Are you in the middle class? Odds are that most of us will say yes.
But are most of us actually in the middle class? According to some studies, 72% of people consider themselves to be in the middle class while the studies also show that only about 52% of us are actually in the middle class. This means that 20% of us make too much or too little to be considered “average”.
What is Average?
But then we have to ask, what even is middle class? Unfortunately, this isn’t as simple a question as it first seems. It depends on a number of factors such as location and household size.
Pew Research defines the middle class as those who have annual household income that is two-thirds to double the national median (adjusted for location and household size). For a family of three, that is anywhere between $40,100 and $120,400 for 2018 incomes. Depending on your location, these numbers will be higher or lower.
Why We are All in The Middle Class
But we have to ask, why do most of us consider ourselves middle class when it isn’t always the case? I am sure there are a host of reasons but here are my thoughts.
A Car is a Car
We all know the feeling of getting a raise or buying a new car. It feels great for a while until we start to feel the same as we did before. Even as our income grows over time, it doesn’t take very long for it to feel very “normal”.
One incredibly strong side effect of our hyper connected world is that it is so easy to find hundreds of people that make more money than we do. Regardless of how much money we make, there is often a neighbor, friend, or social media connection who makes more. This can make even high-earners feel just average.
It Doesn’t Sound Good
Nobody wants to feel like they are less than average and lower income simply does not sound as good as middle class. And as many studies have shown with attractiveness, driving skills, and now income, most of us believe ourselves to be “above average”.
Dallen Haws is an investment advisor for Haws Financial Planning