Budgeting Tips To Stretch Your Middle-Class Income

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What does it mean to be middle class, and who falls within these socioeconomic brackets? This is, strangely enough, a complicated question with no easy answer — even for economists.

Find Out: How To Know If You’re Truly Middle Class (Hint: It’s More Than Just Your Income)
Explore: Here’s How Much You Need To Earn To Be ‘Rich’ in 23 Major Countries Around the World

With the median U.S. family income being about $80,000 a year, a household of four bringing in anywhere from $52,000 to $175,000 a year is considered middle class. That’s a terribly broad range, indicating that perhaps the middle class is better defined by aspects other than strictly income, such as mortgage status, debt, location and so on.

A quicker, easier way to understand who the middle class is, is to loosely define this cohort as “Americans who aren’t in the lower class or upper class socioeconomically,” said Katie Roberts, consumer analyst with DealNews.com. “You’ll see varying definitions for the term among economists and sociologists, though.”

See: States Where It’s Easiest To Go From Middle Class to Upper Class

Make Your Money Work for You

Roberts pointed out that according to the Pew Research Center, 52% of U.S. adults were a part of middle-income households in 2018, while 29% lived in lower-income households and 19% were a part of upper-income households.

“So you’re looking at about half of Americans that are middle class,” Roberts said.

Surely the issue is more complex, but let’s just say that half of Americans are middle class. How can this majority group best budget on their (wildly fluctuating) income?

“Budgeting on a middle-class income can certainly be challenging,” Roberts said. “If you reside in a high-cost-of-living area, are dealing with significant amounts of debt, or are paying a lot for medical care, that can make budgeting and saving more difficult, but perhaps more important. And there are always steps people can take to put themselves on better financial footing.”

Billionaires vs. Middle-Class America: Who Pays More in Taxes?

Roberts shared several key ways in which middle-class folks can successfully budget.

Set Aside a Specific Percentage To Spend On Wants vs. Needs

“This approach could be helpful for folks who have money to spend on entertainment, restaurant meals, and the like, but maybe not a lot extra,” Roberts said. “The 50/30/20 rule is one budgeting strategy that utilizes these percentages.”

Make Your Money Work for You

Assess Your Spending Habits

“Maybe you’re paying for a streaming service you never watch, or spending a lot more on groceries than you thought you were,” Roberts said. “Track your spending habits for a month or two and see exactly where your money is going, and then decide if there are any expenses you can cut out or allocate elsewhere. Budgeting apps can help you track your spending, as can looking at your credit card statements.”

You can go the extra mile and keep a spreadsheet of everything you spend money on so that you capture each and every purchase.

Try: 50 Easy Things You Should Do To Save Money

Prioritize What You Want To Spend Your Money On

“If you decide to take a vacation, figure out what elements are most important to you to spend money on, and how you can save on the rest,” Roberts said. “Maybe you want to splurge on tickets for a Broadway show when you’re in New York, but decide to book a hotel outside of the city to save money.”

Time Your Purchases

“Most of us need to buy clothes from time to time, or spend money on a new vehicle,” Roberts said. “But when you buy matters. Maybe purchase clothes during holiday weekends when there are lots of sales, or save your car purchase until the end of the month or year, when you might be able to get better discounts. Never assume you have to pay full price! Our monthly buying guides are a great way to learn when you can save the most on different items.”

Additionally, if the 50/30/20 rule isn’t for you, consider another of these budgeting tactics:

Zero-based budgeting: Allocate every dime of your income so that your income minus your expenses adds up to zero. With this method, every dollar you earn has a purpose.

The Envelope method: Made famous by Dave Ramsey, the envelope method is one of the more tangible savings tactics. You literally stash cash in envelopes to segment your spending. So, you’d have an envelope for groceries, gas and so on. Once the money in the designated envelope is gone, so is your opportunity to spend it.

Flexible budgeting: When practicing this one, you reallocate your income and expenses as they change. Basically, you’re giving yourself breathing room and capacity for adjustments on an ongoing basis. It’s a more relaxed style, but you should only do this if you have the time to really micromanage yourself, as well as the discipline to not slack and not lie to yourself.

Static budgeting: This is probably as simple and as middle class as it gets. Your budget stays the same even if your income increases. This way when you get a raise, nothing changes and you can allocate the difference into savings or your retirement fund.

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Last updated: Oct. 28, 2021 

About the Author

Nicole Spector is a writer, editor, and author based in Los Angeles by way of Brooklyn. Her work has appeared in Vogue, the Atlantic, Vice, and The New Yorker. She's a frequent contributor to NBC News and Publishers Weekly. Her 2013 debut novel, "Fifty Shades of Dorian Gray" received laudatory blurbs from the likes of Fred Armisen and Ken Kalfus, and was published in the US, UK, France, and Russia — though nobody knows whatever happened with the Russian edition! She has an affinity for Twitter.

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