Finance Influencer Erika Kullberg: 3 Things the Middle Class Won’t Be Able To Afford in Less Than a Decade

It’s no secret that the cost of living has been steadily on the rise. In 2022 amidst the COVID-19 pandemic, inflation reached 8% (the highest it’s been since the early 1980s). Certain everyday goods, like food, rose even higher.

Read Next: I’m a Financial Advisor: 5 Things the Middle Class Wastes Money On

Learn More: 7 Reasons a Financial Advisor Can Grow Your Wealth in 2024

While inflation has stabilized since then, averaging only 2.4% in the 12 months ending in September 2024, high costs still have many U.S. consumers worried. Even without major economic changes (globally or nationwide), some things might become unaffordable in the next 10 years, even for America’s middle-class households.

GOBankingRates reached out to Erika Kullberg, an attorney, personal finance expert and the founder of Erika.com , to get her thoughts on what could become unaffordable to the middle class in the next decade. Here’s what she said.

It's Going Viral: Want to Retire Rich? Suze Orman Says You're Missing This Key Money Move

Housing

Affordable housing is by far one of the biggest issues nationwide, and not just for middle-class households. The current median sales price of homes in the U.S. is $412,300, according to the Federal Reserve Bank of St. Louis. Trading Economics reported that the average sales price of a home as of August 2024 is $492,700 (though numbers vary by source).

In order to avoid being “house poor,” various outlets suggest a household should spend no more than about 30% of their gross annual income on their housing payment. Some experts argue that percentage should be even less.

So, what does that look like for America’s middle class?

According to the Pew Research Center, someone is considered “middle class” if they earn between two-thirds and double the country’s median household income (adjusted for household size and region). Using U.S. Census Bureau data from 2022, this means someone earning between $56,600 and $169,800 is technically “middle class.”

Now, say someone purchases a home for $492,700 and puts 20% down ($98,540). Their loan amount would be $394,160. Next, assume they get a 30-year, fixed-rate mortgage with 6.5% APR. Excluding property taxes, insurance and other fees, their monthly payment would be around $2,491.

Based on the Census numbers above, a middle-class, monthly gross income would be between $4,717 and $14,150. That means a middle-class household could comfortably afford a monthly mortgage payment between $1,415 and $4,245 a month (assuming no other major or unusual financial obligations).

“Home prices have skyrocketed in many metro areas, and if this trend continues, the middle class might no longer be able to afford a home,” said Kullberg. “Urbanization, housing needs and inadequate supply are pushing up prices, and homeownership is getting harder and harder to attain. Even city renting increases in cost, putting additional strain on households’ budgets.”

For added context, RentCafe reported that the average monthly rent in the U.S. is $1,739, although the actual amount depends on a variety of factors such as location, square footage and property age/condition.

Find Out: What Is the Median Income for the Upper Middle Class in 2024?

Healthcare

The U.S. healthcare system has always been expensive. In fact, the Peterson-KFF Health System Tracker found that the U.S. spends more on healthcare than other high-income countries, relative to the size of the economy.

In the U.S., the average person spent an estimated $12,555 on health expenses in 2022 alone. In comparison, the next-highest expenditure was in Switzerland with an average of $8,049 per capita per annum.

Considering the average middle-class income, healthcare can take up a significant portion of their budget . And it doesn’t seem likely that costs will decline any time soon.

“While medical care continues to rise faster than wages, even insured people find themselves paying a higher premium, deductible and deductible co-pay,” said Kullberg. “With healthcare inflation no doubt increasing, comprehensive healthcare could be unaffordable for a majority of middle-class households.”

Higher Education

Last but not least is higher education. As Kullberg explained, “Higher education is also becoming increasingly impractical. Rates of tuition are rising above inflation, and there isn’t much students can do but take out big student loans.”

Unfortunately, she said this means traditional college education might no longer be the default for middle-class families.

According to the Education Data Initiative, the average cost of college in the U.S. is $38,270 a year. Someone attending a public four-year university can expect to spend around $27,146 a year ($108,584 over the course of the program). Out-of-state tuition and private universities tend to be much costlier.

Final Take To GO

Just because things are becoming more expensive doesn’t mean they’ll be totally inaccessible to the middle class. There are programs — state, local, government, etc. — to help subsidize some costs.

Everyone’s financial situation, from income to spending needs, is also different. Some people might be able to afford these three things without an issue in the next 10 years, while others (particularly those on the lower income spectrum) may struggle.

Still, it’s important to keep these expenses in mind as you manage your finances so you can be better prepared when they come up.

This article originally appeared on GOBankingRates.com : Finance Influencer Erika Kullberg: 3 Things the Middle Class Won’t Be Able To Afford in Less Than a Decade