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Middle Class Feels Financial Pressure

[Wednesday, November 25th, 2015]

The shrinking middle class has been the subject of much media attention over the past few years, and the situation is not getting a lot better—at least according to a recent study of 1,000 consumers who offered their feelings on the country’s economy and people’s general financial well being.

Elevate, a provider of online credit solutions, did the study. They found that people in lower classes and upper classes used financial products differently, illustrating “the void in financial solutions that meet the needs of those who have less financial security.”

A strong middle class is vital to the economy

Eighty-eight percent of respondents said that a robust middle class is of vital importance to the United States economy, and 76% of people said they themselves identified as middle class. Still, 80% said it was difficult to be middle class now compared to the past. Twenty-five years ago, people felt it was easier to be middle class. And 71% of those surveyed said the middle class is “weaker” now than in previous years.

When folks say it’s hard to be middle class, they most likely mean that they have a lot of financial challenges. Thirty-five percent of people reported having money troubles within the last six months, and that was true across all demographics and income levels. Nearly two-thirds of respondents said they spend half, or more than half, of their income on basic living costs. Eleven percent are not even able to meet their basic living expenses with their income.

When people can’t pay their bills, one thing they often do is turn to credit cards to bridge the gap. But people who are in financial trouble may not be able to get some credit cards if their credit is poor. Folks with bad credit can still get credit cards though, but they may be limited to applying for cards that are designed for people with poor credit. These cards might charge higher interest rates or more fees.

What is middle class, anyway?

The question may well be asked: what is middle class?

Seventy-seven percent of folks said that anyone whose net worth is over a million dollars is not middle class, and someone who nets less than $20,000 a year is also not middle class. Having a retirement account, an emergency fund, enough money to pay for healthcare and housing, and not carrying credit card debt were issues that people who identified as middle class reported struggling with.

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