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Which Income Class Are You In? How Do You Rank?

“The other people that live on this lake aren’t uber-wealthy are they? No, they’re middle-class, right?….Like us!” …said one of our friends that earns over $200,000 a year….

I literally had to bite my lip to keep from entering the conversation.

Middle-class like you? You really think you’re middle class? In what fairy-tale world do you live where $200,000 a year is considered middle-class?

Instead of blurting out my brash comments, I decided to suppress them, do some research, and then plaster my findings passively all over this website! Lol.

Which Income Class Are You In?

While I was delving into the details of the income classes, I naturally grew curious around where Liz and I landed on the income spectrum, and then where we might land in the future with our growing rental empire (which at this moment is an “empire” of one… ;)). So of course if I’m curious, I figured that all you readers would be curious as well! So let’s dig in!

Income Class

What Are the Income Classes?

So what are the names of the different income classes? And what are the ranges of earnings within each class?

According to, there are five main income classes:

1) The Upper class

The “upper class” basically means the upper 1% of America. To gain a place in this income class, you need to earn at least $389,436 a year. On average, the upper 1% earns $1.2 million each year.

2) The Upper-Middle class

According to the Census Bureau, 6.1% of households earn $200,000 or more and 14.1% bring in $100,000 to $200,000 a year. This is the upper middle class.

3) The Middle-Middle class

The great majority of people land here, with an income of between $35,000 to $100,000. Of everyone in the United States, 41.5% can honestly say that they are part of the middle-class.

4) The Lower-Middle class

This class earns between $18,871 and $47,100. They straddle the lower-line of poverty and the upper edge of the middle middle class. They’re not technically poor, but they’re dang close…

5) The Poverty Level

The lowest income class is comprised of those that don’t earn enough to meet their basic needs (food, shelter, and clothing). Earning less than $18,871 is an unbelievable 14% of the U.S.

What Does the Top 1% Do?

In 2012, The New York Times came out with an amazing heat-map that showed what people did to earn their way into the Top 1% earners in America. Check it out (and click on it if you want to see more detail).

income class

According to this amazing piece of research, the majority of people that earn more than $389,436 simply call themselves “managers”, but they’re not just any run-of-the mill manager (don’t let them fool you). They’ve worked their way through the ranks of high-earning professions – like brokers and investment professionals – and now manage a team of high-earners, which is why they earn so much money themselves.

The other top earners are just what you would expect:

  • Physicians
  • Lawyers
  • Chief Executives
  • Dentists
  • and Financial Specialists

For the most part, these 1%ers have worked their butts off. They’ve spent 8+ years of their adult lives going through school and have paid out hundreds of thousands of dollars to gain the knowledge and earn the right to their high income.

It definitely isn’t for everyone, and for those that make it, more power to them.

Our Friends…and Us

Our friends…the ones that bank $200,000…are in the upper echelons of the upper-middle class and are nowhere near the stats of the true middle class. I’m not mad at them. I think it’s awesome that they earn such a great income. I just wish they understood how rare their income actually is, and to stop relating themselves to people that earn $150,000 less than they do. Put it into perspective, people!!

Liz and I – we’re true middle-middle classers. We earn more than $35,000, but less than $100,000. We don’t make a ton, but we manage our money extremely well, and we’re growing wealthy because of it.

Our motto has been simple:

How to Jump Up to a Higher Class….and Should You?

Will Liz and I always be part of the middle-middle class?

I doubt it.

Even though Liz stays at home with our daughter and technically doesn’t earn an income, we still have plans to earn more in our future. I’ll probably earn some advancements at work, we plan to continue buying rental properties with cash, and we’re continuing to invest heavily into my company 401k.

In the next five years, I wouldn’t be surprised if we worked out way out of the middle-middle class and into the upper-middle class.

“So how the heck do you do that? How can you jump into a higher income class? I thought it was impossible for the little man to get ahead?”

Well that’s absolute B.S.

