Sep 5, 2025
The American middle class is shrinking. While 61% of Americans were considered middle class in 1971, that number fell to 51% by 2023, according to Pew Research [1].
Pew defines middle class households as those with an income that is two-thirds to double that of the U.S. median household income, which is around $80,000.
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Mark, aged 40, lives alone in Ithaca, New York and is technically middle class with his $60,000 per year salary, but he doesn’t feel very financially secure at all. Mark has no debt, but he only has $10,000 in emergency savings, and he lives in a one-bedroom apartment. He worries that some crisis such as losing his job or a health emergency could plunge him into serious financial difficulty.
If you’re feeling the same about your financial situation, here’s what you can do to become more financially stable, prepare for a potential future emergency, and start building wealth.
Being middle class isn't a guarantee of financial security
Pew Research reported that growth in middle-class income has fallen behind the income growth in the upper tier, and the share of total U.S. income held by households within the middle class has plummeted. The middle class’s share of all household income is just 43%, while 51% of the population is considered to be middle class. Their share of income is below their share of the population, as the incomes of middle-class households haven’t kept pace with the rise in the incomes of upper-income households.
While the middle-class lifestyle once meant having a nice house, two cars, a couple of kids, and some money in the bank, that's not necessarily the case anymore.
How far middle-class individuals can stretch the income they do have depends on location, as well as which end of the scale their income falls. As a result, it doesn't really matter which class you are in when it comes to your finances. What does matter is whether you feel secure in how much money you have in the bank, and whether your income stretches far enough to cover what you need. If it doesn't, then you need to make a change, regardless of whether you're lower, middle, or upper class.
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How can you become more financially stable
So, if you find yourself in the middle class but always feel like you're one emergency away from financial collapse, you'll need to make some changes to the way you're managing your money.
First and foremost, you should be living on a budget that prioritizes savings. The only way to become more financially secure is to cut back on unnecessary spending and devote some of your money to building an emergency fund that can cover three to six months of living expenses. This will ensure you have the money to cover not just minor emergencies like car repairs, but major ones like a job loss.
To build that budget:
- Start by tracking your spending for 30 days to see where you spend your money now, and where you can trim.
- Aim to save around 20% of your income, with money first going to emergency savings an then retirement savings.
- Treat savings as a "must-pay" bill and cut your other spending accordingly to pay yourself first. This could mean cutting into your entertainment budget, but you can also look for ways to cut down on your utilities, insurance, and other necessary expenses.
- Look for ways to increase income to make your savings goals easier, such as taking on a side hustle to boost your earnings.
- Ensure you’re not carrying debt, the interest payments on which can seriously cut into your savings budget.
- Get serious about diverting as much extra money as you can into savings, including windfalls like tax refunds or cash gifts.
It’s best to automate transfers of money into your savings accounts until your emergency fund has three to six months of expenses. Once you have solid emergency savings, and are building a retirement fund, you'll be more likely to feel that you're living a stable middle-class life.
Article sources
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[1]. Pew Research Center. "The State of the American Middle Class"
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
