America’s Shrinking Middle Class: A Close Look at Changes Within Metropolitan Areas

The middle class lost ground in nearly nine-in-ten U.S. metropolitan areas examined

The middle class is shrinking in most U.S. metropolitan areas, and lower-and upper-income tiers are gaining share

The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. The decrease in the middle-class share was often substantial, measuring 6 percentage points or more in 53 metropolitan areas, compared with a 4-point drop nationally.

The shrinking of the middle class at the national level, to the point where it may no longer be the economic majority in the U.S., was documented in an earlier analysis by the Pew Research Center. The changes at the metropolitan level, the subject of this in-depth look at the American middle class, demonstrate that the national trend is the result of widespread declines in localities all around the country.

This report encompasses 229 of the 381 “metropolitan statistical areas” as defined by the federal government. That is the maximum number of areas that could be identified in the Census Bureau data used for the analysis and for which data are available for both 2000 and 2014 (an accompanying text box provides more detail). 1 Together, these areas accounted for 76% of the nation’s population in 2014.

With relatively fewer Americans in the middle-income tier, the economic tiers above and below have grown in significance over time. The share of adults in upper-income households increased in 172 of the 229 metropolitan areas, even as the share of adults in lower-income households rose in 160 metropolitan areas from 2000 to 2014. The shifting economic fortunes of localities were not an either/or proposition: Some 108 metropolitan areas experienced growth in both the lower- and upper-income tiers.

The tale of two metropolitan areas: A smaller middle class could signal a move either up or down the income ladder

The possibility that a shrinking of the middle class may signal a movement into either the lower-income tier or the upper-income tier is exemplified by the experiences of Goldsboro, NC, and Midland, TX—one community buffeted by broader economic forces and the other buttressed by them.

In Goldsboro—an old railroad junction town and home to Seymour Johnson Air Force Base—the share of adults who are middle income fell from 60% in 2000 to 48% in 2014, or by 12 percentage points. This was one of the greatest decreases among the 229 metropolitan areas analyzed. It was also an unambiguous signal of economic loss as the share of adults in lower-income households in Goldsboro increased sharply, from 27% in 2000 to 41% in 2014.

But in Midland—an energy-based economy that benefited from the rise in oil prices from 2000 to 2014—the shrinking middle class was a sign of financial gains. The share of adults in middle-income households in Midland decreased from 53% in 2000 to 43% in 2014, the fourth-largest drop in the nation. But this was accompanied by rapid growth in the share of adults in upper-income households in Midland, which doubled from 18% in 2000 to 37% in 2014. 2

Among American adults overall, including those from outside the 229 areas examined in depth, the share living in middle-income households fell from 55% in 2000 to 51% in 2014. Reflecting the accumulation of changes at the metropolitan level, the nationwide share of adults in lower-income households increased from 28% to 29% and the share in upper-income households rose from 17% to 20% during the period. 3


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The widespread erosion of the middle class took place against the backdrop of a decrease in household incomes in most U.S. metropolitan areas. Nationwide, the median income of U.S. households in 2014 stood at 8% less than in 1999, a reminder that the economy has yet to fully recover from the effects of the Great Recession of 2007-09. The decline was pervasive, with median incomes falling in 190 of 229 metropolitan areas examined. Goldsboro ranked near the bottom with a loss of 26% in median income. Midland bucked the prevailing trend with the median income there rising 37% from 1999 to 2014, the greatest increase among the areas examined. 4

The decline of the middle class is a reflection of rising income inequality in the U.S. Generally speaking, middle-class households are more prevalent in metropolitan areas where there is less of a gap between the incomes of households near the top and the bottom ends of the income distribution. Moreover, from 2000 to 2014, the middle-class share decreased more in areas with a greater increase in income inequality.

These findings emerge from a new Pew Research Center analysis of the latest available 2014 American Community Survey (ACS) data from the U.S. Census Bureau in conjunction with the 2000 decennial census data. The focus of the study is on the relative size and economic well-being of the middle class in U.S. metropolitan statistical areas. These areas consist of an urban core and surrounding localities with social and economic ties to the core. A metropolitan area may cross state boundaries, such as the New York-Newark-Jersey City, NY-NJ-PA area (see the text box for more details).

A previous report from the Pew Research Center, released on Dec. 9, 2015, focused on national trends in the size and economic well-being of the American middle class from 1971 to 2015. That report demonstrated that the share of American adults in middle-income households shrank from 61% in 1971 to 50% in 2015. The national level estimates presented in the earlier report were derived from Current Population Survey (CPS) data. Thus, they differ slightly from the estimates in this report.

