The Middle Class Has Been Divided Into 5 Categories — And The One You’re In Determines How Much Money You Need To Live

Being middle class doesn't mean what it used to.

Middle-class couple stressed about finances Cast Of Thousands / Shutterstock

In 2018, 52% of adults in the U.S. defined themselves as part of the middle class, meaning that they made between $48,500 and $145,500. As years have passed, the indicators of what makes someone middle class have changed dramatically, and it all comes down to two things: housing and childcare.

Here are the 5 categories of the middle class that determine how much money you need to live:

1. People who bought a home before 2020

Content creator Freddie Smith posts news and critiques covering the U.S. economy and social trends. He maintains that the five categories of the middle class are based on when you bought your home and if you pay for childcare.


Housing and Daycare has the middle class divided

♬ original sound - Freddie Smith

People who bought their homes before 2020 have an interest rate under 4%. “Their mortgage out the door is around $1500,” Smith said before breaking down how having kids changes the economic equation.


“Let’s say they have no kids or their kids are in junior high, so they have no daycare. Their housing and daycare bill is $1500 a month,” Smith noted, which is a fairly affordable cost of living.

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2. People who bought a home before 2020 and pay for daycare

Smith explained that the second group of middle-class people is defined by two things: They also bought homes before 2020, have interest rates under 4%, and mortgage costs around $1500, but they also have kids in daycare, which changes their economic standing.

The cost of education for the toddler set has become as expensive as college tuition, a fact that leads parents and anyone who cares about future generations to wonder why the government hasn’t stepped in to subsidize the cost of something so essential.


This middle-class sector has daycare costs of $2500, Smith explained, “So, they’re now spending $4,000 just on housing and daycare” each month.


100k Salary is the new middle class

♬ original sound - Freddie Smith

3. Millennials with high interest rates

According to Smith’s math, this group of people bought homes with interest rates ranging from 6% to 8%, and their mortgage is $4,000 a month. They don’t have kids yet, so they’re not paying childcare costs, yet Smith noted many are waiting to see if they can even afford to become parents.

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4. People who aren’t buying property

These people haven’t bought property and don’t plan to do so. They pay $2500 a month in rent and have daycare costs that come out to $2500 a month, too.

“That’s $5,000 a month for rent and daycare,” Smith explained. “And you wonder why that group’s saying, ‘How do I save for a down payment.’”

Happy couple holding their son - Yuri A / Shutterstock


5. People with 7% interest rates and daycare costs

This section of the middle class is hard hit by everyday costs, Smith said.

“Their payment is $4000 a month, plus daycare for $2500 a month,” he explained. “So, just on housing and daycare is $6500 a month.”

“This family would have to make $100,000 basically just for housing and daycare,” Smith stated, getting down to the crux of his argument. “You can see why those people are saying, ‘$150,000 is the new middle class."


Millennials and Gen Z 150k is the new middle class

♬ original sound - Freddie Smith

He noted the structural differences between each group, describing how the first group of middle-class homeowners “Are crushing it off $80,000 a year,” which creates a distinct sense of dissonance between economic classes.


“This is probably the first time in history where when you bought a house and if you have children or not is making a huge difference in where you sit in the middle class,” Smith concluded.

All people, no matter what their income is, should be able to etch out the future they want for themselves. The fact that this generation's life decisions depend so deeply on how much money they make is more bitter than sweet. It’s no wonder so many young adults feel disillusioned with their options and unsure of their future.

Yet the more transparency we model and the more we talk about how economically strapped we feel, the more likely we are to come together to demand the future we want and deserve. 


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Alexandra Blogier is a writer on YourTango's news and entertainment team. She covers social issues, pop culture, and all things to do with the entertainment industry.