We live in the United States – the land of opportunity. Every single individual has the ability to do more, earn more, and become as wealthy as they can imagine. And actually, I already shared the secret with you, but here it is again in case you missed it:

  • Get out of debt,
  • live on less,
  • and invest heavily for your future

That’s it.

It’s basic, simple, and it isn’t sexy at all, but it!

If you want to move up an income class, do everything you can to ditch your debts, live on far less than you earn, and then do everything you can in raise your income – via your job and through any investments that you make.

My favorite investments that will propel you into a higher income are:

  • investing in real estate (with cash)
  • starting your own business (mowing lawns, tutoring, fixing cars, it doesn’t matter)
  • investing in yourself (to earn a degree that will increase your earning potential)


Should You Work Toward a Higher Income?

Back in 2012, Princeton found that the perfect household income for happiness was $75,000. So logic says that if you earn less, then yes, you should work toward a higher income. If you earn more, then don’t worry about it. But life isn’t quite that simple….is it?

Here’s what I go by:

  • If you have a constant want for more stuff and more money, then no. You’re selfish and more money will never make you happy no matter if it’s an extra $500 or $500,000. Instead of working toward a higher income, you should work toward a contentment of self.
  • If you love your life and are interested in helping others, then yes, you should work toward a higher income. The more you earn, the more consideration you’ll put into how you should spend it. It’s people like you that should earn more money because you’ll do the most good in the world by having it.

Income Classes and Your Earnings – What’s Next?

You earn a certain income. You land in a certain income class. Be honest, are you in the appropriate income class for you? If not, work your butt off to get out of debt, live on little, and then invest heavily to propel your future income upward.

What income class are you in? And where will you be in the future?

Battle of the Mind Get Out of Debt Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Right now we are just pushing the top of the middle-middle. We got the bump up to the top of that after my wife got her job. She stayed home with our son for the first year and then decided to go back.

    I wouldn’t be surprised if we just barely scraped into the upper middle in the next year or two. We won’t this year since my wife and i are both taking FMLA for our latest child.

    • Great job BOAS! Getting into the upper-middle class is a big deal! Just be sure not to pay too much for daycare!

        • Haha. Thankfully I don’t know the numbers first hand, but I hear plenty of the horrific numbers from my co-worker moms… :-/

  2. We are upper middle. But what is great for us is that all our income is passive. As retired people we get a pension and social security, but nearly the same amount is from investment income. It is so nice to know the money is coming in even when we sleep.

    • Yeah, that is definitely awesome when the income is passive! We’ll get there, but we certainly aren’t there yet! Thanks for sharing, Kathy!

  3. I’m always curious about the different income classes too and where I fall in relation to other people. I love all the information you provide – the different classes and the different jobs they have. It’s interesting to see that it’s earnings that put people into the different categories. There are people that are wealthy with a high net worth that may not be earning much anymore. Are these people considered upper class or poverty (since they may “earn” less than $18,000) or just somewhere in between?

    • Great question, Jen. The income of the high net worth individuals comes to them via passive income. In other words, let’s say they have $2 million and then withdraw 5% of their earnings each year. Their income is $100,000 – still in the upper-middle class.

  4. I’m almost to the upper-middle class. Last year, I had income of $93k including my rental income. This year, I’m going to be very close to 6 figures, but should be able to cross that barrier. If I change jobs or my business takes off, I’ll definitely be there.

    • Sounds like you’re on the right track, Erik. Just make sure that you don’t get money hungry along the way! Thanks for the comment!

  5. We are in the upper-middle class as well. While we don’t earn a ton compared to others, we have set our priorities to save a lot of money. As a result, we could both start working part time if we really wanted to. Fun article :-).

    • Sounds like the common theme of most of our readers – just into the upper-middle class. I love your priority of saving a ton of money. You won’t regret it when you’ll be able to dial back on work whenever you want!

  6. honestly surprised i didn’t see software engineers on that list. Been fortunate enough to be in the upper class for the past few tax seasons…but being an entrepreneur…we can easily drop down a couple ranks. your 3 tips to propel you into the next income bracket is pretty spot on.

