Unless you've already struck it rich, you're probably working hard every day trying to get ahead. But what really defines "middle class"? What can you do to break through to get into that exclusive club, "the rich"? (To find out if you fit into the middle class, check out 6 Signs That You've Made It To Middle Class.)

IN PICTURES: 6 Millionaire Traits That You Can Adopt

What Is the Middle Class?
We all have some idea of what we believe middle class to be. But when you try to create hard distinctions, socioeconomic classes have proved very difficult to define. Opinions abound as to what income levels are middle class, and how large of a percentage of the population is middle class. Due to these widespread disagreements, middle class can only be loosely defined.

The most popular way to define the middle class is to delineate a range around the median household income. In the United States, the median annual household income is around $46,000. If we were to consider the middle 33% of households to be "middle class" then "middle class" could be defined as a household income ranging from approximately $30,000 to $62,500 per year.

Moving Up the Ladder
There is no single easy path to follow if you're trying to move up the economic ladder. The current list of the richest people in the world includes moguls from many different industries, each of whom did it in their own way. Many believe, however, that some basic economics shows the fundamental strategy that richer people apply more effectively.

Factors of Production
In general, we can think of an economy as a collection of four "factors" which produce goods and services. These factors are land, labor, capital (machines) and human capital / knowledge. To produce a car, for example, you need land on which to build a plant, a labor force, machines for fabricating parts and human capital to design cars and direct the manufacturing process.

It could be argued that a primary difference between the rich and the poor is that richer people successfully aim to control or own the factors of production. In doing this, they are able to leverage these factors to achieve superior wealth. To stay with our car example, it is pretty clear that the owner of the car company is going to make considerably more money than the factory line worker.

To implement this strategy, it isn't necessarily that you should go on a buying spree for unused land and fabricating machines. However, there are three areas which are easy to focus on in order to increase your economic status.

1. Education / Human Capital
A major predictor of economic status is educational attainment. This makes sense if you consider that in today's world there is a great deal of valuable work that can only be done by highly trained individuals. Individuals who can do this work in an important sense "own" the human capital factor of production, and can attract high salaries in return. It is no wonder that an undergraduate degree is almost a requirement for entry into the middle class, and that further education is generally a requirement for entry into the "rich" class.

Education does not always have to happen in the classroom, however. In fact, several billionaires including Bill Gates, Michael Dell, Mark Zuckerberg and Steve Jobs dropped out of college. However, keep in mind that each was highly intelligent, and got a valuable education from running their own start-ups. The common thread is that having superior skills and expertise can bring significant wealth your way. (Learn more about these figures in 4 Lessons From Billionaire Entrepreneurs.)

2. Thrift
As the old saying goes, it takes money to make money. Money is not itself a factor of production, but a certain amount is often required for investments that gain control of other factors of production. Many now-rich people had to save in order to have enough money to make their initial investments. For example, Warren Buffett is said to have saved around $90,000 in present day dollars by the time he had graduated from college. (For more on Buffett, see Warren Buffett: The Road To Riches.)

IN PICTURES: Debunking 10 Budget Myths

3. Hard Work / Labor
Any rise in economic class will not be easy - you have a lot of competition. Hard work is always required to become rich, especially if you do not have much education or money to leverage initially. But hard work does not stand alone as a ticket to wealth. Obviously, unskilled labor is in great supply. There are certainly many poorer people who work longer, harder hours than the rich. To move up in economic status, you do need work hard, but you will also need to leverage other factors to increase your earning power.

The Bottom Line
While there is no easy way to the top, understanding some basic economics will help you leverage your talents and help you move up the economic ladder.

Check out the latest financial news in Water Cooler Finance: History's Biggest Rogue Trading Scandal.

Related Articles
  1. Chart Advisor

    ChartAdvisor for January 29, 2016

    A weekly technical summary of the major U.S. indexes.
  2. Philanthropy

    How Billionaires Around the Globe Give Back

    This list of foreign billionaire philanthropists is robust. Here's a list of rich entrepreneurs around the globe who have given back in really big ways.
  3. Term

    What High Net Worth Means

    A high net worth individual is someone with many liquid financial assets.
  4. Your Practice

    Advisors: Avoid Making This Mistake with Clients

    Financial advisors who focus only on wealthy clients may be missing out on a significant portion of business. Here's why.
  5. Investing

    The Richest Person in Each Decade of Life

    Who is the richest person currently in their 20s, 30s or 40s? Learn their inspiring stories and gain motivation to pursue your dreams.
  6. Investing

    Say Hello to Uber on Facebook Messenger

    Transportation on Messenger is introduced to enable Uber ride-sharing within the Facebook Messenger app. Users can book a ride, notify friends and pay.
  7. Estate Planning

    A Look At Robin Williams' Net Worth and What Happened to His Estate

    Understand what happened to Robin Williams' estate and what his estate included. Learn about the court battle over his remaining possessions.
  8. Investing Basics

    Defining The 3 Types Of Investments

    The first step to being a successful investor is knowing what is and isn't an investment.
  9. Investing News

    Bill Gates and the Oculus Rift Buddha Dance Hall

    Should you invest in hot virtual reality tech company, Oculus Rift?
  10. Investing

    An Overview of Businesses Owned by Microsoft (MSFT)

    Microsoft is much more than a software company. Here are five businesses owned by the multi-billion dollar conglomerate.
  1. Under what circumstances would I benefit from a high net worth insurance policy?

    A high-net-worth insurance policy is specifically tailored to suit the needs of high-net-worth individuals. It is specifically ... Read Full Answer >>
  2. Under what circumstances would I require private wealth management?

    An investor who is a high-net-worth individual (HNWI) may require private wealth management services. HNWIs have unique financial ... Read Full Answer >>
  3. What is private wealth management?

    Private wealth management is an investment advisory practice that incorporates financial planning, portfolio management and ... Read Full Answer >>
  4. When is litigation better than mediation in a high net worth divorce case?

    Typically, litigation is better than mediation in high-net-worth divorce cases for two major situations – when there are ... Read Full Answer >>
  5. Which US cities have the highest number of high-income households?

    According to the most recent U.S. Census report on the geographic concentration of high-income households conducted in 2 ... Read Full Answer >>
  6. Why are fee-based accounts preferred by many high net worth individuals (HNWI)?

    High net worth individuals (HNWIs) often prefer fee-based investment accounts for reasons that include reduced conflicts ... Read Full Answer >>
Hot Definitions
  1. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  2. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  3. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  4. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  5. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center