The middle class is known as the backbone of the economy. Almost 53% of the new generation thinks this is because of the high cost of living and inflation in the US. In March 2024, the core inflation increased by 3.8% compared to a year ago. This means that, on average, things like clothes, electronics, and other everyday items cost about 3.8% more than last year.
We compiled a list of 10 things the middle class may need help to afford in the next five years.
Buying a home
The American dream of owning a home is getting more complicated for many middle-class people. The cost of homes keeps increasing, but paychecks are growing a little. For instance, the housing market has become 31% more expensive in recent years. However, according to the BLS, the median weekly income for salary workers in the United States was $1,145 from October to December 2023. This has increased by only 5.5% as compared to the year 2022.
Additionally, it’s becoming more challenging to get a bank loan to buy a house, and the interest rates on those loans are going high, too. So, even though owning a home is a big dream for many people, it’s getting trickier to make it happen if you’re in the middle class.
Healthcare Costs
Healthcare costs are a significant worry for middle-class families. According to KFF, family premiums for employer health insurance have increased 43% in the last ten years. Another study reveals that health expenditures per person in the U.S. were $12,555 in 2022, over $4,000 more than any other high-income nation.
In the future, costs will likely keep going up. This makes it harder for people to pay for their healthcare.
Owning a car
People in the U.S. spend a lot of money paying off loans, on cars, getting insurance, and buying fuel. On average, these expenses add up to about 20% of their monthly income, which is double what financial experts usually recommend they invest.
A survey by Streets Blog found that 10% of the people spend 30% of their earnings to pay for the cars. This means they have less money left over for other important things. More than 12% of the people agreed that they are struggling to make a living after paying off the money for the cars.
Private college
Private college education is getting more expensive for the middle class. On the contrary, the cost of public colleges is less than that of private colleges. For example, the average cost of tuition and fees at a public college in 2022-2023 was $10,662, and for a private college it was $42,162. The fees of private colleges have also grown by 4% in 2024.
Branded clothes
A survey shows that the average spending on clothes in the U.S. was 1,400 dollars in 2022. Besides that, according to the Bureau of Labor Statistics(BLS), clothing prices also rose by 0.7% in March 2024. Since incomes are going up a little, it’s harder for them to afford branded clothes. So, instead of buying those expensive brands, many families look for cheaper options or thrift stores.
Childcare facilities
According to a study, the average annual cost of infant child care reached over $11,000 in 2020. According to a Care survey, the average weekly cost of a babysitter is $192, while daycare is $321.
This increased cost can make it hard for middle-class families to find affordable child care services.
Organic food
In 2022, organic food sales in the United States surpassed $60 billion for the first time, setting a new record of $67.6 billion (including organic non-food goods). Rising demand and limited availability may make organic food out of reach for many middle-class families in a few years.
Broadband internet
By 2025, the number of 5G connections in the United States is expected to grow to 410 million in North America. Thus signaling a significant shift in connectivity and digital capabilities.
As of 2021, almost 43 million Americans could not access to broadband internet, primarily due to the high cost. Due to the high expense of broadband internet, it may be out of reach for the middle class in the coming years.
Safe investments
Safe investments are a top choice for many individuals seeking financial security. However, relying solely on such investments can reduce the amount saved over time.
Bankrate’s latest data shows that the average interest rate on a savings account dropped to 0.57% APY as of April 2024. This decrease in savings can make it challenging to afford a variety of expenses, from everyday necessities to larger investments like education or retirement plans and paying off loans.
Family Vacation
The average price of a one-week vacation in the United States for one person is $1,984, up $400 from the previous year. Vacation expenditures account for 2% of the typical American household budget each year. The rising living costs have made it difficult for people to save up for a vacation, turning it into a luxury that feels out of reach.