else) versus those who rely on "investment income" (some else works for them). "Self-employed" represents something in between, which is why it is known as _"petite bourgeoisie."_
The "cultural capital" you mentioned is an interesting topic, and I think it involves more than just the way you speak and behave. I've seen plenty of well-to-do people who behave like truck drivers, and vice versa. So I think it's more than just being polite, "classy," cultured, things of that nature. It's more about "attitude," outlook, philosophies, THINKING. Having the right attitude determines to a large extent how your life is going to go.
Very true!
I know exactly what she meant by “social/cultural capital “ without having to say a thousand words. This thing about show me your company and I will tell you who you are plays a big part in our attitudes and goals. That said, crude uneducated people can become wealthy and refined educated people can live hand to mouth but that it not the norm.
1. It’s not who you know, it’s who knows you.
2. If you are in America you aren’t poor. Just over $32,000 in annual income puts you in the top 1% worldwide.
Income together with purchasing power parity gives a better reflection of where we stand. Cost of living of where we live is very important.
Very well researched and presented! You will connect with lot of people and improve there financial literacy. Keep it up.
Awesome video. P.S. Great color on you!
Thanks Alexis!! 🙏
Great food for thought here. The European b-roll shots threw me off a little. 😉
Very wise for such a young age. Really get a lot of good information from your channel.
Thanks James!! (Although my hubby tried to make me feel old today by telling me that I was born during the cold war 😂😂 - apparently that went until 1991). I'm so glad you enjoy the vides, thanks for watching!!
Love the Yooper eh. Hello from WI. Great video, keep them coming.
Thanks for the video!
Wealth isn't distributed, its earned.
I make 150k a year in Atlanta and have basically no real disposable income. Need 250k to 400k to have real sense of financial freedom.
Good orientation. Thank you.
That was great, thank you
Glad you enjoyed it!
Here are three ways that saving is good for the economy.
1. It smooths out spending which helps people spend more money when there is an economic dip and the economy needs spending most.
2. Most savings are invested in one way or another which boosts the economy.
3. Savings contribute to philanthropy which is disproportionately good for the economy.
That’s all well and good, except the working class is being squeezed to the point that they have _just barely_ enough to cover rent/essential food&medicine/utilities after taxes and none extra. Even if they work overtime or a second job.
If you’re in a _position_ to save money, fantastic, by all means. But a lot of lower class people that get told to “just save money!” Are really not in a position where they can do that thanks to inflation, shrinkflation, and stagnating wages.
"Be a super saver, it is good for you!" Nice.
Your insights are spot on. I would have guessed middle class because I compare myself to others I am surrounded by. It has me tagged as upper class oddly enough - now I feel like I should be saving more!
If live in California 40k to 150k is lower middle-class for example ad locations
Many of the lower middle-class people are first generation to the US. It is estimated that there is over 20 million which have entered the US from the Southern border.
Many of the upper top 20% are highly educated and older. As one gets older one's assets tend to generate more income due to compound interest. This helps explain the large wealth gap.
Income means nothing in relation to class. Net worth is a much better measure of wealth and class. There are people that make 70k a year and are millionaires because they are frugal. There are others that make 200k and spend it as soon as they get it.
70k a year millionaires might be a super stretch, I get where you are coming from though.
I I know someone that made less than 48k, had a family of 3 children and is saving about 12k each year. The place their savings in market funds and are on track to reach before they reach 60. All depends on living humbly and putting savings somewhere other than ‘the bank’ so it grows at a respectable rate (I.e. the market, etc.). They also recently bought a small home (1200 sf), which will be part of the net worth as well. Seems that most people just don’t have the patience or discipline to do this in today’s society, so yes, it is not the norm.
