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Lower, middle and upper-class incomes

According to the U.S. Census Bureau, the median annual income for Americans in 2022 was $74,580. How this breaks down in terms of class strata can get complicated: living on $70K in rural Montana is a lot different than in downtown Manhattan: location, location, allocation, you might say.

Still, the Pew Research Center has done commendable work turning census data into meaningful benchmarks. In an April 2022 report, they found that the median income of middle-class households in 2020 was $90,131 — up 50% from $59,934 in 1970, as measured in 2020 dollars.

Using 2018 figures, Pew defined class-income breakdown in 2020 like this, based on three-person households, adjusted for the cost of living in a metropolitan area:

  • lower-income households had incomes less than $48,500;
  • upper-income households had incomes greater than $145,500;
  • middle-income households fell into a range between those two numbers.

But the report also pointed out that geography plays an important part in where you fall on the scale. Locationally, Jackson, Tenn. is 19% cheaper than the national average, while the San Francisco-Oakland-Hayward is almost 32% more expensive.

You might wonder where you fall and if so, you’re in luck. The 2020 Pew report contains a calculator that lets you determine your class strata. All you have to do is enter your state, metro area, pre-tax household income and number of family members.

Keep in mind the data is from 2018, but it’s a great starting point to give you an idea of where you stand — and how much further you have to go before hitting the next rung. Here are a few tips to help speed up that process.

More: Does your income put you in the top 1%, 5%, or 10%?

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Invest in yourself

To be clear, “invest in yourself” means taking steps to build on your skill sets and literal worth in the job market, or upward position as an entrepreneur. Advanced degrees and specialized training will prepare you for the leap.

A study by Georgetown University found that individuals who held a bachelor's degree earned on average 31% more over a lifetime — for a total of $2.8 million on average — compared to those with an associate’s degree, and 84% more than those with a high school diploma.

The decision to seek out high-demand skills can increase your earning potential even faster, and boost your net worth in the process.

Build a budget

Of course, college, grad school or advanced training requires money. That’s where it helps to leverage expenses alongside income — which is where making a budget comes in. That’s more crucial than ever in our post-pandemic world.

Ramsey Solutions found in its 2023 State of Personal Finance report that the number of Americans who reported difficulty paying bills increased by 42% over the last two years, while more than one in three Americans who make more than $100,000 a year live paycheck to paycheck.

The budgeting process need not be complicated; often it’s more psychologically taxing than anything else. Learning that you eat out twice a week or have expensive subscriptions you haven’t used in years can make you feel vulnerable.

The idea here is to keep your larger goals in mind. Stay stubbornly focused on them instead of beating up on yourself. After all, cutting expenses is the true equivalent of getting a huge raise or coming across “found money.”

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Diversify your investments

Again, Americans face a bevy of psychological roadblocks here. Following headlines about a blockbuster stock (and experiencing FOMO) has more in common with playing Powerball than building a powerful portfolio. To that end, diversification is crucial.

Would you rather find and invest in the next Amazon? Dump it all into cryptocurrency? Keep in mind that the media and your boastful buddies love to share the success stories. But diversifying and playing the long game — which also employs a buy-and-hold strategy — made billionaires out of Warren Buffett, Charlie Munger and Charles Brandes, to name a few investment titans.

Growth stocks like Tesla and Amazon have their places in a diversified portfolio, but the idea is to balance them with more conservative investments, including bonds and established companies that deliver steady gains and dividends. Remember when Amazon was a runaway gravy train for investors? Then remember mid-April of 2023, when Amazon stock was down 35% year over year? Such are the risks that come with growth stocks that promise meteoric profits; they also put you at risk for steep plummets. A half-million dollar portfolio invested in Amazon in April 2022 was worth just $325,000 in April 2023.

A mix of conservative stocks, growth stocks, bonds and real estate will in general provide a safer way to achieve your long-term net worth goals. Exchange-traded funds (which peg their value to the S&P 500, for example) are also a great idea in that they contain a ready-made basket of investments.

No matter the class you occupy or seek, keep in mind those other investments that build riches over time: family bonds, quality leisure time, relationships and passion projects among them. To borrow from the late Stephen Covey, make sure as you climb the ladder to success that it’s leaning against the right wall.


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Amy Legate-Wolfe Freelance contributor

Amy Legate-Wolfe is an experienced personal finance writer and journalist. She has a Bachelor of Arts in History from the University of Toronto, a Freelance Writing Certificate in Journalism from the University of Toronto Schools, and a Master of Arts in Journalism from Western University. Amy has worked for Huffington Post, CTVNews.ca, CBC, Motley Fool Canada, and Financial Post. She is skilled at analyzing trends and creating content for digital and print platforms. In her free time, Amy enjoys reading and watching British dramas on BritBox. She is a mother and dog-mom to a Wheaten Terrier.


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.