Tightening Belts: Middle-Income Earners Face Financial Challenges Amid Inflation and Soaring Housing Costs

Inflation is a major concern for middle-income earners, with four out of five respondents citing it as a significant issue in a recent survey conducted by Santander US. As a result, more than 70% of participants reported seeing higher prices in the second quarter. To cope with these rising costs, 90% of respondents have had to cut spending in at least one area, while two out of every five have taken on additional jobs within the past year.

Despite these challenges, the survey revealed that 77% of middle-income households are managing to stay ahead of their bills. Nearly three-quarters of respondents expressed confidence in their financial prospects, believing they are on track towards financial prosperity.

Santander US CEO Tim Wennes commended American households for their resilience in the face of economic challenges, noting that many are taking necessary actions to navigate through inflationary pressures. This includes cutting back on spending and scaling back on summer activities to accommodate higher prices.

Among the biggest financial concerns for middle-income earners are elevated housing costs. The study defined middle-income households as those earning between $50,000 to $148,000 a year. The survey revealed that 51% of respondents no longer believe homeownership is essential for financial prosperity, indicating a shift in views on the housing market.

As housing prices continue to rise, many are appreciating the flexibility and cost-effectiveness of renting over homeownership. The findings of the survey shed light on the challenges faced by middle-income earners and the adjustments they are making to navigate through these financial obstacles.