The current and future status of the American middle class continues to be a central issue in the 2016 presidential campaign. Moreover, new economic research suggests that a struggling middle class could be holding back the potential for future economic growth. 5 The national trend is clear—the middle class is losing ground as a share of the population, and its share of aggregate U.S. household income is also declining. 6 But, as the trends in Goldsboro and Midland demonstrate, similar changes in the size of the middle class could reflect very different economic circumstances and reactions at the local level.

U.S. metropolitan statistical areas

Who is middle income?

Who is 'middle income' and 'upper income' in 2014?

In this report, “middle-income” Americans are defined as adults whose annual household income is two-thirds to double the national median, after incomes have been adjusted for household size. 7 In 2014, the national middle-income range was about $42,000 to $125,000 annually for a household of three. Lower-income households have incomes less than 67% of the median and upper-income households have incomes that are more than double the median.

The income it takes to be middle income varies by household size, with smaller households requiring less to support the same lifestyle as larger households. Thus, a one-person household needed only $24,000 to $72,000 to be middle income in 2014. But a five-person household had to have an income ranging from $54,000 to $161,000 to be considered middle income.

Middle income or middle class?

The same middle-income standard is used to determine the economic status of households in all metropolitan areas after their incomes have been adjusted for the cost of living in the area. That means the incomes of households in relatively expensive areas, such as New York-Newark-Jersey City, NY-NJ-PA, are adjusted downward, and the incomes of households in relatively cheaper areas, such as McAllen-Edinburg-Mission, TX, are adjusted upward. Incomes are also adjusted for increases in the prices of goods and services over time when analyzing changes in the status of households from 2000 to 2014. 8

Metropolitan areas with the largest middle-, lower- and upper-income tiers in 2014

A distinct geographical pattern emerges with respect to which metropolitan areas had the highest shares of adults who were lower income, middle income or upper income in 2014. The 10 metropolitan areas with the greatest shares of middle-income adults are located mostly in the Midwest. Wausau, WI, where 67% of adults lived in middle-income households in 2014, had the distinction of leading the country on this basis, followed closely by Janesville-Beloit, WI (65%). Sheboygan, WI, and four other Midwest areas also placed among the top 10 middle-income areas.

Beyond a shared geography, the top 10 middle-income metropolitan areas are more rooted in manufacturing than the nation overall. Elkhart-Goshen, IN, for example, derived 56% of its gross domestic product (GDP) in 2014 from the manufacturing sector alone. Likewise, the manufacturing sector’s share was 40% in Sheboygan, WI, and more than 20% in Wausau, WI, Lebanon, PA, Ogden-Clearfield, UT, and Kankakee, IL. Overall, manufacturing accounted for only 12% of the nation’s GDP in 2014. 9

But the role of the manufacturing sector in sustaining the middle class in these Midwest localities is not clear-cut. While manufacturing jobs tend to pay more than average, the sector has been letting go of workers in recent decades. 10 Nationwide, employment in the manufacturing sector shrank 29% from 2000 to 2014. 11 The middle-class communities in the Midwest were not immune to this trend.

Metropolitan areas with the highest shares of middle-income adults in 2014 are mostly in the Midwest

Among the Midwestern areas with some of the highest shares of adults who are middle income, the areas hardest hit by the loss in manufacturing jobs were Janesville-Beloit, WI, where manufacturing employment fell 49% from 2000 to 2014, and Youngstown-Warren-Boardman, OH-PA, where it fell 42%. Although at least 6-in-10 adults were middle class in these areas in 2014, both localities experienced losses in the shares of adults who were upper income and increases in the share who were lower income from 2000 to 2014. Thus, the economic status of the middle class in some of the Midwestern localities is not necessarily on firm ground.

The remaining top 10 middle-income metropolitan areas experienced more modest losses in manufacturing jobs and other sectors stepped in to pick up the slack in several areas. For example, from 2000 to 2014, Wausau, WI, lost 3,200 manufacturing jobs but overall private sector employment increased by nearly 1,ooo. Similarly, Eau Claire, WI, had a loss of 2,300 manufacturing jobs but an overall gain of 5,700 private sector jobs. Neither of these two areas experienced much of a change in the shares of adults who were lower income, and Eau Claire witnessed a rise in the share who were upper income. Thus, at least some of these industrial communities held on to their economic standing or saw it improve despite the decay in manufacturing.

Metropolitan areas with the largest upper-income populations are mostly in the Northeast or on the California coast. Midland, TX, the exception to this rule, leads the metropolitan ranking of upper-income areas. Some 37% of the adult population in Midland was upper income in 2014, thanks to a prospering oil economy. High-tech corridors, such as Boston-Cambridge-Newton, MA-NH, and San Jose-Sunnyvale-Santa Clara, CA, are on this list, along with financial and commercial centers, such as Hartford-West Hartford-East Hartford, CT. The adult populations in most of these upper-income areas are also more likely to have a college degree than in the nation overall.

