Here’s how much money the average middle-class American household makes — how do you stack up?

Live below your means

As personal finance celebrity Suze Orman says, “buy what you need versus what you can afford when you can afford more than what you need.”

However, living below one’s means is easier said than done — especially in the current economic climate.

A middle-class income may not leave you with all that much wiggle room to save and invest these days. Therefore, it’s important to keep your expenses as low as reasonably possible so you can focus on attaining some financial stability.

Living below your means could translate to a lot of things, but one area you may want to focus on is anything involving housing.

The Bureau of Labor Statistics reports that, in 2022, housing accounted for just over 33% of consumer expenditures — far outpacing the next closest category: transportation, which accounted for roughly 17% of spending.

A widely accepted standard in financial planning is to keep your housing costs to 30% (or less) of your gross monthly income.

Adhering to the 30% rule helps maintain a balanced budget, which in turn allows families to live within their means and avoid excessive debt.

It can also provide a cushion for any emergency expenses — from home repairs to medical bills — that may suddenly crop up.

Another viable option is to boost your income through side hustles The income this avenue creates may help create a buffer for your savings.

Kiss your credit card debt goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Explore better rates

Move to an area where your income goes further

For some, curtailing housing expenditures may come down to location, location, location. Consider moving to one of the country’s more cost-effective states, or leave bustling urban centers behind.

Forbes, for example, ranks South Bend, Indiana, as the most affordable U.S. city, followed by Brownsville, Texas.

Different sources use different methodologies for calculating affordability, however, so it’s good to do plenty of research to help narrow your choices down.

That said, some sources use formulas to calculate salaries based on local living costs. Moving from one part of the country to another could mean taking a pay cut. So that’s something you’ll want to consider, as it may not help you financially in the long run.

To get you started, consider some of the states where it’s easiest (and hardest) to save money.

Consider tax-friendly states

There are eight states that don't have a state income tax:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

In addition, New Hampshire has a state income tax that applies to interest and dividend income, but not wages from a job.

Moving to a more tax-friendly state could mean getting to hang onto more of your earnings. However, even within states that do have an income tax, there’s a spectrum — with some imposing higher taxes than others.

It could be a good idea to sit down with an accountant to review your options. Similarly, a financial adviser can help you come up with a strategy to maximize your income and work toward your personal goals.