Last Updated on August 20, 2022
Contents
Social Classes And Saving Money
Saving money every month gives you security and financial stability. A savings fund can help you later in life with financial goals or an emergency. Saving money can also help you avoid debt and having to fix your credit score. There is no doubt that it is vital in everyone’s life.
Being financially responsible means living according to your income, no matter how big. It means to be honest with your financial situation so that you can control your spending habits. That way, you can make a budget according to your monthly earnings.
The social position you are in doesn’t determine if you can save money. People usually think that you can’t save money if you are not wealthy. But with good budgeting techniques, the working and middle class can achieve savings too. Read the rest of this article to find out how to save money in a middle-class family and acquire the necessary savings to live in peace.
What Issues Does The Middle Class Face?
Middle-class households sit between the poor and wealthy classes. These individuals usually have a college degree and can afford to pay for their needs. They may also own real estate, cars and their own business.
The difference between this class and the wealthy is that the middle class can afford only some luxurious things. For example, they can afford restaurants and vacations. The middle class has several issues like:
- Inflation
- Stalled wages
- High cost of living
The middle class is necessary for economic growth. A stable demand, trust, and intelligent decisions can lead society to expand economically. Next comes the question: how can a middle-class family save money, and how much is enough?
How much should a middle-class family save?
To establish if you are part of the middle class, you need to take into consideration the following:
- Family members
- Overall income
- What you own
If your annual income is between $52,000 and $156,000, you are part of the middle social class. However, it also depends on how many family members are part of your household. Your goals and belongings are essential to determine your social class. For example, a middle-class individual owns or may aspire to own a home or car and go on vacations.
A good rule of thumb is to have at least three to six months of savings for emergencies. For example, if your annual income is $90,000, you should have saved between $22,500 and $45,000. This number is different for each family and depends on various factors, like goals and if you have any debt to pay off. Based on that, here is an example of how to save for three months:
Monthly income – $7,500 | Savings | Total Saved |
Month 1 | $4,500 | $4,500 |
Month 2 | $4,500 | $9,000 |
Month 3 | $4,500 | $13,500 |
Month 4 | $4,500 | $18,000 |
Month 5 | $4,500 | $22,500 |
Save Money By Planning and Investing
Before you start saving as a middle-class family, define your target. Start by establishing your goals. Divide them into:
- Short-term goals
- Mid-term goals
- Long-term goals
That way, you will have clear goals, and you can calculate how much you need to save until you reach them. For example, if you want to save for clothes or books, that could be a short-term goal you can accomplish in a month or two.
If you plan to save for a car or house, that can be a mid-term goal achieved in 2-5 years. Your long-term goals can take many years, and include saving for retirement or higher education. You can also combine goals and set shorter ones that grow towards the long-term goal.
After you make your plan and set your goals, the next step is to make them happen. The best way to do it is by investing, but first, you need to have some money. There are many options out there to invest in and achieve your goals. You can choose from real estate, stocks, or bonds.
Before you invest, make sure to research your options and choose the right one for you. Here is how you can save as a middle-class family to invest:
- Focus on saving instead of spending. Every chance you have to save money, use it and put that money away for a specific purpose, such as investing. Try to cut unnecessary costs and postpone non-essential expenses for the future if possible.
- Do not use credit cards. Credit cards could be a nightmare that leads you into debt. Instead of saving for investing, you will have to save to pay off your credit card debt, which derails your financial goals.
- Use your tax refund. Investing the funds from a tax return is the best way to use that money. If you have a longer-term goal, you can deposit part of your tax refund into a certificate of deposit. If you have shorter goals, it would be better to put the money from the tax refund into a savings account. Either way, use that money wisely and do not spend it frivolously.
Save Money By Controlling Your Impulses
To save money as a middle-class family, try to make sure that each member has control over their shopping impulses. If your child asks to buy something non-essential, advise them that it would be better to wait and put that money into savings. The same goes for every other member of the family.
When you go shopping for food or other things, carry only the necessary amount of money. That keeps you from spending more than you budgeted.
Another way to help your family save money is to use the 30-day rule. For example, if you go shopping and see something you like and want to buy, wait. Even if you have the necessary funds for the item, leave the store, and wait a few days. After 30 days, determine if that item is still necessary, or forget about it and move on.
Save Money On Food And Bills
For a middle-class family, the cost of food and bills are essential. Therefore, it is vital to save on these things. For example, to save on food, you can talk with your family and make a weekly meal plan. Then, you can go shopping for the necessary ingredients and avoid overspending. You may even contribute to your family’s good health since you can plan to eat more healthy food.
