One Major Sign You've Made It To The Upper Class

In 2023, U.S. families spent an average of 32.9% of their budgets on housing and another 17% on transportation costs — almost half of every dollar earned, according to the Bureau of Labor Statistics' Consumer Expenditure Survey. When that much cash gets locked up in mortgage or rent payments and car expenses, most families can't easily scrape together money for big purchases. The gap's even clearer with emergency savings. A Financial Industry Regulatory Authority study in 2022 found 66% of people making over $75,000 had money set aside for emergencies, but only 22% of those earning less than $25,000 did.

If you can buy a larger home or newer car without touching your long-term savings, or eating dangerously into your salary for monthly payments, you've crossed a wealth threshold. This ability to upgrade major assets while continuing to grow your savings is one of the most telling signs that you've joined the American upper class. It's less about squeezing your monthly budget for luxuries and more about having enough breathing room that big purchases feel like choices, not compromises.

The spending gap between income levels reveals why upgrading your home or car usually means you're well off. In 2022, the lowest income quintile of households poured 41.3% of their spending into housing, according to Statista's analysis of Consumer Expenditure Survey data. The highest income quintile spent just 29.2%. Lower-income households pay too much rent compared to their income, making it very difficult to upgrade housing without sacrificing essentials like food and healthcare. 

The same pattern plays out with transportation costs by income level. In the U.S. Department of Transportation's statistics from 2023, the lowest income group spent 32% of their income on things like car payments, gas, and insurance. The highest earners spent only 9.6%. For example, a household earning $30,000 a year spends about $9,600 just to get around. That's money that could have funded retirement accounts or emergency savings. A household with a $150,000 income can spend $14,400 on transportation and still have $135,600 left over for everything else.

It's not just about percentages. Upper-class families have much bigger safety nets. According to the Federal Reserve's 2022 Survey of Consumer Finances, families in the top 10% hold an average of $913,300 in retirement accounts, compared to an overall average of $331,400 for all families with retirement accounts. With almost three times the savings, wealthier households can upgrade homes and cars at the same time without risking long-term financial security. If you've found yourself in a position where you can upgrade your vehicle or home, without any risk to your long-term financial security and savings goals, this is a solid sign of financial health.

Upper-class households maintain their advantage by turning extra income into long-term security, not just lifestyle upgrades alone. The Internal Revenue Service lets workers contribute up to $22,500 a year into 401k plans, and those 50 or older can add another $7,500. Allocating pay raises to these tax-advantaged retirement accounts stops spending from quietly expanding with your paycheck.

If the goal is to maintain wealth, set clear financial boundaries before upgrading. According to the U.S. Department of Housing and Urban Development, housing should eat up no more than 30% of your gross income in order to be considered truly affordable — a benchmark they use across their research. Before upgrading to a pricier home, wealthy households should run the numbers on mortgage, taxes, and insurance to make sure it stays under that 30% limit. Before any big upgrade, calculate your debt-to-income ratios — your total monthly debts divided by gross monthly income — because lenders weigh this ratio when evaluating creditworthiness.

Additionally, spreading your money across different investments will keep you from taking major losses when markets dip. For example, a mix of domestic stocks, international stocks, and bonds can drastically reduce risk. Limit lifestyle inflation and lean into equity-rich strategies. Those moves help the wealthy preserve their financial achievements and maintain their wealth advantage.