Understanding the Middle Class Downgrade Lifestyle Trend, IPB University Consumer Expert: A Sign of Economic Pressure

The phenomenon of downgrade lifestyle, or cutting back on one’s lifestyle, has become a widely discussed topic on social media. This behavior can be seen in people’s decisions to reduce spending, choose cheaper products, and postpone purchases that are not considered urgent.

IPB University Consumer Behavior Expert, Prof Megawati Simanjuntak, explained, “In family and consumer studies, this is known as a coping strategy, which refers to how families adjust to get by. Cutting expenses and switching to cheaper products are part of these efforts, along with finding additional sources of income,” she said.

However, she has observed two interesting aspects of the current phenomenon. First, this behavior is now common among the middle class, a group that has long been considered relatively financially secure. Second, these lifestyle adjustments are increasingly being discussed openly on social media and have even become a form of content.

“In the past, switching from café coffee to instant coffee sachets might have been something people kept to themselves. Now, they actually share these experiences,” she said.

A Survival Strategy, but with Different Reasons Behind It

Prof Megawati believes that much of the current downgrade lifestyle trend among the middle class is driven by financial necessity. This is because incomes have remained relatively stagnant, the prices of daily necessities continue to rise, and installment payments leave families with increasingly limited financial flexibility.

“From the outside, the spending cuts may look the same, but the reasons behind them can be different. When people consciously choose to manage their finances, this behavior can be positive because it reduces the pressure to spend for the sake of appearances. However, when it happens because a family’s financial resilience is weakening, it becomes a warning sign that deserves attention,” she explained.

In addition, the middle class generally receives limited social assistance, leaving some households at risk of becoming more financially vulnerable. Psychological factors also play a role. News about layoffs and difficulties in finding employment has encouraged people to hold back on spending to build up their financial reserves.

Ripple Effects
The downgrade lifestyle phenomenon could have ripple effects across the economy. If the middle class continues to cut back on spending, sectors such as restaurants and cafés, shopping centers, fashion, tourism, entertainment, automotive, and property may feel the impact. These effects would not only be felt by large businesses but also by small and medium sized enterprises, which employ a significant number of workers.

“This situation risks creating a cycle in which each factor reinforces the downturn. Reduced spending can put pressure on workers’ incomes in affected sectors. As their incomes decline, households cut their expenses even further, leading to weaker consumption,” she said.

The Positive Side
Nevertheless, Prof Megawati also sees a positive side to this phenomenon. In the short term, lifestyle adjustments can encourage consumers to switch to more affordable local products and businesses while helping households improve their savings.

However, if the trend continues for an extended period and is largely driven by financial necessity, it could become a problem, as it may weaken the foundation of national consumption.

Could this become the new normal? According to Prof Megawati, the answer depends on what is driving the change. If it is caused by temporary financial pressure, spending habits may shift again once conditions improve. However, if incomes continue to grow more slowly than the cost of living, these habits may persist. Some consumers may even find their new spending patterns more comfortable and reasonable than their previous lifestyles.

“So, this is not about the middle class being unwilling to spend, but rather about their purchasing power and sense of financial security. If we want their consumption to recover, the key lies in restoring purchasing power and confidence in future economic conditions, rather than simply encouraging them to spend again,” she said.

Therefore, she emphasized that the goal should not be merely to accept the downgrade lifestyle phenomenon as a reality, but to ensure that these lifestyle changes are the result of conscious choices rather than economic pressure. “To achieve this, purchasing power and good employment opportunities remain essential,” she concluded. (dh) (IAAS/FHD)