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The Middle Class is the Most Expensive

The middle class is the most populous segment of the United States. It’s also the most expensive. A common perspective among the middle class is that they don’t quite earn enough to afford their standard of living, but they earn just enough not to qualify for financial assistance. The result is often paycheck-to-paycheck lifestyles, mounting debt, and aspirations becoming more elusive, all of which lead to interest costs, fees, and subpar products.


What is the Middle Class?

Most Americans consider themselves middle class, despite earning a wide range of incomes. Some might earn $30,000 per year, while others earn $200,000 per year. Yet both are considered middle class. This is because the middle class is not defined by income, but rather by goals. The Department of Commerce says, “Middle class families are defined by their aspirations more than their income. We assume that middle class families aspire to home ownership, a car, college education for their children, health and retirement security, and occasional family vacations.”


The Most Expensive Class

It seems natural to expect the wealthy class to be the most expensive. Wealthy people can afford more expensive luxuries, therefore their lifestyle must be more expensive. But wealthy people can also afford to make on-time payments and avoid late fees. They can borrow money at lower interest rates and pay more upfront for lower overall costs. This means it is not the most expensive way to live.

On the opposite end of the spectrum, the lower income class is also not the most expensive. This is because most often these families and individuals qualify for financial assistance. The problem is, in order to continue getting help, they must remain in poverty. The challenge for them is breaking into the middle class–the most expensive class–and managing on their own without help. And the challenge for the middle class is not just being able to make ends meet. It’s making ends meet while aspiring to the traditional goals of the middle class such as homeownership and higher education.


Homeownership is one of the main aspirations of the middle class. But the cost of homeownership is increasing faster than income, making this dream more and more elusive. The OECD says, “House prices have been growing three times faster than household median income over the last two decades. Housing is more than just a standard consumption good: in many countries, being middle class is traditionally associated with owning a home, so soaring house prices have touched on the very meaning of being part of the middle class.” The result is that middle class families must rent long-term instead of buying. This reduces the amount of time they can build equity, and further increases the price of homes over time. Time Magazine points out, “Today, a family in the U.S. making the median household income would need to pay six times that income to buy a median-price house. In 1980, they would have needed to pay double.” 

Credit and Fees

Typically, middle class income earners have lower credit scores than those of the higher income class. Wealthy people can afford to make on-time payments, have a mixture of credit, and so on to increase their credit scores. This means those in the middle class don’t qualify for premium interest rates and end up paying more for the debt they do take on. Furthermore, it’s common for those in the middle class to miss a payment. This accumulates late fees in addition to compounding interest. 

In his book, The Super Duper Simple Book on Money, Alan Akina says, “Life in the middle class costs more than being rich! Americans have this understanding that if we work hard enough, we will eventually break out of the debt cycle. So I worked and I worked and I worked. Yet, no matter how hard I pushed, I was still stuck with higher interest rates on credit cards; I constantly got hit with infuriating bank overdraft fees; and I had to deal with weeks of check holding at banks. And on and on and on. Sadly, these types of expenses are the institutional shackles that come along with being part of middle class America – shackles that the financially educated are able to avoid.”

Food and Household Necessities 

Food and household necessities are often more expensive in the middle class. This is particularly true for those who cannot afford to buy in bulk. Costco is popular within the middle class, but only for those who can afford to pay more upfront. It costs more to buy in bulk, but less per unit. Those who cannot afford the higher upfront costs of buying in bulk end up paying more per unit. 

Additionally, inflation affects the middle class more than higher income earners. This is because a greater percentage of their income goes toward essentials. The OECD says, “The rising expenditure on housing and other goods and services reduces the ability to save and squeezes the finances of middle-income households. Today, more than one-in-five middle-income households spend more than they earn which bears a risk of overindebtedness for many of them. Over-indebtedness is higher for middle-income than for both low-income and high-income households.” And with inflation outpacing increases in income, it’s becoming more and more difficult to keep up with household expenses. According to The Manhattan Institute, in 1980, it cost the median family breadwinner 30 weeks of wages to pay for one year of basic necessities. These include a home, health insurance, one semester of college, and a vehicle. It now costs 53 weeks of wages. This makes it impossible to keep up. It costs more than one year of wages to pay for one year of basic necessities, and that doesn’t include additional household needs.

Subpar Quality

Similarly, households in the higher income class can afford to pay for higher quality upfront. This practice costs less in the long run because they do not pay for repairs and replacements that are necessary with low-quality products. The Theory of Boots illustrates this concept:

“The reason that the rich were so rich…was because they managed to spend less money. Take boots, for example. He earned $38 a month plus allowances. A really good pair of leather boots cost $50. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about $10. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. But the thing was that good boots lasted for years and years. A man who could afford $50 had a pair of boots that’d still be keeping his feet dry in 10 years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”


What You Can Do

As part of the middle class, the most important thing you can do is obtain financial education. Whether your goal is to live a more comfortable middle-class lifestyle or to make your way out of the middle class and build wealth, financial education is the only way to get there. 

Financial education helps you break free of the paycheck-to-paycheck lifestyle without necessarily having to earn more income. Instead, it teaches you how to use the income you do have more effectively. It helps you avoid interest costs and late fees. And it prepares you financially for the unexpected. Instead of relying on unfavorable financial options to get out of a tough situation, you can take control.

Through education, you gain control of your financial life. Learn how to manage your budget, take advantage of financial tools, pay off debt, and increase your credit score. With financial education, debt can be a tool instead of a burden. 



The middle class might be the most expensive, but the good news is not everyone in the middle class has to pay that price. Most of the costs associated with the middle class come from poor financial health. Many of those costs can be avoided, such as late payment fees. Individuals and families within the middle class who are financially educated know how to take advantage of debt. They have higher credit scores and therefore optimal interest rates. And most importantly, they don’t have to live paycheck-to-paycheck. This means they are financially stable and feel less financial stress.

Find out how 101 Financial’s Workplace Wellness program helps middle class families take advantage of their money and live with less financial stress.