Middle Class Savings: An Oxymoron?

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Middle Class Savings - An Oxymoron?Now that I have decided to start disciplining myself to save money, I’m confronted with a problem. See if you can help me with it. Is the phrase “middle class savings” an oxymoron? Or how about this: can you even have a middle class without savings?

If we in the middle class can’t afford savings doesn’t that kind of make us…not really middle class?

Indeed, to answer that question, we first have to define who, exactly, is the middle class. We talk a lot, and hear a lot, about the middle class, but it’s a phrase that’s thrown around without much definition for most of us.

Candidate Obama proposed that the middle class was anyone making less than $250,000. That was his proposal for cutting off the Bush tax cut extension. Six months later, some Democrats started talking about $500,000 as the upper limit for the middle class. A couple of people even proposed $1 million.

As Virgo Man would say, those people need to put down the crack pipes and get real. Who ever heard of a millionaire middle class household? Not me.

While pondering this question, I ran across CBS money blogger Carla Fried’s assertion that middle class means something around $50,000. That was the median household income in 2009. To refresh you on your middle school math, the median is the point where half of the household incomes are below and half are above – the very definition of “middle.”

But here’s the strange thing. Apparently, “middle class” is a state of mind, more than a statistical definition, for at least some people who think of themselves as middle class. I say that because Fried also reports a survey where 40% of Americans with incomes less than $20,000 considered themselves middle class.

Objectively speaking, I don’t think there’s any question that $20,000 is below middle class. If the median is $50,000, then it’s significantly below middle class. Still, quite a few people in that income range think of themselves as middle class.

That just goes to demonstrate that belonging to the middle class is aspirational. No one wants to be poor. Everyone aspires to the middle class (or even beyond). If the money isn’t there to prove middle class membership, then maybe the perceptions are: a steady job (even if it only pays $9 an hour), a roof over one’s head (rented), and food on the table (20 Chicken McNuggets for $4).

Then we have Don Peck, author of the series Can the Middle Class be Saved? which ran in the September 2011 issue of Atlantic Monthly. He quotes a Citigroup analytical report as saying there are only two distinct classes in America today: the rich, and the rest. The report suggests that only the rich matter for Citigroup’s purposes, because that’s where all the disposable income is. For full impact, let me give you the whole paragraph where Peck summarizes the report.

In fact, they said, America was composed of two distinct groups: the rich and the rest. And for the purposes of investment decisions, the second group didn’t matter; tracking its spending habits or worrying over its savings rate was a waste of time. All the action in the American economy was at the top: the richest 1 percent of households earned as much each year as the bottom 60 percent put together; they possessed as much wealth as the bottom 90 percent; and with each passing year, a greater share of the nation’s treasure was flowing through their hands and into their pockets. It was this segment of the population, almost exclusively, that held the key to future growth and future returns.

By now, this is not news. We all know that 99% of the wealth is concentrated in 1% of the individuals. Still, doesn’t it shock you  to hear it coming from a financial institution? It shocks me. I hope I never get over being shocked, because if I do, that means I’m starting to accept it – like a broken tooth that I could get fixed, but why bother? I’m used to it now.

When business starts thinking the middle class is inconsequential, we’ve got problems. Just ask Marie Antoinette, who got her head chopped off for thinking the people she ruled were inconsequential.

But I digress. Let me return to the bottom line.

I propose that one definition of the middle class is enough income to afford savings.

That means the basic needs are met: there’s a roof overhead, a steady job with reasonable pay, a readily available, safe, and affordable food supply. You can get a decent,  affordable, relevant education for your children, and affordable health care is easily within reach. Leisure time is not a luxury, not demonized,  and is available to balance out the demands of work. The average citizen can drive down a road without hitting a pothole and bending the drive shaft. Civic life is both rich and civil, not constrained or violent.

And, after all that, there’s a little money left over to save. You can save up to buy a reasonably priced house in a reasonably safe neighborhood. You can save up for a trip to the Bahamas. You can save up to send your daughter to Harvard. You can save up for your retirement. Sure, you may have to trade some things off to maximize your savings, but the bottom line is: it’s possible to save. You have the choice to save. To me, it’s not the middle class without that.

Statistically, I am not presently in the middle class. Aspirationally, I am – but barely. Savings-wise, we’ll see how the  month goes.

How about you, World of Dreamers? What does it mean to be in (or out of) the great middle class? Leave a comment below.


  • Heather Montgomery, Product Launch Dreams

    After major life events – like layoffs, a recession, and business changes – everything financial gets re-evaluated.

    Do I wish vacations and savings were still something we could still swing? Sure. Do I miss the days of crazily spending money just because we could? Nope.

    I love what Cath said about it not changing the value of the people we love. You got that right!

    – Heather

  • I actually don’t think about it — at all.

    When I moved from the bungalow in the country and got divorced, I decided that I could make a magical home wherever we lived — even if I lived in a car. My son, Brian and I moved into this very tiny place and I set about making it like a magical cottage and I planted a garden like the one I envisioned when reading Brian the book, The Secret Garden.

    I bought seeds and started my plants in old glasses I bought at garage sales. Brian helped me and each plant was transplanted to a special place in the garden based on what Brian imagined the garden to be. He was 5 and rich with imagination.

    I found inexpensive pictures of all the places we wanted to travel on our magic carpet and sprayed all the frames gold to represent the opulence seen in the castles of Europe. I hung these on the walls. I took pictures of all of our family and friends and created gold frames from old beat-up on sale frames from Ross department store to show him we were rich in love. They surround us everyday.

    I painted the walls yellow for happiness and painted the cupboards white to look like a french cottage. As family and friends saw my cottage taking shape, they gave me furniture that matched the theme.

    We’d have events like “Italy night” where I’d make home-made lasagna and we’d play Italian music and look at maps of the places we’d go see in Italy. We’d dance around our living room. All his friends always wanted to stay the night at our house. I rented strange foreign children’s films and cartoons — they ate it up.

    I just wanted my time spent with him to be special because I knew someday this would all be over. He doesn’t remember what I’ve bought him — he remembers all the magical moments.

    When he was two I had just completed my divorce. The following December was the roughest Christmas I ever had. When I put him to bed I cried because I wasn’t able to buy him all that plastic kid crap he saw on television. After I dried my tears, I went to pull a blanket down from my closet and noticed a box from my wedding. Inside were all the leftover gold and hunter green unused Mylar balloons from my wedding reception decorations. I stayed up until 4 in the morning blowing up these over-sized Mylar balloons so they filled the floor of the living room up to about 3 feet high and went to bed.

    I never heard a child squeal so loud with joy as when he came out into the living room that morning. He couldn’t care less about our little Charlie Brown tree and his small gifts. I couldn’t get him to stop playing with the balloons. I had also hung the outdoor Christmas lights inside the house. I left them up for years and we’d turn them on at night whenever he was having a bad day.

    I guess what I am saying here is that I think if you approach everything form a place of love and happiness the universe takes care of itself. I’ve been both rich and poor through this financial firestorm of the 90’s and the 2000’s but none of it could change the value on the people I love.

    Now if you ask my son if we have ever been poor and he will tell you no. And he is serious. Every morning people in the neighborhood walk through our complex to see my gardens that have grown up around us over the years. Imagine all the joy those plants have brought strangers … how do you put a value on that?

    I just continue to get up every day and do my best. Some days are better than others. But I am alive and so is my son and that is worth millions.


  • Remy

    This post left me very sad. but I was already sad, so I guess now the idea of aspiring to think rich is the next step! xo Your posts inspire me – thanks…We’re gonna make it!