The squeezed middle
The families finding inflation toughest will surprise you
It’s no surprise that low-income families have been hit hardest by the pandemic, and that higher-income ones have been among the winners. But how much do we really know about middle-income families?
Something’s got to give
Mid-income families have found themselves in a difficult position over the past couple of years. Whilst not long ago they were fuelled by dreams of splashing out after the pandemic, they are now facing the harsh reality of living-cost increases, which sees them having to drastically re-evaluate their narratives and hopes.
More discretionary spend versus the lower-income cohort means more complicated budget decisions - so middle income families saw the sharpest rise in concern about finances over the pandemic.
Stretched finances mean they now find themselves having to make tough decisions about what to cut back on – they don’t have the financial freedom of the affluent to continue with their current lifestyle, or the straightforward solution of the less affluent to cut back on everything. So, for middle income families, choosing what needs to go can turn into a real minefield.
And, to add to the pressure, cutting back on things their peers can retain can feel difficult to stomach.
Interestingly, middle-income families are the group most considered spenders find themselves in, but despite this they are almost as likely to feel frustrated and uncertain about finances as the lower income cohort do.
While at one end affluent families sit relatively comfortably in their bubble, and on the other, low-income families struggle to make ends meet, the mid-income families are forced to adapt to their new financial reality. So, we see them sharply change their behaviour to:
Cut down on shopping and eating out
Actively look for tips to save on utilities
Give up on personal purchases to afford things for the kids
Protect spend to allow for food for home
But, naturally, making financially sound decisions is not always possible – and they, just like the rest of the nation, turn to little treats and takeaways as a means to relieve pressure and bring comfort. However, they feel guilty about giving in to temptation and not spending that money on more sensible purchases.
This guilt is intensified by the fact that their current situation means they increasingly turn to short-term debt such as credit cards for their usually-but-not-always-that-wise purchases.
How to win?
Mid-income families can feel isolated in their struggle. Brands can help by speaking frankly and busting some of the shame associated with cutting back. Ways to allow them to save on essentials as well as inspiration for affordable treats will also go down very well!