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Most people think they are middle class, but most are not, and that’s costing them a lot of money.

This society wide problem is made worse because nobody knows what middle class even means anymore… You probably think middle class is what MOST people think is middle class. Not rich, but not poor.

A middle-class family can afford a regular home with a thirty-year mortgage, two cars, and a holiday once a year. A middle-class family has two people that work in middle management or run a small business. If they are lucky, you might imagine that one of the pair could stay home to look after children.

The middle class describes the largest share of people on the wealth spectrum slotted between the extremely wealthy, and the working class. But you would find it impossible to give a net worth figure that is the cut-off for entry into any of these classes. There are three reasons why you are not middle class and FOUR reasons why this irrelevant definition is hurting your real financial situation.

The first reason you are not middle class is because that term really doesn’t mean anything anymore. The middle class was first used in early modern Europe to describe the “middling people” that were not nobility but not peasants either, they were wealthy merchants or factory owners. If you don’t own a factory or a fleet of trade ships you already fall outside the original definition of the middle class. Today these people would be considered upper class, especially in America where we rejected the idea of nobility. The middle class is a changing classification, and that change is usually decided by the upper class. In early modern Europe the nobles needed a way to class people that were as wealthy as they were, but not considered as important. Today the middle class describes people that aren’t nearly as rich as the new upper class, which is the old middle class, but also aren’t poor.

It’s a definition so broad it’s practically useless, but it has still changed a lot in a short span of time. Homer Simpson was once portrayed as a working-class man. The show has a rigid adherence to episodic continuity, so the family has not changed at all in the thirty-three years the show has been on air. The SHOW may not have changed but the world around it has, and slowly the Simpson family became middle class then upper middle class, and today with their single-family home, three children, two cars and a stay-at-home wife, they could be considered upper class. The definition may be meaningless but it’s not useless. Everybody from companies to politicians target the middle class as the largest block of customers and voters. You probably like to think you are middle class even if you are not. People will place themselves into this group and accept that something that’s good for the middle class is good for them. This is a very useful trait when chasing votes or marketing a product.

A system for classifying people based on their wealth that has remained consistent over time is simply dividing people into two groups the working class and the upper class. The first group are the people that need to work to pay for their living expenses the working class. The second group is those that that don’t need to work because they have enough income from investments or other payments. According to this definition a doctor that still needs to work to pay the mortgage on their seven-bedroom mcmansion is working class, but a retiree living on a pension would be upper class. The definitions are simpler, but the outcome is just as blurry. None of this would even matter, if it wasn’t costing you hundreds of thousands of dollars over the course of your career, and that’s not hyperbole.

So, it’s time to learn How Money Works, to find out why social classes are stupid and only kept around as a useful tool to sell you stuff.