The 10 metropolitan areas with the biggest lower-income tiers are toward the Southwest, several on the southern border. Two metropolitan areas in Texas, Laredo and Brownsville-Harlingen, lead the country in this respect—in both areas 47% of the adult population lived in lower-income households in 2014. Farming communities in central California, namely Visalia-Porterville, Fresno and Merced, are also in this group of lower-income areas. With the exception of Lake Havasu City-Kingman, AZ, Hispanics accounted for more than half of the population in each of these lower-income metropolitan areas in 2014, compared with 17% nationally.

Looking across the broader swath of metropolitan areas, the share of adults who are middle income ranged from a low of 42% in Monroe, LA, to a high of 67% in Wausau, WI, in 2014. But in the majority of metropolitan areas—118 of the 229 examined—the share of adults who were middle income fell within a relatively narrow range of 50% up to 55%. These metropolitan areas are dispersed across the country, not displaying a clear geographical pattern.

In about a quarter of the metropolitan areas in 2014, middle-class adults do not constitute a clear majority of the adult population. Notably, many of the nation’s largest metropolitan areas fall into this group, including Los Angeles-Long Beach-Anaheim, CA, where 47% of adults were middle income; San Francisco-Oakland-Hayward, CA (48%); New York-Newark-Jersey City, NY-NJ-PA (48%); Boston-Cambridge-Newton, MA-NH (49%); and Houston-The Woodlands-Sugar Land, TX (49%).

In some of these metropolitan areas, such as the Boston and San Francisco regions, the relatively small share of the middle-income tier reflects the fact that the upper-income tier is larger than average. But in the Los Angeles region, the middle class is relatively small because the share of adults who are lower income is greater than average.

Perhaps unsurprisingly, the relative size of the lower-income or upper-income tier in a metropolitan area is correlated with the median income of households overall in the area. In Laredo, TX, the area with the largest lower-income tier, the median household income was 35% less than the national median income in 2014. In Midland, TX, the metropolitan area with the largest upper-income tier, the median income was 45% greater than the national median. 12

The extent of income inequality in a metropolitan area also matters. Middle-income adults account for a larger share of the adult population in metropolitan areas where there is less of a difference between the incomes of the highest-earning and lowest-earning households. Wausau, WI, Janesville-Beloit, WI, and Sheboygan, WI, the three areas with the largest middle classes, are also among the metropolitan areas that had the lowest levels of income inequality in 2014.

Changes in the economic status of metropolitan areas from 2000 to 2014

As the middle of the income distribution hollowed around the country from 2000 to 2014, the movement was more up the economic ladder than down the ladder in some metropolitan areas (winners) while in other areas there was relatively more movement down the ladder (losers).

Nationally, the share of adults in the upper-income tier increased from 17% in 2000 to 20% in 2014, a gain of 2 percentage points. 13 Meanwhile, the share of adults in the lower-income tier increased from 28% to 29%, an increase of 1 percentage point. The difference—1 percentage point—is the net gain for American adults. By this measure, the net gain in economic status varied considerably across metropolitan areas. 14

The 10 metropolitan areas that gained or lost the most in economic status from 2000 to 2014

The metropolitan areas that experienced the largest gain in economic status from 200o to 2014 are Odessa and Midland, neighboring communities in Texas with energy-based economies. The other major winners among metropolitan areas are varied in nature. New Orleans-Metairie, LA, and Baton Rouge, LA, are relatively prominent in shipping and petrochemicals, but Lafayette, LA, has more of a stake in information technology. Amarillo, TX, is principally a meat packing economy, while Barnstable Town, MA, is a leading tourist destination on Cape Cod.

The areas with the largest gains in economic status are not necessarily areas with high shares of upper-income households. Indeed, several are decidedly average, with the shares of lower-, middle- and upper-income populations closely resembling the national distribution in 2014. In Grand Junction, CO, for example, some 52% of the adult population was middle income in 2014, 28% was lower income and 20% was upper income. But Grand Junction got to the national norm by nearly doubling the share of its upper-income population from 2000 to 2014, making it one of the big winners.

Although other factors may also be at work, the 10 metropolitan areas with the greatest losses in economic status from 2000 to 2014 have one thing in common—a greater than average reliance on manufacturing. 15 Most of these areas, such as Springfield, OH, and Detroit-Warren-Dearborn, MI, are in the so-called Rust Belt. The areas not in the Rust Belt, such as Rocky Mount, NC, and Hickory-Lenoir-Morganton, NC, are also industrial communities.

