The Middle Class at Risk: 4 Challenges Facing Middle Class Families
Back in the days, middle-class families did not have to struggle financially as the economic situation enabled comfortable lives even in cases there was only one provider for the whole household. Today, we are witnessing a crisis where two paychecks are insufficient to cover all the expenses. Making ends meet is definitely taking the toll on Americans: according to the research conducted by the Federal Reserve Board, 47% of the respondents said they do not have an emergency fund of as little as $400. This is definitely a reason for red alert. But there is more than one thing burdening the middle class.
Expenses Grow, Wages Don’t Keep up
Back in the sixties, the country focused on prosperity, while now – it is all about surviving through the financial insecurities. The main problem is that wages either stay the same or grow only on nominal base, which means that, once they are adjusted for inflation – their buying power drops down. The question of federal minimum wage is specifically problematic since it is dependable on the current government and parties. At the moment, it is $7.25 per hour, while 58% of the surveyed Americans believe it should be at least double ($15) to cover basic life needs. Back in 2015, The Economist argued that taken in mind the U.S. national income, minimum hourly pay should be at least $12. On the other hand, expenses such as college tuition fees or medical care have grown.
The Problem of Debt
Another challenge middle-class families are facing is the absence of any financial safety net. While in the past, households could rely on savings for rainy days, today’s families are living from paycheck to paycheck, and it’s still not enough. Whether it is the credit card debt or an interest they cannot get out of, it is hard for families to get back on track. It usually revolves around seeking instant solutions (e.g. payday lendings or different types of creditors) and then making a bigger problem in the future. This is why many families seek out for payday loan help in an attempt to consolidate their debt and start fresh. Not having a stable budget is a problem by itself, but debts are the weights dragging the middle-class down to the bottom.
Work Landscape Isn’t Promising
Many Americans would love to obtain a full-time job that brings them a decent amount of money and career satisfaction. This is particularly true for younger generations, such as Millennials. This generation chooses part-time employment willingly since they don’t wish to commit to a full-time career doing something they don’t love. According to Time, Millennials use part-time jobs simply as financial survival until they figure out a way to pursue a profession they want and get well paid for it. In any case, this behavior is causing an economic disruption.
Lack of Savings
Given the fact they are overwhelmed with living costs, middle-class Americans find it hard to save money for the future. The household saving rate decreased to 3.10 percent in September and high-level debt plays its role here. This means an alarming number of citizens do not have a retirement plan. Low income combined with poor consumer habits lead to having no financial security in the future. It could be that households don’t have a defined budget or they take care of expenses as they come. The inability to see a broader picture and prioritize comes as a direct consequence of stress and burnout due to working too much for too little.
Despite what you may think, the economic pressure is not put only on American families but is a truly global phenomenon. From the current perspective, it seems that middle class has to find its own methods of savvy financial management – whether it’s by extreme savings measures or seeking new job opportunities.