My sense is that the issue is when people don’t understand money and as a result live outside of their means. Sometimes this is low paying jobs (and low annual income), but I would venture to say that a lot of the
@@barrykima.3641 you told their entire story without saying the most important part. They basically lived in the middle of nowhere because that’s the only way you could make less than 48k with a wife AND 3 kids and then on top of that save 12k a year. And that’s 48k BEFORE taxes lol. Even living in the middle of nowhere that story is extremely hard to believe
@@live4yourself_ massachusetts
They garden, put up tons of food. Build their home with lots of sweat equity and lived with family until they could afford to start (I think it was 2-3 years).
interesting - i thought i was doing well and definitely do not feel like i'm struggling , but the calculator says i'm on the lower class. i do not have house/car payments (paid in cash) and live in an area where the household income is like 35k. many more variables than just a number honestly.
$110k puts you in the middle in San Diego for a 2-person household. :(
Varies greatly depending on location. Your area household income is 35k but your area living expense is also low. Imagine making 100k in CA, get taxed out the ass, then squeezing your butt cheeks every month to pay 3-4k/month for rent. Number without context is misleading. I could be wrong but how much money you have left after expense might be a better indication of middle class ranking.
Leon, all about debt. You’re doing just fine.
35k is low
35k definitely isn’t upper middle. That’s basically minimum wage
There is a demographic in pew unaccounted for high school and apprenticeship graduates. This demographic has no student loans and most of us senior in our trade are 2.5 or more than the median Income level
I subbed for the bloopers 😁
We feel middle class. We’re 81 and have a net worth of $2.2 million but still think twice about expenditures. It a habit that got us here, not easy to change. But one retirement change is we no longer save, just keep our principal constant.
Another factor is job benefits. Two people can make the same amount of money and live in the same town, while one person has to buy health insurance, and the other gets it through their job.
You have a new subscriber!~ I love your videos! n_n
Hi HX! Thanks for watching and welcome to the channel! 😊🙏
For me the simplest way of defining upper middle class and if you’re “successful” is if you make $100k/year. Which equates to about $50/hour. You can add exceptions here or there or adjustments, but that tends to be about the average gauge I’ve always used to determine “successful” and upper middle class. Give or take
Nice! I think you touched on a very important point here...everyone has their own was of defining what success looks like! 😊
@@ErinTalksMoney precisely
Depends where you live....
@@jessicabixler1658 kek 50 dollars an hour i wont even warm up my truck for a low amount like that
That’s about right. A six-figure income is definitely upper middle class. Most people who make half that consider themselves middle class. You’re not really poor unless you make less than a third of that.
Thank you so much for putting this information into such a concise and comprehensive video. I find it difficult to research this topic and you've made an easily digestible updated format for me to learn. 👍
This was very interesting to hear, very thoughtful an well presented with respect to subject matter. I am subscribing to your channel. Your presentation has earned it. Thank you.
Thanks Greg! Welcome to the channel! 😊
Wealthy people don’t save, they invest. And investments are the liquidity that drives the market.
I think net worth is a better indicator of economic class than income
It seems like this is a popular opinion - I guess I will have to do a video from that perspective.
Net worth is more complicated because you have to be everyone's accountant to know their net worths. Using incomes is not ideal, but it does give us somewhat of an indication.
@@rabidfollower income is complex too. What about gains inside of retirement accounts or unrealized gains in a brokerage account? For me, net worth is much less complex than income, just home plus investments minus mortgage.
@@matthewharrigan3568 Incomes are on tax returns because we are required to report them, but not "net worth." That makes incomes easier to track. All your CC debt, student loans, car loans, unpaid bills, and any liabilities are part of your net worth too.
@@rabidfollower taxable income is on a tax return, which can be dramatically different than a lay person's concept of income, for reasons I listed in the previous comment.
