Mme. Louisel was not a very wealthy person, and neither was her family. She was married into a family of clerks, they were not poor for they had a britten maid and ordinary clothing. One thing she did not have though was fancy dresses or expensive pearls, and this bothered her greatly and felt she deserved to be in the highest class and loved by everyone.
When her husband got an invitation to a ball he was ecstatic to show her, and when he did she did not seem to pleased. She told him that she would rather not to go because she had no fancy dresses or expensive jewelry to wear, and she would be embarresed to go in ordinary everyday clothing. Her husband caves in and gives her money to go out and buy a nice dress, but then she comes to the problem that she has no jewelry to wear with her new dress.
On the day of the ball, she arrives in her brand new dress, and jewelry that she borrowed for a very wealthy friend of hers. She has a great time because she looks very wealthy and attracts the attention from many and receives many compliments.
Once they leave the ball they get a carriage and go home. When they arrive home she realizes her necklace she borrowed from a friend is no longer around her neck. Her and her husband look all over in her dress and cannot find it, they came to the conclusion that she must have dropped it in the carriage. They tell her friend it broke and it is getting replaced, so they could have time to come up with the money to buy her a new one.
After searching many jewelry stores in their city they found a necklace identical to the one that she lost. It cost so much money they didn't have the full amount to pay for it, so they had to borrow money from various different friends so they could replace it. Due to this they had to work 10 years so they could pay back everyone and as a result they lost their middle class status and their made, and became completely poor.
Years later Mme. Louisel sees her friend in the streets with her child, she starts talking to her about the necklace and how long she has been paying it off. Then she tells her that the necklace was fake and was only work 500 frances, so Louisel shouldn't have bought a real one but she had no way of knowing it was fake.