A significant majority of middle-income Americans are finding it increasingly difficult to manage their finances due to persistent high inflation in the U.S. According to a recent survey by Primerica’s Financial Security Monitor (FSM) for the second quarter of 2024, two-thirds of respondents feel they are falling behind financially because of the rising cost of living.
The FSM survey, which gathered responses from over 1,000 U.S. adults with annual incomes ranging from $30,000 to $130,000, revealed that 66% of participants believe their income is not keeping pace with their expenses. Additionally, 48% reported that they have either reduced their spending or stopped saving altogether to make ends meet.
These findings align with a separate report from the National True Cost of Living Coalition, which indicated that 65% of Americans earning up to 200% above the national poverty line (approximately $62,300 for a family of four, typically considered middle class) are also struggling financially.
Primerica’s analysis highlights a significant shift in the spending and saving habits of middle-income families. The survey found that 80% of households have started preparing more meals at home instead of dining out or ordering take-out over the past year. The primary reason for this change is budget constraints, with 72% of respondents citing financial concerns as the main factor. Additionally, 62% mentioned that the high prices at restaurants were a major deterrent.
Glenn Williams, CEO of Primerica, noted, “Middle-income families are continuously adjusting their budgets to cope with the ongoing high cost of living. Unfortunately, these tough decisions often involve increased reliance on credit cards and reduced savings for the future, which could have long-term negative effects on their financial health.”
The ongoing inflation crisis has led to a noticeable increase in monthly expenses for most households. Although the consumer price index has decreased from its peak of 9.1%, it remains significantly higher than pre-pandemic levels. Since January 2021, inflation has risen by more than 18%.
Specifically, grocery prices have surged by over 21% since early 2021, while shelter costs have increased by 18.37%, according to calculations by FOX Business. Energy prices have seen an even steeper rise, up by 38.4%.
As a result, the average U.S. household had to spend an additional $227 per month in March to purchase the same goods and services as the previous year. Compared to two years ago, Americans are now paying an average of $784 more each month, and $1,069 more compared to three years ago.
Meanwhile, real wages, adjusted for inflation, have declined by 2.2% from January 2021 to May 2024.