Yesterday I came across a Tweet from The 76K Project asking about “middle class income” in “cold hard numbers”:
All, I’m working on a blog post about why it’s important to share our salary numbers if and when we can. Help me out: in terms of cold hard numbers, what does “middle class income” mean to you? (I may share your response on the blog so if you don’t want me to, lmk).
— The 76K Project (@The76KProject) July 19, 2018
My first thought was that this sounds like an exciting article and I hope to read it when it is completed.
However, that quickly changed to, “I don’t think this is going to go well.” My response:
As some have noted, costs of living are so regional that I try to avoid using any hard numbers.
It's almost like trying to choose a middle calorie consumption for a mammal. Tell me if we are talking about a raccoon or an elephant and maybe we can come up with something.
— LazyManAndMoney (@LazyManAndMoney) July 19, 2018
(I’m 95% sure I’m done quoting the Twitter conversation and can get back to the point.)
The point was that trying to find a middle definition of a wide variety is not very useful. I’m sure there are statistical ways of determining the average weight and caloric intake of mammals, but you’ll always be stuck with a disclaimer of “YMMV” (Your Mileage May Vary). Even if we narrow it down to adult humans, we quickly realize that the range is pretty wide.
The more information we have about a person, the better we can tailor the answer. However, for someone writing a general audience, we’re forever doomed with writing in abstract terms and hoping the reader can personalize the information on their own.
Here’s a personal example on how even when income doesn’t change much, it can feel very different.
I haven’t lived all over the United States, but during the years of publishing this blog (12 years), I’ve lived in Metro-West Boston, Silicon Valley, and Newport, Rhode Island. I looked up the median household income for all three places and it was generally $68K, $135K and $68K, respectively. I also did some searching and found that the cost of living index for the three places (rounded slightly) are 140, 325, and 140. (Source: Sperling’s Best Places)
Here’s a table:
| Location | Median Income | Cost of Living Index |
|---|---|---|
| Metro-West Boston | $68,000 | 140 |
| Silicon Valley | $135,000 | 325 |
| Newport County, RI | $68,000 | 140 |
The Metro-West Boston and Newport County areas are the same. I didn’t plan it that way. A better, less personal, statistical analysis would be to compare places all over the country.
The interesting thing is that our income hasn’t changed that much over 12 years. My wife has gotten some promotions over the last ten years. Blogging has gone up and down a bit and side gigs have come and gone. It certainly has gone up, but if you assume 3% inflation the costs of living in general have gone up 34% in that time.
In all places we’ve had a higher than average median income. I don’t claim to be middle income. However, I certainly felt a lot more “middle income” in Silicon Valley. We weren’t too much higher than the median and the cost of living index was extremely high. Of course Silicon Valley is not normal. That’s kind of the point.
At least the Boston suburbs and Newport County are more normal. However, they aren’t very normal either. A quick Google search for U.S. median household income shows a census report at around $58,000. (The census report was a little difficult to read, so I chose to go with Business Insider’s analysis.) So while both place have higher median incomes they are only 18% higher, while their costs of living is 40% higher.
In the Boston suburbs or Newport County having a median income would likely feel like being below average. I don’t think it would be strange for a household making $80,000 in these areas to claim they are middle income even if that’s not accurate according to the rest of the country. For the costs of living in their area (40% above the US average).
Imagine how someone with median income in a below average cost of living place feels reading about the woes of “only” $68K or worse “only” $138K? It’s probably not going to go over well.
But What About Feelings?
Up until now, I’ve mostly been making a case about the numbers. That was the main point I wanted to make. However, I realized there’s more to the story.
When someone writes about being middle income, it could also be in terms of how they feel. That may not be technically correct, but it could be a short-hand way of saying that he/she feels he/she lives an average financial life. That might be where some confusing in personal finance blogging comes in, because we can each feel differently about the same thing.
Take for example, someone’s social circle. If you were friends with a group of lawyers who made $150,000 a year, how would feel if you only made $100,000? You still might feel successful, but you could also feel like you are closer to middle income.
Let me make this example a little more personal like I did above. My wife’s active duty status provides a very generous scholarship for our children at a local private school. It’s a social circle where the incomes are often double ours. In addition, we’re using as much as our income as possible to invest. That’s normal FIRE blogger behavior, but it isn’t normal for a typical social circle, much less this one.
Not only do they make more, but it seems obvious that they are willing to spend it. When you combine the two, it barely feels like we live a middle income lifestyle. That’s another reason why we don’t feel rich.
Final Thought
Much of personal finance is relative to one’s personal situation. I think we need to keep these relationships in mind and readers should do the same.
I try not to write things that place assumptions on what other can or should be able to do. Instead, I typically write about we are doing. Sometimes, I’ll write about what might happen if someone were able to do something (How to be a Millionaire in 20 Years).
We aren’t going to find people who live the exact same lives as us. Instead we may be able to find some people who have similar goals and exchange thoughts that we can adapt to our own lives.
