There was a time -- perhaps not so long ago -- when having $1 million to your name automatically made you rich. But those days may be behind us.
It's fair to say that $1 million is a lot of money. But is it enough to be considered upper class? Many wealthy Americans say no.
Recent data from Ameriprise finds that 60% of people with $1 million or more classify themselves as upper middle class, while 31% of folks in that boat simply say they're middle class. Only 8% percent of Americans with $1 million or more call themselves wealthy.
Meanwhile, among those with $25,000-$999,000, 25% say they're upper middle class and 58% say they're middle class. And 2% consider themselves wealthy. (To be fair, those 2% might represent people at the top end of that range more so than the bottom.)
You may be curious as to whether your income and savings account balance puts you in the middle class versus upper middle class versus wealthy category. But the reality is, it probably doesn't matter.
Money doesn't go as far today
You may be wondering how someone with $1 million or more might say they're not wealthy. But remember, money is relative to what it costs to live and function.
Inflation has driven living costs up to a notable degree over the past couple of years. And home prices are also sky-high. So it's easy to see why having $1 million may not seem like much when, in some parts of the country, it costs close to $1 million just to buy an average home.
Why labels don't mean anything
It's easy to make the argument today that having $1 million in assets only makes you middle class. But you could also argue that someone in that boat is upper class or wealthy. So rather than fixate on the category you fall into, instead, think about where you are financially and how well you feel you're doing.
Some of the questions you may want to ask yourself are:
- Do I have money in the bank for unexpected expenses and financial emergencies?
- Am I able to cover my expenses without stress or resorting to debt?
- Am I contributing to a retirement account for my future?
- Am I able to purchase the things that bring me happiness?
If you can answer yes to these questions, then frankly, it doesn't matter whether you're middle class versus upper class versus some new class marketing gurus might soon make up. It really only matters that you're able to manage your money well, and that you're working toward the goals you've set for yourself.
And if you can't say yes to these questions, then it's important to get help -- whether your personal assets are worth $40,000 or $2 million. That could mean working with a financial advisor to get a better handle on your finances. It could also mean taking a deeper dive into your personal financial habits.
If you're someone who doesn't pay attention to their spending, it shouldn't come as a shock to be lacking in savings. So in that case, you'd want to find ways to better manage your money, whether by tracking your credit card balances more frequently or using tools that make it easier to budget.
You may be inclined to try to label yourself based on the amount of money you have. But a better use of your time is to figure out if your personal finances are in a good place, and if not, take steps to improve your personal picture and outlook.
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