Sometimes, it feels like no matter how hard you work, your bank account doesn’t seem to show it. If that sounds like you, you’re not alone. Many people in the middle class feel the same way and feel like they’re stuck in a loop that they just can’t escape. Here are 18 things that make the middle class poor and why they can’t get out of it.
Love for Credit
It’s easy to start swiping that plastic for every purchase you make, but it’s a lot harder to stop it. For many middle-class families, credit cards are a financial crutch that they use for everything, but doing this actually pushes them further into debt. Unfortunately, this becomes a vicious cycle that makes saving money practically impossible.
No Safety Net
If you think your job’s safe, think again. Even the steadiest of jobs can suddenly appear the next time the economy suffers or a new piece of technology comes out that can do your job faster. Soon enough, you might find yourself struggling without a paycheck when your job’s on the chopping block.
Student Loans
Although getting a degree might be great, the massive debt that comes with it isn’t so great. Many middle-class people are stuck with student loans, which makes it hard for them to save for their other dreams. Just trying to be financially comfortable becomes a challenge that they can’t seem to solve.
Drowning in Medical Bills
Even if you have health insurance, getting sick can cost you an arm and a leg, even if you’re middle-class. These people often have huge bills that insurance won’t cover, which ends up draining their savings by quite a bit. This constant expense stops them from achieving their other financial goals, including investing in their future.
Shortage of Savings
Sadly, lots of people just aren’t putting back enough cash for a rainy day or even those golden days. Whether that’s because they’re spending it all or just don’t think about it, some middle-class people are unprepared for when trouble hits. Without these savings, they’re in a real bind.
Living Large
As you start making more money, it can be tempting to start spending more, too. This lifestyle creep can start eating into your paycheck without you even realizing it, meaning you don’t have enough left for savings. Soon enough, you’re living paycheck to paycheck and wondering where all your money goes each month.
Forever Renting
Rent prices are crazy, and it’s also affecting those middle-class people without a place of their own. If you’re always paying the landlord, saving up to buy your own place can seem impossible. High rental costs can take up a huge portion of your monthly income, so it’s a lot harder to save for a down payment on a house, especially when those costs are so high.
Retirement Issues
Many middle-class people underestimate how much they’ll actually need to retire comfortably. As soon as they realize this, they’re playing catch-up to make sure they’ve got enough left. Usually, this means their retirement isn’t as comfortable as they hoped for, and it forces them to work longer than they planned.
Increasing Inflation
Inflation causes problems for everyone, and the middle class is no exception. Prices go up, but if your wage doesn’t keep pace with this, you’re going to feel the difference. These increases make it a lot harder to maintain your standard of living without dipping into your savings or going into debt.
Too Much Real Estate
For those lucky enough to put money into real estate, some middle-class families put too much in because they’re betting on property values continuously increasing. When housing markets crash, they’re left with underwater mortgages or properties that don’t give them the returns they were hoping for. This leaves their finances in ruins.
Inadequate Insurance
Some middle-class families underestimate the amount of life or disability insurance they’ll need to protect their income. Sudden illnesses or disabilities can strike at any time, and if they haven’t got enough coverage, they can cause huge financial problems. Usually, this means they’re left with few savings and assets.
Limited Liquid Assets
Middle-class people usually invest in assets that they can’t liquidate easily, like real estate or retirement accounts. This can be a huge problem in financial emergencies, as they don’t have easy access to money to cover these costs. It forces them to get high-interest debt, which can make their financial problems even worse.
Poor Financial Planning
Without professional guidance, it’s unlikely you’ll make the right financial planning decisions, and that’s the same with the middle class. For example, they might not diversify their investments enough or do proper risk management. When the market changes, they might suffer serious losses, and it can be pretty hard to recover from this.
Tax Bracket Troubles
As middle-class families move into higher income brackets, they’ll often have to deal with higher taxes but without gaining any more disposable income. This can make it difficult for them to invest or even save their money. They might be working harder and earning more, but that doesn’t mean they’re actually any richer.
The Cost of Commuting
Living in the suburbs means longer commutes for many middle-class workers, which can cause higher transportation costs. After all, gas and car maintenance doesn’t come cheap, and neither does toll roads. Living away from the city center can mean cheaper housing, but those daily costs make it seem like it’s not worth it.
Beaten By Technology
Many middle-class jobs are in industries that are being changed by technology. In some cases, workers’ skills have become useless faster than they can react, which can lead to them losing their jobs or needing to be retrained. If people aren’t able to keep pace with these, they might be squeezed out of a well-paying job.
Energy Costs
Middle-class homes are often larger and older than other homes, which means their heating and cooling systems may not be as efficient. This causes their energy bills to increase, and that’s not exactly good news considering the rise in energy prices. Unfortunately, these monthly expenses can affect their overall financial health by quite a bit.
Cultural Pressures
When you’re in the middle class, you’re under a lot of pressure to show how much money you have. This can include buying a better car or private schooling for your kids. Sadly, this overspending to “keep up appearances” sometimes means using credit or savings to cover the costs.
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