Characteristics of the Middle Class Around Us: Are You Included?

Indonesia is currently witnessing a decline in the number of middle-class citizens. This phenomenon is driven by various factors, ranging from uncertain economic conditions to the rising cost of living.

Quoting data from the Indonesian Central Statistics Agency (BPS), the middle class in Indonesia stood at 5_7.33 million people in 2019, equivalent to 21.45% of the total population. By 2024, this figure had decreased to only 47.85 million people, or 17.13%. This means that approximately 9.48 million citizens have slipped down a social class.

In general, the middle and upper-middle class groups enjoy a better standard of living and lower levels of financial stress. Compared to the lower class, they possess greater financial freedom to meet their life requirements.

According to Nicole Nicolet, owner of Let’s Make Life Great, the middle class includes those capable of owning a home, taking annual holidays, and investing in their children’s education. Meanwhile, the upper-middle class can enjoy more frequent holidays and live more comfortably.

Middle-class individuals typically must work until retirement age, whereas the upper-middle class can achieve retirement sooner without worrying about future finances. So, what are the characteristics of this group? The following details are cited from Go Banking Rates:

Key Characteristics of the Upper-Middle Class

One sign of being in the upper-middle class is the ability to have surplus funds after meeting all investments and major expenses. Upper-middle-class individuals often have leftover funds even after maximising pension contributions and covering all primary expenditures.

They are less worried about using these additional funds because they possess stronger financial security. Rose, a financial expert, states that the upper-subclass has budgetary room for entertainment, such as regular holidays or dinners.

Diverse Asset Ownership

Those in the upper-middle class usually possess more than just cash. Diverse investments, such as stocks and rental properties, are often part of their portfolios, which helps strengthen their financial security.

Paying off a mortgage early can be one sign of the upper-middle class, though it is not always mandatory. Nicolet mentions that the ability to settle large investments without restricting one’s lifestyle is a primary characteristic of this class.

Living in More Expensive Neighbourhoods

One way to discern if someone has reached the upper-middle class is through their residential location. According to Rose, living in a highly sought-after postcode is a strong indicator of being in the upper-middle class.

However, it is important to remember that this is not merely about appearance or following the lifestyle of neighbours. People in the upper-middle class typically do not feel the need to compare their wealth or status with others.

Minimal Financial Stress

Another sign of the upper-middle class is the lack of financial stress when facing bills or unexpected expenses. If a financial emergency arises, they are able to handle it without panicking.

Rose adds that having financial peace of mind when facing unexpected large expenditures is a strong indication of reaching the upper-middle class. Minimal financial stress allows them to enjoy life more tranquilly.

Positive Lifestyle Changes

Higher income and significant net worth often bring better lifestyle changes. However, this does not mean living beyond one’s means, but rather being able to purchase goods or services that were previously considered luxuries.

Nicolet states that being in the upper-middle class means there are almost no limitations on lifestyle. They may not have reached billionaire status, but they have enough to enjoy most existing standards of living.

Ability to Fund Higher Education

Higher education is one of the major expenses that often requires individuals to take on debt. However, those in the upper-middle class are able to fund higher education, for themselves or their children, without having to take out loans.

Rose explains that those in the upper-middle class can afford the best education without excessive concern regarding the cost. This is one of the important signs that someone is in an excellent financial position.

Possibility of Early Retirement

For many, early retirement is a difficult dream to achieve due to debt or daily expenses. However, for the upper-middle class, early retirement is more likely due to diverse investments, passive income, and financial security.

Nicolet says that being in the upper-middle class often means being able to retire early without much worry regarding future financial issues. This factor provides them with greater freedom in choosing when to stop working.

Possessing Multiple Income Streams

People in the middle or lower classes usually have only one source of income, such as a permanent job. However, the upper-middle class almost always has two or more sources of income, such as a business or passive income from investments.

This additional income can come from high-paying jobs, business ownership, or generating investments, such as stock dividends or rental property income. This diversification of income helps strengthen their financial position.