These areas generally experienced a significant drop in manufacturing employment from 2000 to 2014, ranging from 23% in Fort Wayne, IN, to 51% in Hickory-Lenoir-Morganton, NC, compared with 29% nationally. The jobs lost in manufacturing were not entirely picked up elsewhere as overall private sector employment also fell from 2000 to 2014 in these 10 metropolitan areas, ranging from a decrease of 3% in Goldsboro, NC, to a decrease of 25% in Hickory-Lenoir-Morganton, NC. In contrast, private sector employment in the U.S. overall increased 5% from 2000 to 2014. 16

Across the 229 metropolitan areas analyzed, 119 were winners, moving up in economic status from 2000 to 2014, and 110 were losers. Changes in median household income are related to the likelihood that a metropolitan area proved to be a winner or a loser. Areas with higher growth in median household income from 1999 to 2014 were more likely to experience an increase in the share of adults who are upper income and a decrease in the share who are lower income. Trends in income inequality also made a difference. Areas with more of an increase in income inequality from 1999 to 2014 experienced larger losses in the middle-class share.

Households experience financial setbacks in most metropolitan areas

American households in all income tiers experienced a decline in their incomes from 1999 to 2014. Nationally, the median income of middle-income households decreased from $77,898 in 1999 to $72,919 in 2014, a loss of 6%. The median incomes of lower-income and upper-income households fell by 10% and 7%, respectively, over this period.

The decline in household incomes at the national level reflected nearly universal losses across U.S. metropolitan areas. Middle-income households lost ground financially in 222 of 229 metropolitan areas from 1999 to 2014. Meanwhile, the median income of lower-income households slipped in 221 metropolitan areas and the median for upper-income households fell in 215 areas.

Median incomes of the middle class and other tiers fell from 1999 to 2014

The trends in income point to economic pressures on the middle class, including in areas where it still holds a large share of the population. In Sheboygan, WI, where 63% of adults are middle class, the median income of the middle class fell by 17%, from $80,281 in 1999 to $66,719 in 2014. Also, middle-income households in areas such as Janesville-Beloit and Eau Claire in Wisconsin and Elkhart-Goshen in Indiana experienced at least a 10% decrease in median incomes. Thus, while these communities are still largely middle class, the financial security of middle-class households in them has deteriorated since 1999.

Looking across metropolitan areas in 2014, there is considerable variation in the median income of households. For households overall, the median income ranged from $39,752 in McAllen-Edinburg-Mission, TX, to $90,743 in Midland, TX. Also, the incomes of households within each income tier varied across metropolitan areas. Among middle-class households, the median income ranged from $64,549 in Hanford-Corcoran, CA, to $81,283 in Racine, WI, a gap of 26%. 17

Road map to the report

This report divides households in U.S. metropolitan areas into three income tiers—lower income, middle income and upper income—depending on how their incomes compare with the national median household income. Household incomes within each metropolitan area are first adjusted for the cost of living in the area relative to the national average cost of living. Incomes are also adjusted for household size and scaled to reflect a household size of three.

In drawing comparisons over time, households that were in the lower-, middle- or upper-income tier in 2014 are compared with households in those tiers in 2000. The analysis does not follow the same households over time, and some households that were middle income in 2000 may have moved to a different tier in 2014. The demographic composition of each income tier may also have changed over the period.

The first chapter of the report describes how the U.S. adult population was distributed across the three income tiers in 2000 to 2014. It also describes the impact of adjusting incomes in metropolitan areas for the local cost of living.

The report then focuses on the size and economic well-being of lower-, middle- and upper-income tiers in U.S. metropolitan areas in 2014, and on how the metropolitan areas compare in these respects. The final chapter analyzes changes in the relative size and well-being of the income tiers from 2000 to 2014 at the metropolitan level.

Appendix B contains tables with estimates of the shares of the adult populations in lower-, middle- and upper-income tiers in 229 metropolitan areas and changes in those shares from 2000 to 2014. Maps in Appendix B depict these changes pictorially. Additional data on all metropolitan areas, such as median incomes, cost of living and other economic and demographic indicators, are available online for download.

