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We’ve started into 2024, but millions of Americans are still reeling from the financial strain of 2022. And perhaps that’s because many of the causes that made the last few years so tough — stubborn inflation, soaring interest rates and supply chain disruptions — are still hanging above our heads.
According to the U.S. Census Bureau, the median annual income for Americans in 2022 was $75,149. How this breaks down in terms of class strata can get complicated: living on $70K in rural Montana is a lot different than in downtown Manhattan.
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Still, the Pew Research Center has done commendable work turning census data into meaningful benchmarks. In an April 2022 report, they found that the median income of middle-class households in 2020 was $90,131 — up 50% from $59,934 in 1970, as measured in 2020 dollars.
Using 2018 figures, Pew defined class-income breakdown in 2020 like this, based on three-person households, adjusted for the cost of living in a metropolitan area:
Lower-income households had incomes less than $48,500;
Upper-income households had incomes greater than $145,500;
Middle-income households fell into a range between those two numbers.
Keep in mind the data is from 2018, but it’s still a great starting point to give you an idea of where you stand — and how much further you have to go before hitting the next rung. Here are a few tips to help speed up that process.
Deal with your debt
Having debt hanging over your head is a burden that can easily prevent you from hitting your savings goals and improving your financial stature.
An online marketplace called Credible* can help you consolidate your debts into one monthly payment with a low interest rate.
Combining your debts into a single loan will help you pay down what you owe faster, and potentially save you hundreds in interest*.
It might also be useful to sit down with a financial adviser to discuss both your current situation and where you’re hoping to head in the future. Finding an adviser that’s a good fit for your specific needs can take a lot of legwork though, especially if you’re doing it on your own.
If you want to get some professional advice on managing your finances, Zoe Financial* can match you with a vetted financial adviser in minutes, based on your answers to a few basic questions.
Read more: This Pennsylvania trio bought a $100K abandoned school and turned it into a 31-unit apartment building — how to invest in real estate without all the heavy lifting
Build a budget
Sizing up your spending and building a budget might seem like a chore, but once you get past the initial shock of learning just how much you spend each month (those delivery fees add up!), the process is actually pretty simple, and it’s extremely important if you want to get ahead.
First, make a list of your short- and long-term goals — things like creating an emergency fund or saving for a vacation.
Next, take a look at your bank statements for the previous month and sort everything into two columns: wants and needs. Needs are things like groceries and rent, wants are things like Netflix and co*cktails. Include your goals in the needs column, so that you’re always putting your savings before your spending.
Finally, compare your list to your monthly net income, and start making adjustments. Prioritize your needs, and see where you can trim some fat from your wants. Any money you can shave off the wants column can go towards your goals in the needs column.
Storing your money in high-interest savings account can be a massive help in reaching your goals sooner. Check out our list of the best savings accounts out there.*
You can also use an app called Acorns* to put your savings on autopilot. Once you’ve installed the app and linked your bank account, the app will round up every purchase you make to the nearest dollar and invest the spare change*. That way, you can work towards your savings goals a few cents at a time without even thinking about it.
Diversify your investments
Investing is a key part of climbing the financial ladder and taking your income to the next level. But following headlines about a blockbuster stock (and experiencing FOMO) has more in common with playing Powerball than building a powerful portfolio. To that end, diversification is crucial.
Commercial real estate has long been a solid choice for investors looking to diversify and add stability to their portfolios. For years, investing in commercial real estate was only an option for the ultra-wealthy — but that’s no longer the case.
With First National Realty Partners*, accredited investors of all levels can invest in grocery-anchored commercial real estate properties and expect quarterly income. FNRP’s team of experts will manage every step of the investing process, so you won’t have to worry about whether you’re making the right moves.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
