The Psychology of Rising Costs
Grappling with uncertainty
Key takeaways
- 84% of Australians believed the cost of living had worsened over the previous 12 months, 54% said their personal financial position had worsened and 61% described themselves as financially fatigued.
- Financial fatigue was highest among 35–44-year-olds at 76%, while 59% of Australians felt pessimistic about the future of the economy.
- 68% had compared at least one major household product in the previous year, but 32% had not shopped around; car insurance was compared by 43%, energy by 36%, home and contents insurance by 32% and private health insurance by 28%.
Around eight in ten Australians (84%) believe the cost of living has worsened over the past 12 months, while fewer than one in ten (9%) think it is improving.
For many, there is little light at the end of the tunnel, with 59% feeling pessimistic about the future of the economy.
More than half of Australians (54%) say their personal financial situation has worsened over the past year.
Another 34% say it has remained unchanged, while just 12% have seen an improvement.
Meanwhile, 85% say inflationary pressures have lasted longer than expected, contributing to widespread financial fatigue. Overall, 61% describe themselves as financially fatigued and less able to make proactive money decisions.
Financial fatigue by age group
| Age group | Percentage with financial fatigue (%) |
|---|---|
| 18–24-year-olds | 70% |
| 25–34-year-olds | 68% |
| 35–44-year-olds | 76% |
| 45–54-year-olds | 69% |
| 55–64-year-olds | 62% |
| 65+ | 42% |
Fighting about money
More than half of Australians in relationships (54.54%) say they argue with their partner about money. Of those surveyed, 39.3% argue about money at least once a month, while 17.41% do so once a week or more.
How often do you argue with your partner about money?
| How often they argue | Percentage of people who argue (%) |
|---|---|
| Every day | 2.71% |
| Every few days | 5.97% |
| Once a week | 8.73% |
| Once every couple of weeks | 11.50% |
| Once a month | 10.39% |
| Once or twice a year | 15.24% |
| I never argue with my partner about money | 45.46% |
Money stress is also changing how couples manage their finances and communicate. More than one in five (22%) have adopted a stricter budget, while 15% keep separate bank accounts and the same proportion maintain a shared account. Another 14% are making a greater effort to communicate about money.
Despite the pressure on their relationships, few couples are seeking professional help. Just 4% have consulted a financial counsellor and 3% have started couples counselling. By comparison, 9% say their communication has become strained.
Financial fatigue is highest among Australians aged 35–44, with more than three in four (76%) feeling worn down by prolonged financial pressure. People in this age group may be more likely to have taken out a new home loan, making them more vulnerable to rate hikes.
Hear from Compare the Market's Economic Director David Koch:
“Financial fatigue makes it tempting to put bills in the too-hard basket, but that can lock households into poor-value deals. Break the task down, review one bill at a time and treat every renewal as a prompt to compare, because providers should have to keep earning a customer’s loyalty.”
Is our loyalty costing us?
Two-thirds of Australians say they have looked for better-value options to save money on household bills.
Around 43% of people surveyed said they had compared car insurance policies while 32% had compared their home and contents cover.
The proportion comparing energy plans rose to 36% – up six percentage points on the previous year.
Which of the following product have you shopped around for in the last 12 months?
| Product | Percentage (%) |
|---|---|
| Home loan | 11% |
| Private health insurance | 28% |
| Home and contents insurance | 32% |
| Car insurance | 43% |
| Pet insurance | 6% |
| Life insurance | 5% |
| Travel insurance | 12% |
| Electricity or gas plan | 36% |
| Income protection insurance | 3% |
| I have not shopped around for any of these | 32% |
Nothing compares
Around a third of people (32%) haven’t shopped around for a better deal in the past 12 months.
Attitudes varied across age groups. Adults aged 35–44 were the most motivated to save, with 76% comparing or switching, while people aged 65 and over were the least likely to seek out a cheaper deal. This could reflect different life pressures, with younger Australians more likely to have a mortgage, as well as generational habits, with older customers tending to become more loyal over time.
The majority of loyal customers said the potential savings were not significant enough to motivate them, or that the effort would not be worthwhile—attitudes that appear inconsistent with the widely held view that living costs are getting worse.