What People Usually Think “Middle Class” Means#

You probably picture what most people do:

• Not rich, but not poor.
• A family that can afford:
  • A regular home with a 30-year mortgage.
  • Two cars.
  • A vacation once a year.
• Has two people working, maybe in middle management or running a small business (if they’re lucky).
• You might even imagine that one parent could stay home to look after the kids.

Broadly, you might think the middle class describes the largest group of people on the wealth scale, sitting between the super wealthy and the working class.

But here’s the catch: you’d find it completely impossible to nail down a specific dollar figure for net worth that marks the cutoff for getting into any of these groups.

Reason 1: The Term “Middle Class” Doesn’t Really Mean Anything Anymore#

One big reason is that the term is practically meaningless today. Someone at a seminar recently even said, literally, “There is no middle class anymore. The middle class is gone.”

Why the Term Persists (Even If It’s Meaningless)#

Okay, so the definition might be useless, but it’s definitely not meaningless.

• Target Audience: Everyone from companies to politicians targets the “middle class.” Why? Because it’s seen as the largest block of customers and voters. You hear phrases like:
  • “This really will mostly benefit the middle class…”
  • “…and jobs you probably like to think you are middle class…”
  • “…that’s all for the middle class…”
  • “…a middle class tax cut…”
  • “America’s middle class is getting hollowed out…”
  • “…until middle class incomes are going up again…”
• Marketing & Politics: People like to think they are middle class, even if they aren’t. They put themselves in this group. This means they’ll accept the idea that if something is good for the middle class, it must be good for them. This is incredibly handy if you’re trying to win votes or sell a product to “middle class Americans.”

A Different Way to Classify People (Still Blurry)#

One simpler way to divide people, which has stayed more consistent, is just into two groups based on how they get by:

1. The Working Class: People who need to work to cover their living expenses.
2. The Upper Class: People who don’t need to work because they have enough income from investments or other sources.

By this definition:

• A doctor who still needs to work to pay the mortgage on their seven-bedroom mansion is working class.
• A retiree living solely on a pension would be upper class.

These definitions are simpler, but the results are still pretty blurry when you apply them.

Problem 1: Leads to Unrealistic Spending and Saving Habits#

Assuming you’re middle class often encourages certain spending and saving behaviors that aren’t financially sound.

• Lack of Savings: A study by Bankrate, a financial services company, found that 57% of Americans couldn’t cover an unexpected $1,000 expense without either taking on debt or selling something they own.
  • This means people are forced to borrow from retirement savings, take out personal loans, or put expenses on a credit card.
  • This study is done every year, and the number of Americans in this fragile financial state has been slowly increasing, even though $1,000 is worth less now than when the report started.
• Contradiction: Even if you have a different definition of middle class, having less than $1,000 in savings isn't something anyone associates with being middle class. Yet, a **Gallup poll** found that a majority of Americans still identify as middle class. This means there's a big overlap of people who can't afford a$1,000 emergency expense but still call themselves middle class.
• The Image vs. Reality: The very idea of what a middle-class American looks like is both a cause and effect of this problem. A survey by Lending Club found that 36% of people earning at least $250,000 a year were living paycheck to paycheck! “We’ve struggled… we’ve gone from having money in the bank, having savings, to living paycheck to paycheck and basically trying to make ends meet, and sometimes they don’t meet.”
  • By most people’s standards, earning $250k+ would put someone firmly in the upper middle class. Yet, they face serious financial stress.
  • A major reason for this stress is trying to maintain the lifestyle image people have of what upper middle class should look like.
  • The “starter pack” for an upper middle class income often includes two cars, a well-furnished single-family home, and regular vacations.
  • However, these things are often unaffordable in the areas where people earn these high salaries. For instance, in San Francisco, that income might only realistically get you a one-bedroom apartment and a basic car you have to pay to keep locked up so it doesn’t get broken into.
  • These living conditions don’t feel middle class, so people overextend themselves. They think that if they earn what they believe is a middle-income salary, they should automatically have a middle-income lifestyle, even if they can’t actually afford it in their location. This lifestyle assumption is the second way the definition hurts your finances.

Problem 2: Makes You Less Likely to Pick Profitable Careers#

Thinking you’re middle class can make you overlook some excellent job opportunities.