Second, those aren't part of my net worth because I don't have those
You nailed it
That's educational, I was working class, Now I'm upper class
I want to say, I am studying 3D computer animation, I love the art and technology being blended. I believe I am lower class because I rely on FAFSA and scholarship, but I am very grateful for the opportunity to be able to study in college when they liked my art portfolio and accepted me. I'm in my last year of college and excited to graduate soon, will be debt free. I also wanted to learn coding and get a certification as well after college. I am planning on saving and learning how investment works. My goal in life is to have a higher income, have savings so I won't worry about struggling. I enjoy being able to learn new skills because to me it means I am preparing myself for the future. I am nervous for the job hunt but I will do my best, plus improve my portfolio. I see the news about job insecurity and it doesn't help the COVID pandemic makes it worse, so I am nervous about that, I want to be able to have my first job, and I am also considering starting a side hustle as well.
You raise an important qualifier to these statistics. The income classes aren’t static-meaning that a LOT of us who are comfortable now were poor as young adults. I was as a law student, and even fluctuated in and out of the lower class as a young attorney. And at the highest end, people are breaking their way in while descendants of the rich squander inheritances.
Good news! The job market right now is outstanding for new grads. It sounds like you've worked hard, so hopefully you'll be rewarded with a job you like that pays well in a city you like.
@@Iffy50 Really? That sounds great! While I have been hearing job uncertainty due to the pandemic, I am looking forward to job openings and will apply right away when I am complete with college. If I don't get jobs right away I will focus on improving my portfolio and learn new skills so hopefully it will make the job search easier. While I am glad to be studying for a degree, I also want to learn coding and get a certification so I have more knowledge to add into my skillset, I always wanted to have multiple skills.
@@paolaanimator Hi I always wanted to be an animator for Disney, I love drawing. I'm not a computer person and always wondered.
How good do you have to be on computers to pursue 3D animation? Do they teach you everything in school, or do you need to be a computer/tech nerd before hand? I've heard coding is hard. What types of jobs can you do with coding? Could coding be applied with animation? (Just curious)
@@cheryl-lynnmehring8606 Hello Cheryl! Before I got into computers, I did various drawings and clay sculpting, did a little bit of stop motion animation. My biggest advice for drawing is to study anatomy, as well as art fundamentals and 12 principles of animation. When you have a good understanding of how the human body moves, or different poses, it can help a lot in computer animation. Even when I took college classes, I ended up pretty much Googling or relying on video tutorials to observe how other 3D artists or animators solve technical issues or how to create 3D art with different tools, and I would follow along. No, you don't need to be a tech nerd, you start off with small steps, and go from there. Plus backing up any important project in the cloud or in an external portable SSD are good habits to form to keep your work safe, in case something happened to the computer or somehow the data gets corrupted (I has data corrupted before, and someone spilled water on my laptop, not fun, had to get a new laptop but have my work safe and backed up). When you start with a new program, you should look up beginners tutorials so you can follow along, get to know the program. Even in my four years of college, I still don't know everything, honestly. I still rely on research. In fact, every time there's a huge update and new tools are added, you have to learn it to keep up with the industry. Basically the learning never ends. As for coding, I'm not used to coding since I'm more of an artist, plus I'm busy with college. But when I have more free time after college, I'm thinking of learning coding that will benefit me with my 3D animation skills. Coding isn't required when it comes to 3D modeling or animation, but there are few 3D programs that does have coding in there. The best thing with college is mostly building connections and the Professors can act as someone to recommend in the job search process. When you have someone that can recommend you to work at a team or in a studio, it really helps a lot. Professors will give lots of feedback, and it's good to follow feedback because it will help improve the art/animation skills. Never be afraid to learn something new, and make your own small projects so you can add it into your art portfolio and also your resume. You can join in art concerts for animation, get into a Saturday programs, join a club, or look up free tutorials or websites online to help start learning, that's what I did when I started. It's a learning process but I love it. I know this is a long response but I hope my rely helped you a lot! Remember learning new skills takes time, and enjoy the process and journey. It's okay to make mistakes, it is part of the process. Good luck!
Country Clubs are a thing of the past. They have had to close hundreds of them!
