We’ve already talked about Awful April, the bills, the council tax hikes, the water increases. But those numbers tell only part of the story.
The bigger story is about a group which is absorbing all those costs without a cushion and without support: the middle class.
Defining middle class
Not class in a cultural sense, by middle class here we mean a specific income bracket: households earning roughly £35,000 to £80,000. People who are above the threshold for means-tested benefits, likely carrying a mortgage, funding their own childcare costs and contributing to a pension, and paying full tax often with very little coming back to them in state support.
They are the people the system assumes can handle it and for a long time, most of them could.
Why are the middle class being squeezed?
The cost of living has hit everyone and people on lower incomes have faced devastating pressure – food banks are sadly part of everyday life for many. But for the middle class – long the economic goal of so many – squeeze is starting to show in pension contributions being paused, savings goals being pushed back, house moves slowing and the family holiday downgraded.
Here is what creates that pincer effect:
They fall through the safety net entirely. Universal Credit, council tax rebates, free school meals, the Household Support Fund – none of these are available to this bracket (and perhaps for good reason). When costs rise they are simply expected to absorb it.
The mortgage is their biggest exposure. Wealthier households often own their homes outright. Lower-income households rent, sometimes with housing benefit support. The mortgaged middle took the interest rate hit in full, with monthly payments rising by hundreds of pounds and no government scheme to soften it.
Frozen tax thresholds are holding them back: Income tax thresholds have been frozen since 2021. Every pay rise drags more income into a higher band (AKA “fiscal drag”). Someone getting a payrise from £48,000 to £52,000 is now a higher-rate taxpayer – with tax thresholds not increasing with wages, the government is quietly keeping more of your money – so you don’t feel the benefit of the pay rise as much.
Prices have risen dramatically in recent years – meaning more of the middle class’ money is spent on increasingly expensive necessities rather than nice-to-haves. Luxuries are coming out of the budget.
Their pension is their problem alone. Expected to save substantially for retirement while simultaneously managing a mortgage, student loan contributions, childcare, and rising bills something has to give. More often than not, it is the pension.
Nothing changed except the bills
The National Living Wage went up; benefits are being increased; the two-child limit on Universal Credit has been removed. All of that matters enormously for those in greater financial need. For the household earning £55,000, nothing changed except the bills going up and the tax threshold staying exactly where it was.
There is a particular kind of quiet shame that sits with this group, the fear of sounding ungrateful, of complaining about a problem other people would love to have.
But financial stress does not have a minimum income requirement. Feeling the gap between what you earn and what a stable life actually costs and watching that gap widen, without support, without policy designed with you in mind – you’re human if you’re feeling the pressure.
There’s also an element of older generations not empathising with the squeeze – older middle class generations had the benefit of rising property prices, low interest rates, booming stock markets and generally a low cost of living.
Control what you can control
If you feel seen, we want you to know that your feelings when it comes to money pressures are valid; whilst there’s no magic wand – the best thing you can do right now is to at least control what you can control.
That means taking a good hard look at your numbers. Can you look to reduce or squeeze some of your fixed costs? Can you supplement your income in any way? Are you living beyond your means? Does consumer credit form a big part of your budget?
Starting to budget doesn’t necessarily mean being uber frugal or saying no to things, it gives you the knowledge in knowing where your money is going each month and the insight and power to then consciously decide where that money should go in connection to your money goals.
The middle class may have it better than most, and perhaps it’s a first world problem, but if you’re finding it tough right now – we see you.
Read our ultimate guide to budgeting here.
The content produced by Financielle is for informational and educational purposes only and does not constitute financial advice.