  1. The data used in the report are the Integrated Public Use Microdata Series (IPUMS) versions of the 2000 decennial census and the 2014 American Community Survey.
  2. The post-2014 plunge in oil prices may have a negative impact on the state of the Midland, TX, economy going forward. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Midland increased from 2.8% in January 2015 to 3.9% in January 2016. Over the same period, the national unemployment rate fell from 6.1% to 5.3% (data are not seasonally adjusted).
  3. These estimates for the U.S. differ slightly from the estimates published in a Pew Research Center report released on Dec. 9, 2015. That is because this report is based on data from the 2014 American Community Survey (ACS)—the latest available—and the earlier report was based on data from the 2015 Current Population Survey (CPS) Annual Social and Economic Supplement. The ACS features a much larger sample size than the CPS and is needed to analyze trends in U.S. metropolitan areas.
  4. Income data collected in the 2000 decennial census pertain to 1999.
  5. See Ostry, Berg and Tsangarides (2014), Summers and Balls (2015), Dabla-Norris et al. (2015) and Cingano (2014).
  6. This is the key finding from the 2015 Pew Research Center report on the American middle class.
  7. See Methodology for the method used to adjust incomes for household size. The median income splits the income distribution into two halves—half the households earn less than the median and half the households earn more. The median is not affected by extreme highs and lows in reported incomes. It is also not affected by changes in the top codes assigned to income values in the public-use versions of the American Community Survey and decennial census data.
  8. Estimates of the cost of living in a metropolitan area, relative to the national average, are reported by the U.S. Department of Commerce, Bureau of Economic Analysis (BEA) ( The consumer price index (CPI-U) is used to adjust for changes in prices over time. See Methodology for additional details.
  9. Among the top 10 middle-income metropolitan areas, Urban Honolulu, HI, in which the manufacturing share of output was 2%, is the only area with a share less than the national norm. Data on the manufacturing share of national and regional gross domestic product are from the U.S. Department of Commerce, Bureau of Economic Analysis (BEA) (
  10. In 2014, the national annual average weekly earnings for all employees was $1,016 in manufacturing, compared with $845 in the private sector overall as per the U.S. Bureau of Labor Statistics.
  11. Data on manufacturing and private sector employment are from the U.S. Bureau of Labor Statistics.
  12. These estimates are derived after incomes in the metropolitan areas have been adjusted for the cost of living in the area relative to the national cost of living.
  13. Differences are computed before estimates are rounded.
  14. An increase in the share that is upper income or a decrease in the share that is lower income signals an improvement in economic status. A decrease in the share that is upper income or an increase in the share that is lower income signals deterioration in economic status. A 1 percentage point increase or decrease in the share that is lower income is given the same weight as a 1 percentage point increase or decrease in the share that is upper income.
  15. In 2014, the manufacturing sector’s share of GDP in these areas ranged from 17% in Springfield, OH, to 42% in Rocky Mount, NC, compared with 12% nationally, according to the Bureau of Economic Analysis ( In Springfield, the manufacturing share was down from 30% in 2001.
  16. Employment data are from the U.S. Bureau of Labor Statistics.
  17. It is worth recalling that middle-income households in any metropolitan earn from $41,641 to $124,924 after incomes have been adjusted for differences in the cost of living across areas and scaled to reflect a three-person household.

The Richest Man in Babylon-George S Clason-Audiobook


Travel back in time as George S. Clason takes you back to Babylon in
his enlightening, insightful book on financial investment and financial
success. The original version now restored and revised, this series of
delightful short stories teaches economic tips and tools for financial
success that have withstood the test of time and are applicable still
today. Enjoy reading, and start saving today!

Should I have life insurance in retirement?

George isn’t sure if his $100 monthly insurance premiums are better off in a savings account


Q: I am 59 and mostly retired. My wife and I both have life insurance
policies which are costing us about $100 a month. As we are financially
secure, is there any need to continue paying the premiums or should
we just cancel the policies?

The insurance agent recommends keeping it as I will die eventually and
will cash in at that time but my thought is I can take the cash value and
save $1,200 a year now.

The policy is $33,000 for me and $17,000 for my wife.

Also, I was told that I may have to pay taxes on the cash value.


Screen Shot 2016-04-12 at 11.40.06 PM

A: I like to start any discussion about life insurance with an assessment of insurance needs, George. Insurance should be a risk management tool first and foremost and if you have beneficiaries who would be impacted negatively financially by your death, you should probably consider life insurance.

An insurance needs analysis can be conducted by an insurance agent or financial planner or at least approximated using online resources. If a shortfall exists, it should likely be addressed with life insurance.

In your case, George, you seem pretty confident that you are financially secure. Generally, a retiree may be self-insured through their savings and government pensions, meaning that life insurance is not necessary from a risk management perspective. If that’s the case, I think the decision to keep or cancel the policies becomes an investment, estate planning and tax discussion.

Ask a Planner: Leave your question for Jason Heath »

When assessing an insurance policy in a situation like yours, I like to look at the expected “return” on the policy for the rest of your life. If you pay $1,200 in premiums in the coming year and die at 60, that $33,000 payout to your estate is a 2,650% return on investment. Not bad. But you need to die.

If you live until 110, you may have been better off putting your premium dollars under your mattress. Since it sounds like you own whole life policies, without knowing all the facts about how the policies are expected to grow with dividends during that time, I can’t tell you how low the return may in fact be, George.