    – finished mba in 2011
    – started business in 2009
    – purchased first investment property 2016

    would be where i am today without the latter 2 at least. first one is debatable hah. anyway, i really enjoy your blog. long time reader. first time poster. 🙂

    • Great to hear from you Oliver! I’m always honored to have so many readers and I can never get enough of the comments!

      We purchased our first investment property in 2015 and plan to buy another one toward the end of this year. These real estate investments will play a huge part in our future retirement.

  7. So I am really curious why you recommend paying cash for your real estate investments? I think you are missing the boat by not leveraging other peoples money, especially with interest rates so low?

    • Hi Greg. Great question, and I’m glad you asked it!

      If you want to read the long version, I contributed a guest post to MoneySmartGuides earlier this year that sums it all up: .

      If not, here’s the short version:
      – I don’t pay any interest (even though the interest is low, it still makes a difference, often tens of thousands of dollars)
      – the administrative challenges are much less (since I only have to answer to me, and not the bank)
      – I purchased the house without an appraisal (savings of $350)
      – I saved thousands on closing costs because the bank didn’t need to get involved (can you believe a house closing can cost less than $600??)
      – I wasn’t pressured to find a tenant immediately. Without a mortgage, I took an extra money and found the right tenant. Landlording has been smooth sailing ever since.
      – Decreased risk – sure, I’ll earn less money by owning just one rental property vs. 3 or 4, but what’s the risk that I lose this house back to the bank? Virtually zero. I could lose my job and have the renters leave and I’d still be fine. If I had my personal residence mortgaged and 4 rental houses mortgaged, I’d be in trouble in about 10 days. This is NOT a position that I want to put myself in.

      Hope that helps, Greg. Maybe it’s about time that I write another article about cash investments! 🙂

  8. Hi Derek,
    You have classified various classes of people through their incomes. But wonderfully that reflected like: The top class people are those with professional careers like Doctors, Lawyers, Chief executives and all I hope all the poverty class people are not educated and other employees and all fall under middle classes.

    I just wanna tell a point is that, always an entrepreneur lies in the top class and employee lies in the middle classes.

    • Hi Durga,

      Entrepreneurs can definitely be at the top of the income class, but they can also be at the bottom. It all depends on the level of success of their idea and their hard work.

  9. Combined, my fiancé and I would fall into upper middle class…but we live like we fit into higher reaches of the lower middle class.

    We bought the cheapest house in the nicest neighborhood and fixed it up. We drive cars that are older than most teenagers are driving to school.

    Work, save, invest, repeat.
    We’re not working on becoming rich. We are working on buying out freedom.

    • Well said, Brett. We started out this way too. Eventually, we landed in a house on 6 acres that we love. It’s not scrimping like we used to, but we still own it outright and earn far more than we spend.

      Starting your life like you are allow for those choices. Go the other direction and spend everything you earn and you will have very few choices in life. Instead, life will decide your fate for you (since you have no monetary leverage in the situation). Good choice, Brett. You won’t regret your current decisions.

      Thanks for reading!! — Derek

  10. Just because you make a certain amount, the amount of taxes one pays can bump you right down, making $100,000 and paying out over $30,000 of that in fed/state taxes, property taxes, etc , bumps you down to $70K and then don’t get me started on the $18K paid out for that health insurance that must be bought through the ACA because of pre-existing conditions. That income gets eaten up pretty quick, almost half is just taxes and insurance. Sure we have $50K left to live on which is okay for us, married couple in our fifties, but just wanted to say how fast that income goes to things we really don’t have much control over. Also, not everyone can shield income in 401Ks and Roths, and HSAs either. I am not complaining with a 50K income to spend, it’s very good for us because we are in no debt, just showing how much of the income we make comes off the top before the net spendable. (yes, I do understand net worth, but some things must not be liquidated to make that income.) Sorry if I went off topic about the classes, but I think sometimes being in a certain class can be deceiving when considering all the costs in having higher incomes.

    • Hey, $100k minus all that stuff is better than $50k minus all that stuff! Sometimes the deductions are a given, so it’s best to just earn more!

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