FabrikaPhoto\/Envato <\/p>\n
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.<\/p>\n
The term \u2018\u201cmiddle class\u201d is often discussed but rarely defined. It\u2019s a term the majority of Americans would use to define themselves, yet most people don\u2019t know whether their household truly fits into this category.<\/p>\n
Based on the Pew Research Center\u2019s analysis of government data, roughly 49% of Americans don\u2019t actually fall into the middle class income category.<\/p>\n
Here\u2019s a closer look at why that is.<\/p>\n
Pew Research Center defines the middle class as a household with income that is at least two-thirds of the U.S. median income to double the median income. This would imply a range of incomes from $56,600 to $169,800, based on government data for 2022.<\/p>\n
As of 2023, 51% of American households fit into this category.<\/p>\n
Invest in Gold <\/p>\n
Powered by Money.com – Yahoo may earn commission from the links above. <\/p>\n
But, most Americans might not be aware that this cohort of middle-income earners is getting squeezed. Roughly 61% of households across the country were part of this group in 1971 \u2014 a full 10 percentage points higher than the recent 51% rate.<\/p>\n
This trend may be a reflection of growing income inequality across the country. And many families feel like they\u2019re on the brink of falling into a lower category.<\/p>\n
A recent survey by the National Foundation for Credit Counseling (NFCC) found that 53% of U.S. adults feel like they can\u2019t make financial progress and 48% say they are \u201cconstantly treading water financially.\u201d<\/p>\n
If you and your family are middle-income and worried about falling behind, there are ways to cement your position.<\/p>\n
Reducing debt, especially consumer debt, could be a great way to secure yourself financially. In 2024, there were 494,201 personal bankruptcy filings in the U.S. \u2014 over 60,000 more than the previous year, according to Debt.org.<\/p>\n
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan \u2018works every single time\u2019 to kill debt, get rich in America<\/a> \u2014 and that \u2018anyone\u2019 can do it<\/strong><\/p>\n If you and your family are in the middle-income category and worried about falling behind, there are ways to cement your position.<\/p>\n Story Continues <\/p>\n Reducing debt, especially consumer debt, could be a great way to secure yourself financially. In 2024, there were 494,201 personal bankruptcy filings in the U.S. \u2014 over 60,000 more than the previous year, according to Debt.org<\/a>.<\/p>\n By reducing your debt burden, you can mitigate the risks of bankruptcy and reduce the monthly cost burden of servicing the debt.<\/p>\n Another way to secure your position is to have an emergency fund<\/a> that can cover your living expenses if you suddenly lose income.<\/p>\n A six-month emergency fund can give you enough time to find a new job or different source of income without putting your family\u2019s living standards at risk.<\/p>\n Finally, boosting your income to the upper-end of the spectrum could help you secure your middle-class lifestyle.<\/p>\n Launching a side gig or finding a passive income opportunity could help you get close to or even surpass the $169,800 household income threshold for upper-class status. Not only does this give you more financial flexibility, but it also puts a protective buffer on your current lifestyle.<\/p>\n Almost 1 in 5 Americans are \u201cdoom spending\u201d \u2014 making impulsive and excessive purchases amid increasing economic uncertainty \u2014 according to a recent report from CreditCards.com.<\/p>\n However, this could result in increasing financial insecurity especially among the middle class.<\/p>\n Budgeting and tracking where your money is going at all times can help you identify the areas in which you\u2019re overspending, helping you take control of your finances.<\/p>\n One area where you are likely overspending is insurance. The average American spends approximately $2,433 on full-coverage auto insurance yearly, according to MarketWatch. In addition, homeowners’ insurance costs roughly $2,341 per year, according to Bankrate.<\/p>\n And premiums are projected to rise further. Insurify estimates that car and home insurance costs are expected to rise by 5% and 8%, respectively, in 2025.<\/p>\n You can reduce your premiums by shopping around and comparing rates from multiple insurers near you, and choosing the lowest rate. A LendingTree survey showed that 92% of Americans lowered their monthly auto insurance premiums by switching insurers.<\/p>\n With OfficialCarInsurance.com<\/a>, you can compare rates and coverage from reputable providers like GEICO, Allstate and Progressive within minutes.<\/p>\n You can find rates as low as $29\/month<\/a> \u2014 without spending a penny or hurting your credit score.<\/p>\n If you\u2019re looking to switch homeowners insurance carriers as well, consider shopping around and comparing rates through OfficialHomeInsurance.com<\/a>.<\/p>\n Simply answer a few basic questions about your finances and the home you\u2019d like to insure then OfficialHomeInsurance.com will sort through more than 200 providers near you to display the best rates. On average, you can save $482 each year<\/a> by shopping around and selecting the lowest possible rate.<\/p>\n Budgeting and tracking can also help you understand where your money is going, so you can make every dollar work for you.<\/p>\n With YNAB<\/a>, you can track spending and saving all in one place. Link your accounts so you can see a big-picture look of your expenses and net worth growth. You can prioritize saving for short or long term goals \u2014 like a vacation or a down payment for a house \u2014 with the app\u2019s goal tracking feature.<\/p>\n If you want to pay debts faster, you can create personalized paydown plans<\/a> to calculate how much interest you\u2019d save if you topped up your monthly payments with a little extra.<\/p>\n The easy-to-use platform allows you to simplify spending decisions and clarify your financial priorities. Plus, you don\u2019t need to add your credit card information to start your free trial today<\/a>.<\/p>\n