With over a hundred votes in already, the trend is clear: reading this blog increases your income. Stick around, folks. We'll read ourselves rich.
Of course, earnings are only part of the personal finance equation. A better measuring stick is the amount you keep, after accounting for debts: your net worth. Might the census data have a bunch of spreadsheets for net worth quintiles, too? Ask and you shall receive, brethren. And here's a summary of the 2011 median net worth quintiles.
I am again using the five terms of Lower Class, Lower Middle Class, Middle Class, Upper Middle Class, and Upper Class to designate each of the quintiles: this time though, they'll match with net worth instead of income. So how do the quintiles stack up? A breakdown is below. (A quick note: each dollar amount is the median household net worth for that quintile. In other words, it is the net worth for the household right at the 10th, 30th, 50th, 70th, and 90th percentile, respectively.)
- Bottom 20% of households ("Lower Class"): -$6,029
- Next 20% (or what I'd call "Lower Middle Class"): $7,263
- Middle 20% (the true middle "Middle Class"): $68,839
- Next 20% ("Upper Middle Class"): $205,985
- Top 20% (the "Upper Class"): $630,754
As with the income quintiles, it seems household net worth really turns the corner at the fourth quintile. You've made it when you're in the top 40%.
Another interesting bit is seeing how these net worth quintiles have changed from 2000 to 2005, and then to 2011. These snapshots show how things went for American households from the dot-com recession, checking in mid-boom, and then again right after the latest recession, in the middle of the recovery. The figures tell a binary narrative. Click here for a cool graphic, also represented in a less-cool table below. (All figures are in 2011 dollars).
So over that eleven year period, things got worse for the bottom three quintiles. Those groups each saw a net loss in their median net worth, despite a fairly long period of time to save and invest. Of course, it's also a significant amount of time to lose employment and take on debt. Draw your own conclusions.
On the other hand, things got better for the top 40%. Both the upper class and upper middle class quintiles saw around a 10% gain in their net worths from 2000 to 2011, despite the impacts of the most recent recession.
I'm no economist, so I can't pick out the reasons for these divergent trends. What's obvious is that, unless things dramatically turned around in the past few years, things really are getting worse for a majority of American households. Four out of five household quintiles (80%) saw real incomes decline from 2003 to 2013. Three of five household quintiles saw a net reduction in their median net worth over a similar timeframe.
How do they turn it around? Is frugality the answer in a declining income environment? Adding income via side hustles? Is it as simple as reading this blog, since exposure to my ramblings is a surefire way to increase income? Let's hear your best idea in the comments.
And if you're game, vote below to show which of the median household net worth quintiles you're closest to.
DoctorTongs at Flickr Creative Commons.