If you're in the middle class, you're probably enjoying a decent income, have a roof over your head, a reliable car, and may even be able to squeeze in a nice vacation once or twice a year.
But there is a dark underbelly to middle class life. People in the middle class often struggle with crushing debt, lack of retirement savings, and much more.
In this article, we are going to cover 8 of the most common middle class problems and some practical tips on how to solve them.
We've got a lot to cover, so let's get into it!
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What is the Middle Class?
Before we can meaningfully discuss some of the problems facing the middle class, I think it's important to define the middle class.
According to Investopedia, the middle class consists of people earning between $42,000 and $126,000. That represents people who earn between 2/3 of the median household income (on the low end) and up to double the median income (on the high end).
That makes for a very broad range, but it sounds about right. The middle class is still a very large segment of the population (around 52% of the total population), despite shrinking a bit over the past few decades. Source.
Common Problems If You Are Middle Class
Ok, now that we've got the introductory stuff out of the way, let's get into some of the most common problems facing people in the middle class.
1. You Are Burdened With Debt
This is perhaps one of the most common problems faced by people in the middle class.
If you are a homeowner, you probably have a mortgage that you are trying to pay down each month. Everyone's mortgage payment is different, but in general, mortgage numbers in the US look scary.
According to balancingeverything.com, the average mortgage debt is over $215,000. And the median monthly mortgage payment is $1,100 based on data provided by Rocket Mortgage. Of course, you also have to pay property taxes and insurance on top of that.
If that's not enough, credit card debt, student loans, and auto loans round out the other major categories of debt commonly held by the middle class.
The bottom line is that the pressure to live in a nice home, drive a decent car, and generally live the middle class lifestyle can result in many people taking on unsustainable levels of debt.
If this sounds like you, there are ways to get out from under it.
Check out my article on the five pillars of personal finance, where I provide practical information to help you manage overspending, high levels of debt, and a host of other common personal finance issues.
2. Your Income is Stagnant
Significant debt can sometimes be manageable if your income is high enough.
But that's often not the case for many middle class folks and (given the well-known stagnation in wages for the middle class) it may be hard to get that raise or promotion anytime soon to help reverse the situation.
If your income seems to be going nowhere, there are a couple of things you can do.
You can, of course, try to negotiate with your boss and get a bump in pay. But you are at their mercy, and frankly, you may have a tough road ahead of you.
In my view, a better option is to take matters into your own hands.
I like the following two strategies. The first is setting up a passive income stream that will make money for you no matter what happens with your job. And because it is passive, you can do it on the side and still work full time.
Another strategy is to start freelancing. We are now living in a gig economy and there are tons of great platforms that allow you to start freelancing easily and successfully.
To learn more about how to set up a passive income stream without a lot of money, check out my article on 9 Low Cost Passive Income Ideas That Work [All Under $500].
If you want to find out how to get started in freelancing, check out my article on the the 12 Easiest Freelance Jobs for Beginners [No Experience Required].
3. You Are Not Saving Enough For Retirement
Another common problem facing the middle class is that they are not saving enough for retirement. With social security potentially being reduced or eliminated altogether in the future, it is more important than ever to properly fund your retirement.
But with everything going on in their lives (and the costs associated with that), many in the middle class are struggling to make ends meet, and simply don't have anything left over to set aside for their retirement.
In many cases, it's a budgeting problem. I get it. I struggled with this for many years. But I learned about a better way to make sure that I was saving enough for retirement. Hint: You have to do this on autopilot.
If you want to learn more, check out my article entitled “I Hate Budgeting But Here's How I Made it Work.”
4. You Are Unhappy With Your Job
If you are in the middle class, you probably have a good paying job in corporate America or are a well-compensated pro working in the blue collar sector. Despite the pay being pretty good, there are plenty of people in the middle class who are desperately unhappy with their job.
It could be due to a lot of things, like a bad boss, an unreasonable work load, poor working conditions, or a hostile working environment. Whatever the reason, if you are stuck in a job that you hate, the prospect of continuing for another 20, 30, or even 40 years working that same job could be completely depressing.
But you don't have to resign yourself to that fate. There are ways to escape the middle class and live life on your own terms. If you want to learn more, check out my article on how to Escape the Middle Class in 7 Simple Steps.
5. The Rising Cost of Everything Keeps You Up at Night
Everything seems more expensive these days. As of the date of this writing, inflation has creeped up to a 40 year high of 7.5%. That means that the cost of basic items, like milk, bread, eggs, meat and gas have all seen striking increases.
And middle class folks are feeling the squeeze. I won't even get into the rising costs of a college education – that rate of increase over the years is off the charts.
It's sad, but the only way to get relief from this rising tide of cost increases is to make more money or make do with less.
Personally, I think making more is a better idea.
Especially if you implement some of the ideas I mentioned above around passive income streams. When you do that, you have no set cap on how much you can earn. In contrast, you can only cut expenses so much, and honestly, do you really want to live a life of self-imposed austerity the rest of your days?
6. Despite Appearances, You're One Step Away From Financial Disaster
Did you know that less than 4 in 10 American have enough to comfortably cover an unexpected $1,000 expense? That's according to a recent Bankrate survey of U.S. adults.
Now that survey was not limited to just people in the middle class, so the number could be slightly different for them. But the point is that plenty of people are living paycheck to paycheck. without any sort of meaningful rainy day fund.
So while many in the middle class are doing a great job of keeping up appearances, they are often hiding a life that is on the razor's edge of financial ruin.
Of course, the answer is to build a safety net (or in personal finance speak, an emergency fund). Try to shot for at least a $1,000. If you can't seem to find a way to do that because there is simply nothing to spare, consider holding an online garage sale. I'm serious, it's easy and profitable to do.
To learn more, check out my article on 10 ways to make money selling your unwanted stuff online.
7. You Are Pessimistic About Your Future
With all of that stuff we talked about earlier, it's easy to see why many in the middle class are pessimistic about their future.
Climbing prices, stagnant wages, and mounting debt create what many refer to as the middle class trap. And when you're stuck in that trap, it can definitely take the shine off your future prospects.
8. You Are Underfunding Your Kids' College Fund
I am sure we've all seen that scene from a movie or TV show where a parent is faced with a sudden financial hardship and wrestles with the thought of raiding the kids' college savings to solve it.
But real life is actually more insidious.
You just neglect saving in the first place. It's hard to find space in the budget to save for college, so you put it off. The years pass. And before you know it, your kid is in high school and you are panicking because you have nothing set aside for their education.
It's a common problem, especially with all of the competing priorities that people in the middle class face. But you have to get started. And the sooner the better.
Just start today and save a little bit each month.
I like putting college savings money into 529 plans because are specially designed for this purpose. They offer significant tax advantages if you use the proceeds for college tuition and other education expenses.
So find a 529 plan that has good investment options and low expenses (it doesn't have to be your state's plan, although there may be some additional state income tax breaks if you use that plan).
A good rule of thumb is to open it up and start when each kid is born. Even a modest contribution per month (like $100 or even $50) can turn into serious money over the course of 18 years.
So there you have it – 8 common middle class problems and some awesome tips on how to solve them.
If you are interested in learning more about how to secure a better future for yourself within a reasonable period of time, check out my article on How to Become Wealthy in 5 Years [7 Strategies Backed By Real Data].
This article gives concrete examples of strategies that have provided people with serious income ($10k plus) within a relatively short period of time (approx. 5 years or less). Definitely worth a read.