Navigation

The Middle Class is Shrinking. Should You Care?

This post may contain affiliate links. Please read my disclosure page for more info.

middle class

Middle class Americans became a focus of national attention last week in the President’s State of the Union (SOTU) address. I don’t know if you watched the SOTU last week but I did (or at least I tuned in for parts of it).

Presidents use SOTU addresses to tell Congress and the American public what their priorities will be for the coming year. Mr. Obama seemed to especially focus on the latter of those two groups in his address last week. Specifically, he used his SOTU address to discuss a number of issues affecting the middle class.

Are You a Member of the Shrinking Middle Class?

 

According to this Yahoo Finance article, and every other economic source on earth, the middle class is shrinking rapidly. Those who consider themselves middle class, according to the article, have dropped down tremendously, as the number of those who consider themselves lower class has risen.

“When President Obama delivered his first State of the Union address in 2009, 53 percent of Americans considered themselves middle class. Six years later, just 44 percent of Americans define themselves that way….The portion of Americans who consider themselves middle class has dropped (as has the portion considering themselves upper class), while the ranks who call themselves lower class have swelled.”

middle class

Mr. Obama painted a rather rosy picture of the American economy last week, saying that we have recovered from the economic downturn of a few years ago. But, ask anyone how they feel about the state of our country and many will tell you it’s not good. There’s no doubt that economically, things are getting worse for Americans, even if the stock market is near all-time highs. The stock market may be happy, but Americans, by and large, are not, as they struggle to make ends meet in the midst of skyrocketing food prices and shrinking job opportunities.

We, as Americans, can vote, hoping that those who promise better things will keep their promises should they get elected, but I think we can all agree that over the decades, politicians from both sides of the aisle, by and large, have proven that they can’t be trusted. That’s not to say that there aren’t politicians with heart who truly want to help people; there are. I’ve seen them, know them, and worked with them in my years involved in local politics.

But one man (or woman) can’t stop a speeding train single-handedly. The political world is a mess, has been a mess for years, and will likely continue to be a mess. You might not be able to change the world, but you can ease your own burden by changing your situation. Here’s how.

Learn to Manage Your Money Properly

 

It’s not what you earn, it’s what you keep, as the old saying goes. Americans are horrible at managing their money. With an average credit card debt load of over $15,000 per person, we’ve proven that by our actions.

A large part of the problem with the shrinking middle class is that they simply don’t manage their money properly – they live in denial about what they spend and how they spend it. I learned this money lesson firsthand when my husband and I went back, for the first time in our lives, and assessed our 2012 spending.

We “thought” we were being frugal. We rarely ate at restaurants, and worked hard – or so we thought – at managing our grocery budget. But the numbers showed otherwise. We were spending MUCH more than we thought on groceries and on trips through the drive-thru or at the snack bar at the local big box store.

If Americans truly want to help themselves, they have to start tracking their spending, making (and sticking to) a budget, and stop spending their money on things that aren’t truly important to them. They need to learn to live by a value-based spending budget instead.

Determine Your Goals and Dreams

 

The way to a better road is to figure out what road you want to be on and then figure out the way to get there. What are your dreams? I’m assuming most people don’t like living in the throes and stresses of the paycheck-to-paycheck lifestyle.

We’ve been there. Some months we’re still there. It sucks, to put it bluntly. It’s stressful, angering, and scary.

If you want to avoid being a victim of the shrinking middle class, then make a plan to change your situation.

Determine your dreams, and the goals that you can achieve that will take you to your dreams, and then just do it. Don’t let anyone tell you “you can’t” because of your situation. There are many people out there who’ve done it. Find them, learn from them, emulate their methods.

Educate Yourself

 

I’ve been reading personal finance books for years – well over a decade. In the last two years, however, my knowledge of personal finance and building wealth has exploded, all with the help of the Internet. This “free” education has changed my life and my family’s life too.

To get that free education on money and wealth, however, you have to choose to turn off the TV and and invest some time in educating yourself. There are tens of thousands of blogs on how to win with money and how to increase your income.

Don’t let success pass you by because you are afraid of it, because you think you can’t achieve it or because you’re unwilling to take the time and make the sacrifices to do what needs to be done to change things. Take control of your life and your dreams and educate yourself on how to achieve them. Then, go for it.

choose to Be Debt Free

 

Yeah, I know: you don’t want to hear it. Most Americans don’t. It’s hard work to become debt free and it’s often a long road to get there. A lot of not eating out, turning the heat down and living on less is involved. It’s called “bucking the system,” my friends. You’ve lived the life of keeping up with the Joneses.

How’s that working for you? Are you happier? Are you more accepted?

Financial security isn’t free. It comes at a price. When you make a decision to take control of your money and work for a better life for yourself, people will turn away, they will shun you, sometimes because they want to pretend they’re stunned by your irresponsible situation, and sometimes because they’re angry that you don’t want to sit in your mess anymore, because it forces them to look at their own mess. Is all of that really going to matter in the long run?

America’s middle class is shrinking. You can go down with the ship, or you can take control of your life and your money and turn your own ship around, steering it toward safer waters and protecting yourself and your family in the process. What will you choose?

 

 

Do you consider yourself middle class? Has life gotten harder or better for you over the last five years? What are you doing to spend less, save more and develop other healthy financial habits? What are some of your go-to personal finance resources?

 

 

Photo courtesy of: Mike Poresky

If you enjoyed this post, please consider subscribing to the RSS feed.
The following two tabs change content below.
Laurie is a wife, mother to 4, and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.

23 Comments

  • “Financial security isn’t free.” Love it!