Avoid going out as a family for big celebrations. Instead, gather in your home. Be creative and find some fun games to play or a family movie to watch. Make your food for those events instead of using a delivery service.
Also, it is essential to save on bills as a family. Each of you needs to be careful with how much electricity and water you spend. To have more control over it, install a water meter to track how much water you use.
Make sure to switch off the lights whenever you do not use them. Instead of spending time at night separately, gather in one room and switch off the lights in other rooms. You could also save money in winter and summer because you limit heating or air conditioning to one room.
Save On Kids’ Stuff
There are ways to save money if you are a middle-class family with kids. First, you need to educate your kids on the importance of saving money and why there are things you can’t afford to buy right now. Hopefully they will understand if you sometimes refuse to buy items that aren’t in the budget.
Consider selling clothes and other items that do not fit your child anymore. Find a friend to exchange with for things that do fit your child. That is a way you will save on buying kids’ clothes. You can use the same tip for school supplies.
Also, if you already have one child and are expecting another, use all things from your older one for the younger one. That includes clothes, shoes, toys, cribs, and more. Finally, for your kids’ room, renovate it yourself. It may even be a fun family activity!
Frequently Asked Questions (FAQs)
How can we save money fast as a family?
To save money fast as a family, first, you need to be open with each other about your goals as a family and as individuals. Then, proceed to make a budget plan with your whole income. Make sure to include the essentials first and then everything else. Finally, adjust your budget whenever you need to, and make sure to track each other’s spending. That way, you can see what each of you spends.
Why is it important to save money as a family?
Saving money is essential for everyone, no matter who you live with. If you live with your family, saving money is vital for your future goals. For example, your savings could help you buy a house if you are a young couple. Then, if you plan to have kids, savings could help you pay for your child’s higher education. Saving money could also help you in emergencies, like health or natural disasters.
Which methods can you use as a middle-class family to save money?
If you and your family need help saving, you can use the tips mentioned above or try some budgeting methods. People use these methods because they give them control over their finances and keep them organized. The most famous budgeting methods for saving money are:
- 50-30-20 method – great for the overall budgeting
- Half payment method – excellent for paying your bills
- Digital envelope system – great for online budgeting
For maximum savings, you can combine two methods, like the first and the last one. For instance, if your monthly salary is $5,000, you can combine the methods like this:
Method | Percent | Amount |
First envelope – rent and bills (needs) | 50% | $2,500 |
Second envelope – vacation (wants) | 30% | $1,500 |
Third envelope – savings | 20% | $1,000 |
What are the best middle-class family apps for budgeting?
Technology can also help you budget your money as a family. It can also help you save money. For that matter, you can use one or more of these budgeting apps:
- Mint
- Zeta
- YNAB
- PocketGuard
Is the middle class disappearing?
In 2018, the Pew Research Center reported on the middle class. According to that, in 2016, 52% of the US population was middle class, which is significantly lower than the 61% in 1971. Also, the Pew Research Center analized the government data for 2021, and according to that the middle class fell to 50%. Because of this, it is safe to say that the middle class is decreasing through the years and slowly disappearing.
Sources:
Governments must act to help struggling middle class. OECD. (n.d.). Retrieved August 6, 2022, from https://www.oecd.org/social/governments-must-act-to-help-struggling-middle-class.htm
Hardy, B., & Marcotte, D. (2022, March 9). Education and the dynamics of middle-class status. Brookings. Retrieved August 6, 2022, from https://www.brookings.edu/research/education-and-the-dynamics-of-middle-class-status/#:~:text=Households%20with%20college%2Deducated%20heads%20are%20more%20likely%20to%20have%20income%20at%20or%20above%20the%20middle%2Dclass%2C%20while%20heads%20with%20less%20than%20a%20college%20degree%20are%20increasingly%20within%20the%20bottom%20quintile%20of%20the%20income%20distribution
How a growing global middle class could save the world’s economy. The Pew Charitable Trusts. (n.d.). Retrieved August 14, 2022, from https://www.pewtrusts.org/en/trend/archive/summer-2016/how-a-growing-global-middle-class-could-save-the-worlds-economy
Kochhar, R., & Sechopoulos, S. (2022, April 21). How the American Middle Class has changed in the past five decades. Pew Research Center. Retrieved August 6, 2022, from https://www.pewresearch.org/fact-tank/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/#:~:text=about%20%2452%2C000%20to%20%24156%2C000%20annually
Semuels, A., & Luscombe, B. (2022, April 28). How a great economy left the middle class behind. Time. Retrieved August 6, 2022, from https://time.com/6171292/middle-class-falling-behind-economy/