The point is, the return on investment from an insurance policy is variable. It depends primarily on how long you live. I think you need to crunch the numbers to look at the projected annual payout to your estate (including dividends or investment growth, depending on the type of policy) and compare it to investing the $1,200 a year in premiums in stocks and bonds or GICs instead. In this way, you can figure out the annualized rate of return based on dying in any given year and then try to assess if the return looks good relative to what you think your life expectancy might be. Keeping the insurance policies may be a very good “investment” if you’re conservative GIC investors or if you think you’ll have a short life expectancy.

All that said, I think you also need to consider your estate planning objectives. If you don’t have beneficiaries or don’t care to provide for them–preferring to maximize your retirement–consider cancelling the policies. The cash value and the premium savings may put more money in your hands now if that’s your primary objective.

Finally, from a taxation perspective, cashing in a whole life insurance policy will generally result in taxation. The cash value in excess of the adjusted cost base is taxable as regular income on your tax return. The adjusted cost base is not just the premiums paid to the policy. It’s the premiums paid less the cost of insurance and may mean that a good portion of the cash value is taxable to you.

The good news for you, George, at age 59, is that your income may be lower now than after you begin CPP, OAS and RRIF withdrawals. Thus the tax implications from cancelling the policy may be modest.

Insurance can be a great tool for planning related to corporations, cottages, second marriages and so on, but some of these strategies are beyond the scope of my answer to you, George.

I can’t help but chime in on your insurance agent’s recommendation on the policies. Recommending that you keep life insurance because you will die eventually is like wearing a winter jacket in the summer because it will snow eventually. Sometimes it actually pays to be short-sighted in your financial (and your fashion) choices to avoid keeping a product you don’t need—or wearing a jacket that makes you sweat.

Ask a Planner: Leave your question for Jason Heath »

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.


Money Talks: The 5 Money Conversations to Have with Your Kids at Every Age and Stage.

By Jennie Blizzard

As a child, you’ve most likely heard it. If you’re a parent, you’ve most
likely said it: money doesn’t grow on trees. And while the long standing
common sense saying holds true, parents do have the ability to pass
along financial knowledge that can bear good fruit throughout a child’s
life. Scott and Bethany Palmer can tell you how.

Widely respected and known as the Money Couple and as financial
experts, the Palmers have spent a decade helping couples divorce proof
their marriages over money through books, coaching and various resour-
ces. And now as co-authors of the best selling read The Five Money Per-
sonalities, they have formulated a brand new resource for parents in their
newly released book, The 5 Money Conversations to Have with Your Kids
at Every Age and Stage.

“It’s very interesting for the past 10 years, we’ve been helping couples
make their relationships great by helping them to discover why they view
and look at money differently,” said Scott. “We were doing a great job
working with couples and getting them on the same page about money
but we really weren’t doing the greatest job with helping our own kids
understand money.”

The Palmers weren’t alone. After conversations with other parents, a well-
known fact was confirmed. They were all worried about raising entitled,
materialistic, and financially dependent kids. “Because that was a concern
of ours, we said we needed to come up with a new way for parents to think
and talk to their kids about money,” said Scott. “And that’s how we came
up with and wrote the book.”

The Five Money Conversations gives practical advice and emphasizes that
in order to teach a child about money, you must first know his or her
money personality (spender, saver, risk taker, flyer and security seeker).
“What’s interesting is that everyone has two of the five money personali-
ties and a lot of times people stop at their first one,” said Bethany. “Most
of us can assess our primary one. But the secondary one is so crucial.”
She adds that the secondary money personality can be completely opposite
of the primary. “It’s the dynamic of the two that makes you unique, special
and different,” Bethany says.

In addition to identifying the personality, Bethany says that parents must
also understand that most of the time, their outlook about money will
differ from their kids, thus creating the potential for conflict. She shares
an example from her own family where her mother’s primary money
personality was a saver and the secondary was a security seeker. Betha-
ny’s primary is a spender and secondary is a risk taker. “We have the
same thing with both of our sons,” said Bethany. “One of the reasons
that learning money personalities is so important is because we need
to learn how to speak in a way that they can hear us and learn our chil-
dren’s personalities so they can actually understand and be parented
about the positive sides of these differences.”

The money personality assessment, available online, was developed pri-
marily through the Palmers’ 10 years of research working with couples
and with the help of a statistical scientist at Stanford. The Palmers were
able to take their scientific tool, which has been taken by over 60,000
people and modify it for kids. There’s an assessment for ages 5-12, 13-17,
and 18 and beyond to help them figure out their primary and secondary
money personalities. “For ages 5-12, this may take you sitting down with
your child and taking the quiz together,” said Scott. “But let them drive
the car and answer the questions. It takes less than 10 minutes.”

For parents of teens or adult children and think it’s too late to have “the
big talk” about finances? It’s never too late. “The great thing about this
book is that you have the opportunity to jump in at any age or stage,”
said Scott. “There are going to be some parents whose kids are in college
and they’re saying “oh my goodness, my kids are totally financially depen-
dent on me. How are we going to start to change that?”’

