You’ve heard the terms “upper class,” “middle class,” and “lower class” thrown around in conversations about money and society. But what do these labels mean? And, more importantly, where do you fit in?
Don’t miss:
While there is no perfect way to define economic classes, a common approach is to look at net worth. Your net worth isn’t just how much money you have in the bank, but the total value of everything you own minus what you owe. Think of it as a financial report card that shows your total assets.
According to recent data from the Federal Reserve, the numbers are as follows:
If you are in the higher class, You’re in a good place. The top 10% of earners have an average net worth of $2.65 million. Even if you’re in the upper echelon (the 80-90% range), you’re looking at around $793,000.
Down to the middle classThings get a little more diverse. The upper middle class has an average net worth of about $300,800. A typical middle class family comes in at $169,420. And if you’re in the lower middle class, you’re looking at about $58,550.
Trending: The average American couple has saved this much money for retirement: How do you compare?
Now, for the lower classthe numbers take a sharp dive. The average net worth here is just $16,900. That’s a pretty dramatic contrast to the millions at the top.
But here’s the thing – these are just averages. Your situation could be very different. Maybe you’re a recent college graduate with a mountain of student debt but a well-paying job. Or maybe you’re retired with a modest income but a paid-off house and a hefty savings account. Life is complicated, and so are finances.
It’s also worth noting that net worth isn’t everything. Your day-to-day life is likely more affected by your income and cost of living. A teacher in a small town might have a lower net worth than a struggling actor in New York City, but who’s better off?
See also: Do you know how many Americans retire with $1,000,000 in savings? The percentage may shock you.
So, what can you do with this information? First, don’t panic if your net worth isn’t where you want it to be. Remember, building wealth takes time. If you’re young, you still have plenty of years to grow your savings.
If you want to increase your wealth, here are some tips:
-
Pay off high interest debts. It is difficult to build wealth if you are losing money on interest payments.
-
Save and invest regularly. Even small amounts add up over time.
-
Consider buying a home. Home equity is a large part of many people’s net worth.
-
Invest in yourself. Learning new skills can lead to better paying jobs.
-
Live below your means. The less you spend, the more you can save and invest.
Trending: Are you rich? This is what Americans think you need to get rich.
If you are nearing retirement or are already enjoying your old age, here are some tips to increase your financial comfort:
-
Also consider downsizing your home. This can free up some of your equity and lower your living expenses. And if you’re still working, maxing out your retirement accounts with catch-up contributions is a smart way to boost your savings as you approach retirement age.
-
Don’t forget about Health Savings Accounts (HSAs). They offer triple tax benefits and are a great way to set aside money for the inevitable medical expenses that come with age.
-
Remember, your experience is invaluable. Many professionals with years of experience thrive in consulting or mentoring, turning decades of know-how into rewarding side jobs or even new careers.
Your worth extends far beyond your bank balance! Remember that being upper class or lower class is just one way to cut it. What really matters is how you move towards your own financial goals. Everyone’s journey is different and speaking to a financial advisor can be a great move if you’re looking for tailored advice to help you achieve those goals. They can help you create a plan that’s tailored to your exact needs.
Read more:
“SECRET WEAPON FOR ACTIVE INVESTORS” Boost your stock market game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start your 14-day trial now!
Want to receive Benzinga’s latest stock analysis?
This article How Rich Are You? This Is the Net Worth That Defines the Upper, Middle, and Lower Class originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
