Cost of living bites: 1 in 6 Aussies can't cover a week's essentials
- One in six Australians could cover less than a week's living expenses if their income stopped
- 37% said they could cover essentials for less than a month, according to a national survey
- The findings come in the same week the Reserve Bank raised interest rates for the fifth time in 2026
One in six Australians said they could cover essential expenses for less than a week if their income was suddenly cut.
The finding comes from a national survey commissioned by AMP Bank GO and released the day after the Reserve Bank of Australia raised the cash rate for a fifth time in 2026.
See also:
- RBA delivers fifth rate hike of 2026, pushing cash rate to 4.85%
- No more cash rate increases? Let's take stock
Just under two in five Australians (37%) said they could cover essentials for less than a month without income.
The pressure is greater on younger Australians with 21% of 18-29-year-olds unable to cover a week's essential living costs and 51% falling short of meeting a month's expenses.
Inflation takes its toll
The findings come a week after key inflation data which showed Australia's annual inflation rate rose to 4.3% in September, up from 4% the previous month.
Official ABS data showed housing-related costs climbed 5.2% over the year, fuel prices rose 23.6%, electricity 12.8%, insurance 5.4%, and rents 3.6%.
AMP deputy chief economist Diana Mousina said the latest inflation figures reinforce the pressure many households are experiencing across essential expenses.
"These findings show just how vulnerable some Australians are to financial shocks amid the ongoing inflationary pressure we're currently experiencing," she said.
Not surprisingly, the research found more than one in three people (36%) said they were financially worse off than 12 months ago.
Another 27% described themselves as "treading water financially" while 12% said they were "falling behind".
Close to one in three (32%) said everyday bills and expenses are their biggest financial concern.
Unemployment looms as a double threat
Coupled with pressure from rising household expenses is the climbing unemployment rate, recording a surprise jump to 4.7% in September.
In documents released with the cash rate decision this week, the Reserve Bank is forecasting unemployment to reach 5.1% by the end of 2028.
That equates to more than 62,000 further job losses nationally, based on current data.
Several of Australia's major companies, including NAB, Westpac, Canva, Atlassian, and Coles, have recently announced significant job cuts.
On Thursday, retail stalwart David Jones announced it was being placed into administration, joining a long list of other retail brands going under over the past year.
'Feels like a recession'
In a media conference after the cash rate decision on Tuesday, Reserve Bank governor Michele Bullock acknowledged "people will feel like they're in a recession because they feel poorer".
She attributed this to stalled incomes linked to Australia's weak productivity growth.
But she said the RBA was not looking to push the economy into a recession.
"We do have a dual mandate [maintaining price stability and full employment] although, at the moment, we are focusing on inflation," she said.
How to build a financial buffer
However, this will likely come as little comfort to Australian households trying to absorb a fifth interest rate hike in 10 months.
The AMP Bank GO survey found more than one in three respondents (36%) said they thought about money daily, with 32% focused on how they would pay bills.
One in three single parents reported they had less than a week's financial cover compared with 15% for coupled parents with kids at home.
AMP Bank group executive Sean O'Malley said the findings highlight how little time some people would have to adjust if their income suddenly stopped.
"Keeping up with regular bills can leave very little room for a change in circumstances," he said.
He acknowledged when money is tight, building a financial buffer takes time but he recommended starting with an affordable amount and keeping it separate from money needed for regular bills.
"A first goal might be [to cover] a week of essential expenses, then build towards a month or more," he said.
"A small transfer each payday can help make saving a habit."
He also recommended automating regular transfers after payday and adjusting as circumstances change.
This could also be reviewed after a rent or mortgage change, or a change in work or a significant new household expense, he said.
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