Scott warns parents that these conversations are not as simple as discus-
sing a 12-point budget and convincing your child to stick to the plan to be
financially successful. The Five Conversations guides parents on how to
have discussions and gain some wins that establish trust before jumping
into the budget. “Our youngest is a primary spender and is a secondary
security seeker,” said Bethany. “If I understand that about my child and
I learn how to talk to him in a language that he’s going to understand
by calling a budget a spending plan, then he’s going to see me as a re-
source and someone he wants to talk to about present and future
money challenges.”

The Palmers stress important points to remember when having this much-
needed conversation. First, understanding your child’s money personality
is crucial. Second realizing that it’s not just one conversation but a lifetime
of evolving talks as the child transitions to different ages and stages. The
third is patience. “They are not going to see the money and deal with it
the same way as you do,” said Scott. “But if you have these money con-
versations you will be amazed at what you can teach them, point out and
help them with.”

In addition to patience, Bethany advises parents to not “shame” their
child about their money personality. For example if a child is a primary
spender and secondary risk taker, don’t focus on how they like to spend
money, encourage him/her to use their personalities for the greater good.
For instance, encourage the risk taker to use his/her money personality
to start a business. “One of the greatest gifts we can give our children is
teaching them how to think about money,” says Bethany, “and teaching
them how to view it through their lens in a healthy way.”

For more information about Scott and Bethany Palmer, visit

Get great advice: Get Financially Fettered!

By Alanna Klapp

Financial challenges affect all ages. College graduates employed
at entry-level jobs are now saddled with 1.2 trillion dollars in out-
standing student loans. The typical U.S. household, while earning
an average salary of $60K per year, is faced with credit card debt,
student loans, and an overall lack of savings. Baby Boomers still
reeling from the impact of the Great Recession and wiped-out nest
eggs and retirement savings are now finding new ways to re-invent
themselves and extend their working years. Whichever your situa-
tion, Lynnette Khalfani-Cox, The Money Coach, has advice for you.
Her latest book, Perfect Credit: 7 Steps to a Great Credit Rating,
is a must-read for people who want to establish, fix, improve, or
maintain credit. Along with her sound financial advice, Lynnette’s
mission is to give people hope and inspiration. In a recent interview,
she shared that 99.9% of the time people can recover from things
that have gone wrong financially in their lives, whether it be a
mistake or an unforeseen event. “It’s not the end of the world,
it’s not fate, and it’s not a permanent financial death sentence,”
Khalfani-Cox explains. “It will get better if you take some steps.”
Here she shares a few of the steps below.

Lynnette’s Advice

For the Recently Employed College Graduate

•    Be realistic about starting salaries and expenses, including
student loans. A huge pitfall college grads face is overestimating
starting salaries and underestimating expenses once they get into
the real world. Take a hard look at your student loans and create
a strategic payoff plan that’s done as quickly as possible. Don’t wait
to start aggressively paying off student loans. Double the minimum
payments if you can afford it, or add to the minimum monthly payment.

•    Keep the spending in check. Make some sacrifices to be able to
put more money towards student loans. Don’t be ashamed to tell
your friends you can’t afford a trip or a dinner out. “You can’t say
yes to everything because you don’t have an infinite amount of
money,” Lynnette says.

•    Start saving and investing now. Save something rather than
nothing, even if it’s just $25 a paycheck. You’ll develop disci-
pline and over time, even small amounts of money can amass
and become large sums because of the power of compounded
interest. Make sure to take advantage of your employer-
sponsored retirement savings plan, such as a 401K or a
403B program.

For the Working Joe and/or Jane with Kids

•    Avoid the credit card debt trap. If you’re in credit card debt,
create a strategic payoff plan.

•    Regular savings is critical. Lynnette recommends three types
of savings accounts for working moms and dads:

1. Rainy day fund: cash needed for one-time, unforeseen events
such as the car or the washing machine breaking down.

2. Emergency fund: enough cash on hand to cover your living
expenses for 3-6 months in case of a long-term major life
disruption such as a job loss. For example, if your bills are
$2500 a month, you should have $7500 or more in this account.

3. College fund: such as a 529 plan, a state-sponsored college
savings vehicle where you can save money and invest in mutual
funds over time.

•    Use financial windfalls properly. Set aside a portion of your
income tax refund to build any of the three funds above.

•    Max out your retirement plan in 2014. Increase your contri-
butions gradually, add money back to your paycheck by adjusting
your tax withholdings at work, use your raise, and make sacrifices.
Scale back eating out and look at savvy ways to cut costs.

For the Baby Boomer

•    Rethink the impact of adult children and grandchildren on
your finances. Don’t be a victim of a financially abusive relation-
ship, which occurs anytime someone you know, trust, or love
takes economic advantage of you.

