5 Key Signs You’re Lower Class Without Realizing It

The American economic landscape is changing nearly every day and if you are not paying attention, you might miss out on what’s happening and where you fall into the hierarchy. You might not think you are lower class or “working class,” but if you look at some key signs, you might find that you and your family do fall into the demographic without realizing it.

Learn More: 5 Genius Things People With Healthy Savings Do

Check Out: 7 Reasons You Should Consider a Financial Advisor — Even If You’re Not Wealthy

Income inequality is rising, with the gap between the upper earners and lower earners becoming increasingly bigger with each passing year. The contrast only got sharper after the COVID-19 pandemic. The Pew Research Center found that in 2021, to qualify as upper class, your household needed to be earning greater than $145,000 annually while lower-class households fell under $48,500 each year and middle-class status happened somewhere in the middle. But of course, this will vary a lot depending on where you live and the living costs associated.

“Living in the United States, it’s easy to overlook signs of being lower class,” said Dana Ronald, CEO of Tax Crisis Institute . “We are often taught that anyone can achieve the ‘American Dream’ through hard work and determination, regardless of their social or economic background. However, income inequality is a growing issue in our country, with many individuals and families struggling to make ends meet.”

Beyond your household’s earnings each year, are there other indicators pointing to the fact that you might be lower class without realizing it? GOBankingRates reached out to some experts to get their key signs that you might not be as high up on the economic pecking order as you once thought.

Earning passive income doesn't need to be difficult. You can start this week.

Limited Access to Education

Your kids struggle in school, but you don’t have extra cash to pay a tutor. You can’t afford to pay for tuition to take night classes at the local community college. These are two examples of how you might be getting pushed down in terms of class and did not know it until now.

“Education is often considered a key factor in social mobility and upward economic mobility,” Ronald said. “However, if you come from a lower-income family, you may have different access to quality education than those in higher-income brackets. This can make it difficult to break out of the lower class.”

Discover More: I’m a Self-Made Millionaire: 6 Steps I Took To Become Rich on an Average Salary

High Debt-to-Income Ratio

It’s hard not to go into debt in the United States in any year but especially in 2024. Between outstanding loan payments, credit card balances and car payments, you can find yourself owing more than you actually bring in on a regular basis.

“High debt-to-income ratios, where monthly debt payments exceed 40% of your gross monthly income, can indicate lower-class status due to financial strain,” explained Jeff Rose, CFP® and founder of GoodFinancialCents.com . “Difficulty in getting approved for credit cards or loans, often due to low income or poor credit history, is another common issue faced by those in the lower class.”

Living Paycheck to Paycheck

“It’s possible to be in a situation where you are paycheck to paycheck without realizing it,” said David Bakke, financial expert at DollarSanity .

This is a chain reaction of spending versus earning. Basically, you get your paycheck and your bank account fills up with money. Only problem is that you spend all that money without saving or investing, then hit dire straits — just as your next paycheck comes in and the cycle begins all over again.

“If you’re in a constant state of being behind financially and there’s no end in sight, you are lower class,” Bakke said.

Government Assistance Is a Part of Life

There are programs that exist on local, state and federal levels where American citizens can get financial assistance from the government. This could be in the form of subsidized income with a benefits check or basic needs covered via food stamps. There is no shame in being tied to one of these assistance programs, but to qualify you need to meet certain criteria and one of them is being significantly under a specific level of income for your demographic.

“Government assistance programs, such as food stamps or public housing, are designed to help those struggling financially,” Ronald said. “If you find yourself in need of these programs, it may be an indicator that your income level falls within the lower class.”

Saving Is Impossible

When you are earning a limited income, all your money goes to the basics: food, shelter, clothing and transportation. This means that you have nothing left over to put in a savings account to accrue interest or to invest in an opportunity to grow your money. Even worse, if there is an emergency, you have no financial safety net.

“If you are unable to set aside some cash for unforeseen needs and you are living paycheck to paycheck, in my opinion, this is a blatant indicator that you have slipped out of the middle class, and it’s something that you should take seriously,” said Ethan Keller, president of Dominion , an international network of legal and financial advisors.

Keller described that a person in the middle class is typically advised to have an emergency fund that can “cover at least the costs of living for three to six months” of expenses.

“This lack of reserves for unexpected events isn’t just a matter of numbers,” Keller said, “Rather, it’s a matter of the consistent worry and anxiety that comes with living on the financial edge. It’s about being so precariously close to falling into financial ruin that all it would take is a broken down automobile or some unexpected medical bills.”

This article originally appeared on GOBankingRates.com : 5 Key Signs You’re Lower Class Without Realizing It