Your social class, along with the money you have in your savings account, can be an indicator of certain criteria of your socioeconomic status; however, it does more than a simple metric to calculate your net worth. It also has important implications for assessing and measuring income inequality or educational attainment. The term middle class is not static when it comes to American households; it can change depending on your location or even your age.
Learn more: 6 Signs You’re Actually Upper Middle Class (Even If You Don’t Feel Rich)
Learn: 7 tax loopholes the rich are using to pay less and build more wealth
So as much as your financial security depends on how much money you make and can save and invest, it also depends on how you feel. Find out here how to determine if you are poor, middle class or rich.
Americans identify themselves along the class spectrum in a variety of ways. While most would say they feel middle class, some choose to identify as working class. On both sides of the wealth spectrum, few identify as high net worth or poor. Why is there so much inconsistency in classifying people, let alone how society does it?
This may be because not all class performance correlates directly with your economic status. For example, a graduate student may receive $20,000 a year in scholarship, which would help them get into a lower class, but you have to factor in their future earnings based on the time spent in education. Tuition or student loans can be expensive, but the cost of studying is balanced by higher salaries after graduation, where they can more easily build wealth.
Someone else who grew up in the upper class may go bankrupt for one reason or another, but even though they are temporarily out of income, they can draw on the habits and support of the upper class. They may ignore some of the problems more common in the lower and middle classes, including not being able to pay rent or credit card debt.
While American families in lower-income households are often the first and hardest hit during economic turmoil, things like stock market crashes, recessions, or tariffs affect how much money goes to everyone.
You may be wondering where you fit in with recent and ongoing economic trends, including higher inflation, layoffs, worries about a future recession, and the effects of continued economic volatility. If you’re not sure which US class you belong to, here are markers to look for based on resource generation.