While the exact threshold fluctuates based on factors such as local cost of living and inflation, those in the upper middle class typically have an estimated household income of $150,000 to $250,000. This income level is much higher than what the average American makes. According to U.S. Census data, the real median household income was $74,580 in 2022.
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However, with their above-average earnings, do upper-middle-class professionals manage their finances differently or are they also living paycheck to paycheck like nearly 50% of Americans? Let’s get a first-person perspective.
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“Even though I make $250,000 annually, I still find it’s best to keep things simple. I don’t go for fancy financial schemes. It’s all about knowing what’s coming in, what’s going out, and making sure there’s always enough tucked away for a rainy day,” said Bryan Clayton, CEO of GreenPal.
Here’s what his finances look like:
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Investment Strategies: “Here’s my go-to move: buy a single-family investment property each year, aggressively pay down the debt, rent it out and repeat. No overthinking, no jumping from one strategy to another. Consistency is key,” said Clayton. Of course, buying a single-family investment property may not be doable for everyone, but you can still adapt Clayton’s philosophy to your own circumstances and establish a routine that aligns with your financial capacity and investment goals. This might involve regularly setting aside a portion of your income for investment purposes, whether it’s in real estate, stocks or other avenues.
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Monthly Budget and Savings: “My monthly budget is pretty disciplined. I’m not one to splurge on unnecessary stuff. Most of my income goes into savings and investments. It’s all about building that long-term wealth, not just living it up today,” he explained. So, despite making well above the national median wage, Clayton doesn’t overspend. Instead, his financial philosophy revolves around maintaining a disciplined monthly budget and avoiding unnecessary costs.
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Financial Challenges: “One challenge I experience as someone in the upper middle class is not getting caught up in lifestyle inflation,” admitted Clayton. Lifestyle inflation, also known as lifestyle creep, refers to the gradual increase in a person’s spending and lifestyle as their income rises. What has helped Clayton navigate this challenge is staying grounded. “I try to remember my roots and focus on growing my wealth, not just showing it off,” he said.