  • I consider myself middle class, although it depends which measure of income you use. Still, once you have the “middle class” mindset, I think it’s easy to just feel middle class forever.
    I think the middle class would be much better off if they managed their money better, like you said. Almost everyone I know has nicer stuff than I have, yet aren’t necessarily saving for college or retirement, etc. A lot of middle class people don’t even have an emergency fund or save for a rainy day. In a lot of ways, we have ourselves to blame.

    • Laurie says:

      Exactly, Holly. There is so much “you only live once” mentality with the middle class, and I believe that’s where a lot of their money problems stem from.

  • Kathy says:

    One thing that the middle class depends on is jobs and this so-called recovery is being called a jobless recovery. People who had well paying jobs either are working part time, or at a substantially lower wage, or haven’t even begun working again at all. And with Obamacare requiring companies to have healthcare plans for people who are full time, more and more of them are placing their employees in a part time category. The proposal to tax 509 college plans (now scrapped) would have done tremendous harm to the middle class. You are right. The people have to take care of themselves with attention to their money. No one else is truly going to help them.

    • Laurie says:

      So true, Kathy, yet they – or we – keep waiting for someone to come along and help them. But it’s not going to happen, and the sooner they accept that and help themselves, the better.

  • Another thing I’d include is to spend in line with your value. I actively avoid stores like Walmart and support local businesses because of the role they play in this shrinking middle class crisis.

  • The gap between high skill and low skill labor keeps growing with the decline of blue-collar work in the US. As technology keeps increasing, the ability for small numbers of people to create huge amounts of wealth will keep going up.

    Automation will likely have huge affects too. We actually manufacture as much in the US as we ever have, it’s just done with a much much smaller workforce. People who used to work the line at the local widget factory and make a decent salary are now working service jobs. It’s more important than ever to make ourselves as valuable as possible, create multiple income streams, and save.

  • Lauren says:

    I think the economic crisis left so many people feeling defeated. That middle class life that they worked so hard to build just fell away. People need to feel empowered, but it’s hard to do when you’re struggling. One thing is clear- people can’t rely on politicians and policy makers to help them out, they have to do it themselves.

    • Laurie says:

      “They have to do it themselves”. So true, Lauren. There’s no other option for financial stability. No fairy godmothers are going to come along waving their magic wands. Life simply doesn’t work that way.

  • Mrs. Maroon says:

    I definitely consider us to be middle class. But this post has made me question how we define middle class. I would say that is largely depends on income, and also spending habits. What happens in a couple short years when we retire early and no longer have the professional jobs, yet are still living a full life… Does our drop in income put us into the low class category? Does our choice to limit our expenses put us in that category also? I really don’t think so. Which brings us back to the question of how to define class. I don’t have a clear cut answer. Any ideas??

    • Laurie says:

      Interesting question, Mrs. Maroon. I like to not think about classes in terms of income. We have a lower income than most families of our size, yet we are living well because we are learning to manage money well. If and when we’re debt free, living on 40k a year will be a piece of cake for us.

  • We absolutely should care about the shrinking middle class because they are the ones that really grow our economy. I absolutely agree that people must choose to be debt-free. Sadly, many won’t because they don’t want to live within their means or don’t believe they can have an enjoyable life living within their means.

    • Laurie says:

      Exactly, Shannon. The more people that choose not to care and choose not to help themselves, the bigger the burden on the self-sufficient taxpayers will be.

  • Eric says:

    Any chance the notion of a “Declining Middle Class” is simply a self-fulfilling prophecy?

    We hear every day about this phenomenon, but there are nary and good stats to back it up. Yes, the rich get richer, but that’s nothing new and the effect will always get more dramatic due to compounding.I believe that the middle class is as it always was.

    This reminds me of the “road rage” epidemic of the early 2000’s. Media started citing “reports” of the big increase in road rage. How was this increased measured? The increase was based off of the amount of media coverage of road rage. More media coverage of something, the more people think it’s a real thing.

    More robust studies were subsequently performed verifying that road rage incidents haven’t escalated whatsoever since the early 90’s.

    Eric

    • Laurie says:

      Wise comment and I agree, Eric. We cannot let the media or anyone else sway our opinions or decisions. We must take our futures into our own hands, and make decisions based on our own well-being.

  • Jason B says:

    There are so many people who don’t educate themselves about money. It’s sad that more people don’t take advantage of all the free websites out there with knowledge. Turning off the TV takes discipline. In my opinion, the average person doesn’t have it.

    • Laurie says:

      Well said, Jason – well said!!! If more people would turn off the TV,use some of that time to educate themselves and then implement what they’ve learned, think of how much better off Americans would be financially.

  • My huge worry is that so many people are waiting for the government to solve their money problems with more entitlements and tax credits. Depending on anyone other than yourself is a sure fire way to be let down. If the government passes laws that are favorable to my finances, awesome, but that’s not what I’m pinning my hopes on.

  • I think we are considered middle class, although, I don’t really know if that is something that feels good in this day and age. I don’t feel better off than my parents and I have to work harder for less. That being said, once we got our money situation under control, the stress levels definitely reduced, although I still think we work really hard to not get that far.

  • Melissa says:

    I agree with all of your points – we definitely need to be savvier with our money and be careful with debt. I’d like to add that people should actually write to their congressmen/women and encourage them to support policies for the middle class. We can only do so much individually, but as a middle “class”, we can tell those overpaid politicians that they need to listen to us, otherwise we, as a middle class group, will vote them out!

Leave a Reply

Your email address will not be published. Required fields are marked *