Lower class people with multiple kids actually have more money than lower-middle class working people because of food stamps, housing aid, free medical, free grants for school/college, etc. So if you are a couple with 3 kids making $25,000 per year, you actually have just over $50,000 of actual income when considering food stamps ($800 + per month) housing assistance ($900 + per month) etc.
The system is designed to keep most people poor and punish them when they try to better themselves and make more income to be part of the middle class. They can work less, have less education and end up with more money than someone that is better educated and makes more on paper, but keeps far less.
Plus, single people are heavily punished with taxes. Single people with no kids are the ones paying higher taxes and sending other people's kids to school. The more kids someone has and the more of a drain they are on the system, the less they pay. It is backwards from how it should be. I have worked the exact same job at the same place as my friends. I actually got paid a little more since I worked there longer, but since I don't have kids and they do, they each get to keep an extra $400 per month after taxes. It is totally unfair.
While I agree the system makes it very difficult for a person to rise out of poverty, I'm not sure that I would say it's "not fair" for someone with children to get a tax break. Raising children is important for society. While you see it as a drain on the system, you need to consider that those kids will be the labor force when you are older and reach retirement. Look for example at the one child policy in China. It has seriously hurt their economy as the population ages. There are less people to care for the elderly. The government is offering massive incentives to having more children, but it was so ingrained in their culture that people don't want to have more children if any.
@@shortermama8099 How is it fair that I am taxed more for the same work to pay for OTHER people's kids? That is completely unfair and illogical. It rewards irresponsible behavior and punishes people for other people's poor decisions.
💯. We are providing assistance and services for others. Yet when we are elderly, sick, injured, or recovering from surgery, we get no help. We get told to go pound sand, and “oh, by the way, keep paying taxes to provide for others.”
@@Awesome_Force Because we need the next generation as a society. People are worth money to a country - they will work jobs in the future and pay for your social services when you are old. An individual person is richer without kids, but society is wealthier with educated and fed kids. It has a strong ROI since each human is worth a few million to the country over the course of their lifetime if they are sufficiently educated to work. Each child is actually becoming worth more nowadays since our population is starting to decline and each child will need to support more elderly taxpayers.
Like the outtakes at the end
Thanks Mike! 🙏
I guess you could say its all about perspective by this video my wife and I are upper class by your net worth video we fall THOUSANDS below the poverty line with an actual negative net worth. Im an airline Captain and my wife is a lawyer and when we add that student debt to our liabilities is absolutely scary
There is a suburb town in our city that has used zoning and schools to keep house prices very high. Almost every person in that town thinks they are "middle class", but every calculator shows them upper class. They have no clue about the world outside their bubble.
You're very, very welcome 🤗!
You're doing a great job with these videos! Thanks again!
Your videos are great. You are so conscientious about your articulation. I record all of my videos in one take, and usually the first take. I figure that when we are conversing in life, we don't redo our conversations. You've got one chance to make it count and make it right. Life doesn't hold rehearsals.
Saving can drive the economy if that money is used by banks to lend to other people or invested in private businesses. It is a really good thing for people to be super savers, because it means they produce for more than they consume.
Thanks for the video. I enjoyed it.
Glad to hear it!
The situation where an income differs by region is the problem with the federal government changing tax code based on the “rich”. The value of your income is different by state, the federal government cannot discriminate based on state so it’s the same across the board
Love your content, Erin. Consistent, concise, backed by facts. Thank you for the work you put in.
Thank you for the kind words and thank you for watching! 😊
it's nice to see a yoopers youtube channel. i'm from marquette
depends on state, county, and town/city.
Assets are a better indication of class than income. People could make a large amount of money yet could have a negative net worth. On the other hand, a low-income person (retired, etc.) could have millions in assets.
Hey Erin, as a Da Tech alum, your Yooper comment cracked me up. Ja, sure, ubecha, eh?
Haha 😂
According to the PEW calculator, I am upper everywhere except where I live (NYC Metro) and parts of CA. I wish I could move to a different state! 😕
Net worth is a more accurate determination of one's comparative financial position IMO.
