:max_bytes(150000):strip_icc()/GettyImages-523282434-9634e83b86a84217ab113ef30ddbefee.jpg "Middle-Income Earners Turn To Spending Cuts, Second Jobs To Deal With Inflation")
Middle-income earners are taking second jobs, cutting back on spending and delaying large purchases to deal with inflation, a new survey shows.
Roughly 78% of respondents to a survey conducted by Santander US said inflation was a major concern with nearly three out of four reporting seeing higher prices in the second quarter.
“While current economic conditions remain challenging, American households are showing great resiliency by taking the necessary actions to navigate through inflationary pain points,” said Santander US CEO Tim Wennes. “For many households, this has meant scaling back on spending, including summer activities.”
Economists have found the lowest-income households have been most impacted by inflation. However, Santander’s survey shows middle-income earners are also having to adjust to accommodate price increases.
To meet the higher prices, 90% of households earning between $50,000 to $148,000 a year said they cut spending in at least one area. That includes scaling back expenses on things such as dining out, concerts or movies, summer vacations, kids summer camps among others.
Meanwhile, two out of every five said they had taken on a side gig or second job within the last year to supplement income.
Inflation has stretched household budgets in the past few years, as prices have risen more than 20% from the onset of the pandemic in February 2020 to the most recent measure of inflation last month. Additionally, the Federal Reserve’s fight against inflation has made borrowing money more costly.
However, middle-class earners’ efforts to deal with inflation appear to be working, as the survey showed that 77% of middle-income households stay ahead of their bills, with nearly three-quarters believing they are on the right track toward financial prosperity.
Elevated housing costs are one of the biggest financial issues for middle-income households, the survey found.
Home prices have been pushed up to record levels and the Federal Reserve’s fight against inflation has raised mortgage rates to nearly 7%. Meanwhile, rent has risen quickly for a lot of people. For example, in 2022, 50% of renter households are paying 30% or more of their income toward rent.
Those costs have helped shift views on the housing market, with the survey showing that 51% now don’t believe homeownership is required to be financially prosperous.
“Higher housing prices have led to a shifting view on the importance of homeownership, with many appreciating the flexibility of renting,” the study showed.
