- A new survey has found only 5% of Australians feel confident they would be able to purchase a home in 2026
- 46% believed they may never be able to afford their own home
- Respondents cited essential costs as the overwhelming source of financial stress, rather than discretionary spending
The survey conducted by insurance provider Youi found 62% of participants feel the financial squeeze daily or on most days.
More than two in five (42%) said their financial situation had worsened over the past two years and nearly a third said it had improved, largely due to tighter budgeting and cutting back on non-essentials such as dining out and entertainment.
The biggest financial stressors reported were:
- Monthly bills (47%)
- Grocery costs (44%)
- The growing need to dip into savings (31%)
The research found financial stress is largely being driven by rising everyday expenses, rather than discretionary spending.
This is backed by the latest ABS Household Spending Indicator (HSI) data, released this week, which shows discretionary spending fell 0.3% month-on-month in December after climbing 4.5% on the back of three cash rate cuts in 2025.
Over the same period, non-discretionary - or essential - spending had risen 5.8%.
What's squeezing household finances?
Survey respondents overwhelmingly (91%) cited increasing costs of essentials such as groceries and fuel as key contributors to financial stress, followed by unexpected bills (58%) and higher household costs such as childcare (37%).
It broadly reflects the latest inflation data, which shows the biggest contributors to annual inflation was housing (up 5.5%), food and non-alcoholic beverages (up 3.4%), and recreation and culture (up 4.4%).
Rising inflation was the key reason the Reserve Bank of Australia moved to lift the cash rate earlier this month, putting further strain on households paying a mortgage.
In the year ahead, respondents reported their biggest financial concerns were managing daily expenses (61%), housing costs (39%), and their savings levels (36%).
Discretionary spending is the first area households are looking to cut, although gym memberships (17%) and insurance (16%) were the least likely to be axed.
Long-term goals hammered by cost-of-living crisis
Nearly half of survey respondents (46%) said they believed they may never be able to afford a home of their own, with a further 11% saying home ownership wouldn't be possible for them within the next decade.
Only 5% said they felt confident they could purchase a home in 2026.
However, most respondents' financial goals for 2026 were more modest and included:
- Building savings (24%)
- Reducing expenses (20%), and
- Increasing income (13%)
Of the almost one-third of respondents who said their finances had improved over the past two years, nearly half (44%) said this was due to cutting down on expenses and budgeting.
An additional 40% said they had changed their spending habits, while 36% said they had become more organised.
What the expert says
Behavourial economist Evan Lucas said financial pressures are making households more deliberate and vigilant with their money.
"The key to staying on top of your money is to know where it's going - turn your reviews of fixed costs like phone, energy, and internet into a regular habit," he said.
"Oftentimes people sign up for a service and neglect to check whether there are cheaper options out there.
"Moving away from 'set and forget' and regularly reviewing fixed costs is one of the simplest ways to build financial strength."
Insurer Youi commissioned the survey to coincide with the launch of its new Financial Fitness Calculator, designed help households track their spending and build their financial knowledge.
Practical steps in budgeting
Mr Lucas said all households can benefit from doing the basics:
- Schedule regular reviews of bills, subscriptions, services, and credit cards to avoid 'set and forget' spending
- Automate savings so a portion of every pay goes straight to a dedicated savings account
- Prioritise paying down debt to cut interest costs and lower financial stress
- Use budgeting tools and resources to keep track of spending, spot savings opportunities, and stay focussed on goals
See also: Best budgeting and savings apps for Australians in 2026
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