It's not how much you make, it's how much you keep and how well you manage what you keep.
For the USA, to be in the Net Worth top 1% in 2022, you need a minimum net worth of $10,815,000. If your net worth is $522,210 or less, you're in the bottom 50%.
Absolutely right. The “Millionaire Next Door” series of books refer to “balance sheet affluent” and “income statement affluent”. Yes, a million dollars isn’t what it used to be when the first book was written, but the points Dr. Stanley raised are still worth keeping in mind. If you spend everything you earn and have no real savings, you may be poorer than the person who has saved 10x their salary over decades.
@@Whineboy Exactly.
While a million dollars isn't what it used to be now that net worth is counted in billions, I think it's still a good benchmark and goal.
Someone in the USA in 2022 with a net worth of $1M is in the top 5%
@@xenonsan3110 Many things "could be" which means they "aren't". Actual net worth is more indicative and valuable than projected or estimated net worth.
Given the choice between having a $1M net worth vs the potential of having $2M net worth, I'd choose the former.
Bird in the hand is worth two in the bush.
IMO.
To further complicate it, places like NYC have very complicated rent regulations and welfare programs. Making $60K,paying $2K a month for a market rate apartment, and $1K a month for health insurance may be a similar quality of life to making $30K, but only paying $900 a month for a rent stabilized apartment and getting free healthcare through the state. The median household income in my neighborhood is less that’s $50K, but the median market rate rent is $2,500 and the median home price is over $1 million.
I’m single and I made 97k in 2023. My coworkers household income is 275k with 2 kids. He has nicer things than me and does more exciting things than I can afford, but at the end of the day his 275 with a family really isn’t much more than my 97 all to myself
Being in the upper and middle class while working for companies and businesses is hard work especially too maintain it. The upper class business owners got a tremendous return on investment with workload and income. Its important too understand how difficult it is too get there and actually maintain this way of life
Even though our household income is only 120000 which will place us on middle class, we get to keep about 2500 dollars a month to save and invest. I bet we are doing much better than a lot of high middle class Americans
This was entertaining.
I loved your video. I'm looking forward to create my own content in Spanish to help minorities in and out of the US. Regards!
Very nice video
I'm on SSI but own my homes outright on the big island. With no rent or mortgage and $$ from my second home every month I do fine. Life off the grid
Given the stock market correction, the new categories could be middle class, lower class, and poverty. Although, below the middle class, little to no participation in the stock market.
What stock market correction?
@@johngill2853 LOL! Well as of a few days ago, the S&P index was down by more than 10% YTD. I suspect there will be more "correction to come" as a result of the Fed policy to raise interest rates, to stave off inflation. However, if we can fix some of the supply chain issues, this could be a good year on the S&P.
@@DaveM-FFB 100 of the last three bear markets have been predicted by people guessing what the market will do. You should expect the market to do anything possible and your portfolio should reflect this. Your portfolio should match your need ability and willingness to take risk
@@johngill2853 I didn't say there would be a "bear market". Just an overdue correction. Every portfolio is either exposed or not exposed. The only difference is the degree of exposure. We'll do just fine.
Great!!!!
My net worth is 2 million dollars, but my income is only $45,000 a year. Am I in the lower middle class?
I am a Call Center agent from the Philippines, handling credit card issues with American customers, what I found out is an average American is having a credit card debt of an average of 4000 Dollars, and they are ONLY paying a Minimum of 100 Dollars per month, can you imagine for how long an average American can PAY OFF all his credit card, it will take him an average of 5 years to just pay his credit card debt...Lesson learn from them, DO not squander your cash, because cash is KING...
Cost of living in the area you live impacts this immensely. $250k in the Midwest is a lot of money, $250k in some areas of California is basically poverty.
I think I knew where we sat, buy I still tell people that we're just doing ok . That quote about people you surround yourself with says it all. The people I surround myself with also invest, buy homes outside the US, fly FC, drive nice cars, have larger homes, etc. Great video!