• Dismissing Trade Jobs: Some of the best job options in America right now are roles often associated with the working class. Fields like:
  • Trade jobs (electricians, plumbers, etc.)
  • Trucking
  • Farming
  • Oil work
• These jobs can often make more money than most white-collar office jobs.
• A lot of young people dismiss these careers, seeing them as something you’d only do if you “didn’t make it into college,” because they don’t want to be seen as “working class.” This is true even though these jobs can offer a lot more money and involve taking on less debt compared to pursuing a traditional college path.
• As skilled laborers become harder to find, companies get more desperate and have to pay more. Also, generally, the longer you work in the trades, the more money you tend to make.
• There are pros and cons to white-collar professional work and blue-collar trade jobs. But climbing a corporate ladder isn’t as guaranteed as putting in high-paying hours with a solid trade skill.
• Too often, trade careers are dismissed because people think they are “better than that,” when in reality, they often aren’t financially.

Problem 3: Leads to Taking Unnecessary Financial Risks#

This financial stress and the pressure to keep up a perceived lifestyle can push people towards risky behavior.

• If people who think they are middle class can’t afford the things they associate with that lifestyle, they might take on debt or look for risky ways to make money fast.
• Scams: Which group do you think is most likely to fall for financial scams? (The video prompts the audience to put answers in the comments).
• According to the FTC, elderly people trying to pay back the IRS using gift cards actually fell for scams at a lower rate than young professionals on above-average incomes.
• Younger adults were 330% more likely to fall for investment scams specifically.
• How scammers reach them: “texting, snapping, messaging on social platforms – that’s how they communicate and scammers love that, right? They’re on all of those platforms, they’re on all of those networks.”
• The Need to Get Rich Quick: Everyone wants to get rich quick, but people with high incomes who feel they’ve fallen behind their idea of a middle-class life feel like they need to get rich quick just to keep up.
• An investment promising 100% annual returns is clearly a scam. But someone who thinks they ought to be middle class has just the right mix of:
  • Enough income to invest.
  • Enough desperation to fall for the con on the slim hope it might work.
• Even less obvious scams are specifically aimed at people who are perceived as middle class and should be further along in life.
• The Ad Test: The video asks viewers to watch an ad (implying a common type). If you saw an ad pitching an:
  • Amazon automation course?
  • Day trading course?
  • Dropshipping course?
  • Real estate investing course?
  • …then, according to the creator’s community poll, you are the prime target for wanting to make extra income to fix your financial situation. If you have Adblock or YouTube Premium and were confused by the prompt, you likely weren’t targeted.
• Even people who don’t fall for outright scams or pay for questionable “get rich” courses might still choose aggressive stock portfolios or risky strategies like house flipping, options trading, or cryptocurrency investing.

Problem 4: Makes You Less Likely to Take Smart Financial Risks#

This financial anxiety and focus on maintaining an image doesn’t just lead to dumb risks; it also prevents smart ones. This is the fourth problem with thinking you’re middle class.

• Financial security offers many benefits; people who save more and spend less tend to be happier.
• Having a “middle class job” to pay for a “middle class life” feels like the most secure path for many.
• The Illusion of Job Security: The problem is people get used to this imaginary safety and stay in financially risky situations to maintain it. Someone who’s been with their employer for a long time feels very secure in their role.
• However, multiple studies show there’s no correlation between how long you’ve been at a company and your job security, outside of maybe a starting probationary period.
• Survivorship Bias: People expect they are more secure the longer they’ve been there simply due to survivorship bias – they haven’t been laid off yet, so they assume they won’t be. The text states this is “simply not true.”
• The Cost of Staying Put: Employees who stick with the same employer for longer than about three years:
  • Earn significantly less than peers who switch jobs more often.
  • Have less overall job security.
• While potential employers do value loyalty to some extent, they value a range of experience and flexibility in different situations much more. Someone who’s been at one company for decades can sometimes be seen as a red flag by hiring managers because they might be set in their ways and hard to train on new processes.
• Examples of Smart Risks: These calculated risks aren’t just about changing jobs. They include things like:
  • Moving to a new city with much better job opportunities.
  • Starting a business in a field you have experience in.
  • Simply asking your boss for a raise.
• Someone who is just barely keeping up the appearance of a middle-class lifestyle is much less likely to take these calculated risks. Why? Because they know that any complication or setback could cause their carefully constructed facade to collapse very quickly.