Yahoo Finance The Difference Between Middle and Upper Middle Class Is Just $20K — How To Bridge That Gap
If one of your goals for the New Year involved reaching a new income bracket, it might not be so out of reach after all — but it will take some effort to get there.
The difference between middle and upper middle class is just $20,000 — an amount experts say can be achieved by being strategic.
“Twenty thousand dollars sounds insignificant, but figuring out how to earn an extra $20,000 can seem impossible,” said Melanie Musson, finance expert with Clearsurance. “Still, it can be done. One way to boost your income is to start building passive income streams.”
“Purchase property if possible. If you can’t purchase income property yourself, invest in partial ownership of income property. Save your profit and invest again. Eventually, you’ll be earning $20,000 or more in rental income,” Musson said.
Here are more ways to help you bridge that income gap.
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Get a New Job or Promotion
According to Musson, another way to boost your income is to search for a job or promotion.
“If you excel where you are, you can probably take on more responsibility and be paid better,” she advised. “Know your worth and look for a job that gives you what you’re worth and has room for advancement.”
Kevin Huffman, financial expert and owner of Kriminil Trading advised the same. “Think about what you can earn at your present job,” he explained. “The National Bureau of Economic Research has shown, in a 2022 report, that women and people of color often miss out on substantial salary increases by failing to negotiate for them.”
“So look at what is on offer for your position and location in your industry, collect information about your achievements, and discuss with your manager a realistic target for your next raise.”
He said that a 5% to 10% increase can translate into a sizable boost to your annual income — helping you to achieve your financial goals.
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Leverage Your Skill Set
Dennis Shirshikov, finance expert and head of growth at Summer, said one effective strategy to increase income by $20,000 involves leveraging current skills in new markets or industries. “For instance, professionals can identify transferable skills that are in demand in higher-paying sectors. This might involve taking additional courses or certifications to bridge the gap.”
“Freelancing or consulting is another viable avenue,” said Shirshikov. “Many professionals overlook the potential of freelancing in their field of expertise. By dedicating a few hours a week to consulting or freelancing projects, individuals can significantly boost their income.”
Huffman also recommended using the skills you already have. “A 2023 annual study of the freelance economy by Upwork, shows the overall freelance economy is thriving and that more than 59 million Americans are freelancing in a wide variety of specialties.”
“If you have skills in writing, editing, graphic design or programming, there are freelancing platforms that allow you to earn more by using your skills on your own schedules,” he explained. “Other side jobs to bolster your income would be pet sitting, house cleaning or online tutoring, to name a few.”
“You could also upgrade your skills by enrolling in a course or getting a new certification,” Huffman added. “Technology keeps evolving, and you’ll find that new skills are always in high demand.”
He suggests considering taking some online courses, attending workshops or going for a professional certification, especially if you’re remaining in the same career or if you want to transition to a new, higher-paying field. “There are government grants that you might be eligible for and employer tuition reimbursement programs can help fund your upskilling.”
Invest in Real Estate
Investing in real estate can also be a fruitful path, said Shirshikov. “This doesn’t necessarily mean buying properties outright; options like real estate investment trusts (REITs) allow individuals to invest in real estate without the need for substantial capital.” He said this can create an additional stream of passive income.
Moreover, he noted that leveraging the gig economy can provide a flexible and often lucrative way to increase income. “Platforms like Airbnb for renting out a spare room, or Turo for renting out a car, can generate substantial additional income.”
Invest in Personal Development and Networking
“Investing in personal development and networking can also yield significant financial returns,” said Shirshikov. “Attending industry conferences, joining professional organizations and actively networking can lead to opportunities for higher-paying roles or lucrative side projects.”
“By diversifying income streams, continuously upskilling and exploring both active and passive income opportunities, middle-class individuals can effectively bridge the $20,000 gap to join the upper-middle class.”
Create Digital Products and Courses
Another area with significant potential is the creation and sale of digital products and courses.
Leveraging your expertise to create downloadable guides, templates or video courses can lead to passive income streams.
Platforms like Teachable or Gumroad make it easier to sell these products to a global audience. For instance, if you’re a digital marketing professional, you might create a series of video tutorials on effective social media strategies, tapping into the burgeoning market of aspiring digital marketers.
Look into Micro-Investment Platforms
One innovative way to incrementally increase income is through micro-investment platforms. Apps like Acorns or Robinhood allow users to invest small amounts of money regularly, using spare change from daily transactions. These platforms democratize investing, making it accessible without requiring large upfront investments.
By taking advantage of compound interest and diversified portfolios within these apps, you can grow your investments steadily over time.
Consider Specialized Remote Consulting
With the shift towards remote work, there’s a growing demand for specialized consulting services that can be provided from anywhere.
You can capitalize on your specific skill set by offering consulting services in niche areas. This approach not only allows for higher billing rates but also exposes you as a consultant to a global client base, significantly widening your income opportunities and bridging that $20,000 gap.
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