That's what we always say as well. But we are still in our hustle years for sure. But....I am trying to be ok with a bit more spending. In fact last week I told Steve maybe we should splurge and get Amazon Prime. haha 😂
@@ErinTalksMoney, HAHA! We have Prime, Disney+, HBO Max, Showtime, RUclips TV, discovery+, Paramount, Hulu, Netflix, and I forget the other ones if there are any left. HAHA!
The numbers also make me realize that we will never be in the middle class again, something you and Steve will feel once he's retired. Even if I didn't work, my wife's salary and my retirement we would still be well above the high medium class number. I feel very fortunate to be in this position!
I still find it hard to believe low $40s is middle class. That can barely keep you afloat here in Utah. The median home price is well in to the $300/$400K range and we're not considered a HCOL area.
@@roburb73 People recognize the abbreviation HCLA.
@@genxx2724 Even so, you understood mine. 🤣 I'm military, COLA is how we do it and how I'll always do it.
@@ErinTalksMoney Thanks for reminding me to cancel my inadvertant trial subscription to Prime! Those sneaky bastards.
Hi Erin. Good insight and video! And your bloopers at the end always are funny! I definitely have seen the shrinking of the middle class out here in California over the last 10 to 20 years. The high cost of living, extremely high taxes for everything, extreme regulations and very poor government leaders here have driven so much of the middle class to other states. I see the gap getting much bigger here between the rich and the poor in the coming years as well. So sad to see from a once really great state.
Hey Tim!! 👋 I feel the gaps are far more noticeable in major cities and higher cost of living states. In the more rural area or lower cost of loving states it just easier for everyone to sort of blend in, if that makes sense? It’s unfortunate what’s happening in California. My brother actually wants to live in Cali. But ultimately he decided to work in another state because he said he could retire 10 years sooner by opting not to live and work in Cali.
@@ErinTalksMoney Tell your brother that was a wise and best decision. I have lived in Southern California all 56 years of my life and the weather is incredible all year long and a lot of things to do. But I know if I had moved to a lower cost state when I was younger I would be in a much better place home wise as well as for retirement.
Living in the DC metro has skewed my thinking on income especially since everyone I know makes six figures and while the Pew calculator puts me at the upper end I don’t necessarily have the net worth that the wealthy have around here. Also I’m a divorced woman with no dependents in the home, a degree and no car payment. I’d love to take my income and move out of Maryland one day. It’s so expensive here.
How big the middle class is. Is defined by where you put the boundaries
The first few minutes show us that the majority of the middle class shift is up. I would say that’s positive news. And to address the lower class, you have a platform here. You could teach them the principles of the wealthy so they can pull themselves up too.
Well knowledge make stuff more possible but I think many of the lower class will have to retrain for different careers. There are whole career paths that never lead to 100K each year jobs. In my experience people who do not have marktable skills tend to have a very hard time "shifting up."
4:07 to come to the topic at hand, that’s roughly 45% of the video! 😀
Thanks for bringing up the social/cultural capital aspects. Many finance channels miss those aspects to it.
One thing that is rarely considered when this topic is raised is wealth. People who already have several million in assets can live a much higher standard of living than others with the same income. Frequently this wealth advantage is inherited, and is “old money”…..
It's not just about income numbers, consider how life in general has improved. Nowadays many "poor" people have air conditioning, iPhones, cable television, etc. Although they may live in an apartment and not own a suburban home I would say this is at least lower middle class lifestyle. They have everything they need, and some things that they don't. Therefore, I say the middle class has actually grown over the years.
I think your poor if you can't afford luxury items. If all your money goes to the things you need to survive then your poor regardless of the $ amount. Like, AC units come standard. You arnt going out and buying one if you can't afford it, we wouldn't have stories about people dying from cold or heat in their homes
What does it mean to be rich? Is it a certain income and net worth?