•    Plan for things that can wipe out retirement savings, such
as an accident, illness, or an aging parent’s expenses. Health
and disability insurance can be helpful here.

•    Make sure you have a will. Direct and protect your assets.
Name a guardian or custodian if you have minor-age children.


An award-winning financial news journalist, sought
after financial expert and radio personality, Lynnette
Khalfani-Cox has appeared on such national TV pro-
grams as The Oprah Winfrey Show, Dr. Phil, Good
Morning America and Dr. Oz sharing her success
story and teaching millions about proper money
management and how to get out of debt and
eliminate their debt.

Also known as The Money Coach®, Lynnette has
authored numerous books, including the New York
Times bestseller Zero Debt: The Ultimate Guide to
Financial Freedom. Her latest book, Perfect Credit:
7 Steps to a Great Credit Rating, is a must-read
for people who want to establish, fix, improve, or
maintain credit. She’s currently working on her next
book, due out later this year, on how to save for a
college education without going broke.

Dave Says—

*Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored fie New York Times best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at

(Dating and the budget)

Dear Dave,
I’ve been following your plan, and I’ve finally gotten out of debt and feel I have
control of my finances. I’m also single, and I was wondering if you have any tips
for how to gracefully mention financial topics and budgeting when you’re on a date.


Dear Paula,
Well, I don’t recommend bringing it up on a first date. If I’m a guy on the initial date
with a girl and the first thing out of her mouth is about finances and handling money,
that’s going to be pretty strange.

Now, if the first date turns into another and another and another, then you might
start talking about the deeper things in life and where you both stand. As you start
talking about more serious subjects, you’ll begin to learn if there’s enough of a basis
for a real relationship.

But the first date is just sort of an introduction, right? You’re both seeing if there’s any initial, mutual compatibility. Asking someone how much they make, or where they are
on their debt snowball in this scenario is officially weird-even by my standards. In other words, use manners and tact. They may be old fashioned words these days, but in
most cases they work well.

(More of a long-term spending thing)

Dear Dave,
I’ve started my four-year-old on an allowance structure and a chore chart. I also have a mini-envelope system with spending and saving set up, but I’m having trouble helping him distinguish between the two. How can I solve this?

Dear Monica,
At that age, any type of saving is going to be more of a glorified, long-term spending plan. The point is to teach them to delay gratification when you’re first starting out. And when you’re only four, two weeks is long term. The contents of the spending envelope should be kind of spontaneous. Let him take it on trips to the store, and if he wants a pack of gum or whatever, he can get it. The saving envelope, though, stays at home. Then, as he grows and his mind and reasoning develops a little more, you can really start teaching him about long-term goals and how to get there-including giving.

Don’t try to force a four-year-old to think five or 10 years into the future. We’re just trying to teach lessons here, and it doesn’t have to be done perfectly. Just be intentional, and try to find teachable moments as you go along.

(Don’t tithe with credit cards)

Dear Dave,
What is your opinion of churches encouraging members to do e-giving with credit
cards and debit cards?


Dear Melissa,
I’m against debt, so I’m not particularly fond of churches asking people to use a debt vehicle to pay their tithes. I realize that few businesses and organizations distinguish between debit cards and credit cards when accepting payment. However, this practice bothers me a lot when it comes to churches. The Bible mentions debt several times in Scripture, and every time it does, it’s always in a negative light. It’s not a salvation
issue or anything like that, but the Bible basically says debt is a foolish thing.Now, I think e-giving in itself is fine. But if I were the pastor or on the leadership board, and we had an e-giving process, I would strongly encourage people to use debit cards and not credit cards. There’s nothing wrong with a draft or an ACH kind of thing. A lot of people do that and like the ability to give online.

But I don’t want a giving situation to your church turn into debt to you. And it does just that when it’s a credit card!
– Dave

(Don’t insure cell phones)

Dear Dave,
I just bought a new smartphone, and the company I’m with offers insurance for
the device. Do you think it would be wise or foolish to do this?


Dear Lisa,
The purpose of insurance is to transfer a risk that you can’t afford to take. When it comes to things like cars or houses, I absolutely recommend that people have insurance. Most folks couldn’t just write a check for another car if the one they drive were totaled. It’s the same with a house. If your home is destroyed, the insurance takes care of things instead of putting you in the position of having to pull tens or hundreds of thousands of dollars out of your own pocket for a new home-also something most people can’t do.

No, I don’t insure inexpensive things like smartphones. And if a smartphone is an expensive item to you, then you probably shouldn’t have that phone. I mean, there’s nothing wrong with having a cell phone if you can afford it. But if you tear up a phone or it breaks down and you can’t afford to replace it out of your own pocket, then you’ve got too much phone!
– Dave