Being rich yet identifying with the middle class may sound oxymoronic, but even millionaires don’t see themselves as upper class.
According to a late 2023 Ameriprise Financial survey, 31% of Americans with $1 million or more in investable assets consider themselves to be middle class, and 60% see themselves as upper middle class. Yet the median U.S. household income is around $75,000.
Check Out: 7 Reasons You Must Speak To a Financial Advisor To Boost Your Savings in 2024
Learn More: What Is the Median Income for the Upper Middle Class in 2024?
James Osborn, founder and partner of Envest Asset Management, LLC, has noticed this occurrence, where those who are technically rich, like being in the top 10% of household income, still feel like they’re middle class.
“I think it’s more common than one would believe,” he said.
Here’s a look at some ways the rich might end up feeling like they’re in a lower income bracket.
Earning passive income doesn’t need to be difficult. You can start this week.
New Wealth
Part of what’s driving this identification might be an association with the past.
“It’s been reported that a significant portion of high-net-worth individuals accumulated that wealth during their lifetime. In other words, they are new to wealth. And those that are new to wealth, most likely, identify more closely with the middle class than those that are from inherited money,” said Osborn.
These associations can sometimes tie into lifestyle choices, such as with some millionaires living more modestly than you might assume.
“Many people that have gained their wealth in their lifetime may be uncomfortable expressing their wealth through material possessions, having been raised in a different socioeconomic culture,” said Osborn. “This results in establishing their money beliefs well before they became wealthy. Psychologically, they feel more connected to their original upbringings than in their current financial standing and may feel uncomfortable with the perception associated with the wealthy.”
Read Next: I’m a Self-Made Millionaire: 6 Steps I Took To Become Rich on an Average Salary
Expenses Affect Views
While some rich people identify with the middle class as more of a lifestyle association, others have high household incomes, but their financial situation is still relatively tight. That could be due to overspending, perhaps without realizing it.
“Certainly lifestyle creep can be a factor in middle-class identification. This is a form of ‘keeping up with the Joneses,’ so to speak,” said Osborn.
Or, some people face high costs, like those who live in expensive cities. For example, the middle-class income range in San Francisco tops out around $250,000.
So, even if your income is high, sometimes identifying with the middle class reflects not being able to afford what you might assume you could if earning several hundred thousand dollars, if not more, per year.
Take “high housing and childcare costs, then throw in two cars and pack on inflation that we’ve witnessed, and you’ll see a robust paycheck dwindle,” said Osborn.
Making a Plan
While many wealthy people identify as middle class, there are ways to shift this view in a way that ultimately helps the lives of high earners.
“Both mindset and tactics help the wealthy identify with the middle class. When it comes to mindset, those new to wealth, feeling uncomfortable discussing it with anyone else, may want to seek advice from a financial advisor,” said Osborn.
This mindset can affect areas like passing on wealth to family members.
“Often it’s not only their upbringing that keeps them in a middle-class mindsight, but they may also struggle with what to do about their heirs, such as children and grandchildren,” said Osborn. “They may be so rooted in the hard-working middle-class work ethic that they may feel the need that their heirs take the same path, rather than inheriting that wealth.”
For those who want to break this mindset and set their finances up to freely enjoy their wealth, rich individuals and families might construct a team of support staff.
“In addition to working with a financial advisor, working with an attorney and an accountant can help create an overall financial plan that includes an estate and tax strategy. Understanding their financial needs today and setting the stage for that mindset change,” said Osborn. “With a team who is versed in personal finance, legal and taxes, a roadmap can be created to outline their financial goals that include spending, savings and inheritance.”
With a more comprehensive plan in place, wealthy people can feel more confident in how they use their money, rather than feeling like they’re in the same paycheck-to-paycheck cycle that many middle-class families face.
“Witnessing a thoughtful strategy surrounding their finances should provide peace of mind and can greatly help to change their mindset so that they can enjoy their wealth, not only today but also in the future,” said Osborn.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: Here’s Why My Rich Clients Identify With the Middle Class
