In many ways, the middle class represents the American dream: a good job, a safe home, a nice car and a healthy retirement are just a few things that come to mind.

However, according to the United Way Alice Project, the American society is slowly shifting towards a new growing economic class – ALICE (acronym for Asset Limited, Income Constrained, Employed).

People in the ALICE demographic earn more than the Federal Poverty Level but less than the basic cost of living in their area.

Combined with those living in poverty, almost a third of Americans (100 million people) are struggling financially.

What is Considered Middle Class?

According to Pew Research Center, about half (52%) of Americans lived in the middle-class household as defined by the household income.

However, to be called the middle class, a person needs to have more than a certain income.

According to Brookings, a middle-class individual must have the right mix of economic resources (cash in the bank), credentials (educational achievement and occupational status) and cultural values (attitudes, behavior and mindset).

Unfortunately, attaining the middle class status can be extremely difficult for someone who was born into poverty.

The Path to the Middle Class

The path to the middle class involves following an easy to explain (but less-easy-to-do) plan. For millions of people who are struggling financially, joining the middle class may seem unattainable.

However, while the quest to the middle class can be a long and difficult road, it can be done with the proper education and determination.

To help out, we put together an infographic that lays out the path to the middle class for everyone who’s willing to embark on the journey to joining the American middle class.


Are You the Middle Class?

What does the Middle Class look like?

The Middle Class represents about 50 percent of the total population of the United States, and the middle-class income levels vary depending on the family size.

  • A single person is considered upper class if they are earning $72,520 or more and lower class if they are making $24,174 or less.
  • A household of two is considered upper class if they are earning $102,560 or more and lower class if they are making $34,186 or less.
  • A couple with a child is considered upper class if they manage to earn at least $125,609 and lower class if they earn $41,869 or less.
  • A family of four with 2 adults and 2 children is considered upper class if they earn over $145,041 and lower class if they earn $48,347 or less.
  • A family of 5 people should be earning at least $162,161 to be considered upper class and making $54,053 or less will classify them as being lower class.

What are the typical examples of the financial goals of members of the Middle Class?

The middle-class families and individuals will typically aspire to accomplish the following financial goals:

  • To own a home
  • To have health insurance
  • To be able to save for retirement
  • To provide quality education for themselves and their children
  • To have a car for every adult in the family
  • To go on a family vacation at least once per year

A Roadmap to The Middle Class

The following financial habits may be developed by individuals who remain within the middle class throughout their life:

  1. They will be developing valuable skills and/or expertise.
  2. They will be saving and maintaining funds for emergencies.
  3. They will be investing for retirement.
  4. They will be building and maintaining a good credit score.

Below are some additional specific steps you may consider in trying to raise your income to the level of a person who is considered middle class:

Step 1: Invest in Yourself and Build a New Skill

Your Income is your most powerful wealth-building tool. It is difficult to stay out of debt or build wealth without taking control of your income.

Some of the most popular skill sets and career fields that can help pave the way to the middle class by providing solid incomes are below:

  • IT & Computer Networks: Average income: $41,800
  • Engineering Technology: Average income: $55,195
  • Visual Arts & Graphic Design: Average income: $52,572
  • Construction & Architecture: Average income: $39,304
  • Law & Legal Services: Average income: $49,366
  • Business Administration: Average income: $47,168
  • Journalism, Media & Communications: Average income: $36,360
  • Skilled Trades: Average income: $41,036
  • Health Sciences and Nursing: Average income: $45,810

Step 2: Build an Emergency Fund

The second step to consider is building an Emergency Fund. An emergency fund is the money you save for unexpected events such as job loss, medical emergencies or car repairs.

It is best to start saving for emergencies as soon as you can with the goal of building up a fund large enough to cover 3 to 6 months of your living expenses.

To accomplish this, one approach to consider is breaking up your income in the following way:

  1. Put away at least 20 percent of your income for emergencies or retirement.
  2. Spend about 50 percent of your income on essentials such as housing costs, food and utilities.
  3. Spend no more than 30 percent of your income on non-essentials such as eating out, seeing a movie, or going on vacation.

Step 3: Invest for Retirement

Investing for retirement is a task that many people tend to put off, but most members of the middle class know that investing is a crucial step if they want to be able to afford retirement.

Individuals with income to qualify them as being middle class are able to build up a retirement nest egg.

One reason why investing helps with building a nest egg is what is known as “compound interest”. 

Compound Interest is money you can earn from investing your income.

It is such a powerful tool for growing investments that it has been said that compound interest is the eighth wonder of the world.

If you start early and properly invest your income, your money may accrue compound interest and may grow to a level that allows you to afford to retire.

One important thing to keep in mind, though, is that investments, even those that may earn compound interest, may involve risks and can cause money losses as well.

So, before making any investments, make sure to consult a professional and decide on the level of risk and the type of investments that will be most suitable for your unique circumstances. 

Step 4: Limit Debt & Build Good Credit

Limit debt. 

Middle-Class individuals aim to invest in “good debt” and avoid “bad debt” as much as possible. 

Good debts are those that may help you generate more money over time and in the future. Bad debts are those that do not have the potential to eventually increase your net worth and often make your networth go down. 

Examples of expenditures that many people consider “good debt”:

  • A student loan to pay for a college education that can increase your income after graduation by helping to secure a well-paying job in a profitable field.
  • A small business loan that may help you start a potentially profitable business.
  • A loan for a car that you’ll be using to get to work at a job that helps increase your income.

Examples of expenditures that many people consider “bad debt”:

  • Using a credit card to pay for an expensive vacation.
  • Using a store credit card to buy clothes, consumables and other goods and services that you don’t need.
  • A loan for a car that you’ll be driving for fun or convenience.

Build Good Credit

Many members of the middle class try to build a good credit score and maintain it because good credit scores often allow them to borrow money at cheaper rates that can be used for important purchases such as a home or a car.

Many people can start building good credit by:

  • Applying for a credit card at a bank or credit union with which you have a checking account
  • Applying for a retail or gas card
  • Applying for a secured credit card
  • Applying for an unsecured credit card with a co-signer
  • Becoming an authorized user on someone else’s credit card
  • Applying for a credit builder loan that is designed for people with poor credit
  • Getting credit for paying rent with the help of credit reporting services such as Rental Kharma and RentTrack

Tips to keep your credit score high:

  • Pay your bills on time
  • Keep your credit card balances low
  • Don’t close old credit cards
  • Always keep a small balance on your cards
  • Open and maintain a healthy credit mix 
  • Don’t apply for too much credit
  • Get a copy of your credit report monthly
  • Dispute inaccuracies


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