Australian households have entered 2026 with renewed focus on their finances as ongoing cost-of-living pressures influence day-to-day budgeting and longer-term planning, according to new research from national insurance provider Youi - but insurance coverage appears to be surviving.
In a survey of Australian consumers, Youi found that more than two in five respondents (42%) say their financial position has deteriorated over the past two years. Around two-thirds (66%) report they are only just keeping up, managing debt, and likely to struggle if faced with an unexpected expense.
Cost pressures are a regular feature for many households, with 62% of respondents indicating they feel financial strain daily or most days. The research also links money stress with wellbeing impacts: 34% say it has affected their mental health and 26% their physical health. Despite these pressures, the findings indicate that some households are changing their behaviour. Nearly one third of respondents (30%) say their finances have improved over the past two years. They attribute this mainly to stricter budgeting and reductions in non-essential spending such as dining out and entertainment. Respondents identify monthly bills (47%), supermarket spending (44%), and the need to draw on savings (31%) as leading sources of financial pressure.
Youi’s research suggests that rising essential costs, rather than discretionary purchases, are the main driver of financial strain. A large majority (91%) of respondents point to higher prices for groceries, fuel, and other basics as a contributor, followed by unexpected bills (58%) and increased household costs such as childcare (37%). The effects extend beyond household finances. More than one in three respondents report impacts on their sleep (35%), social life (33%), and nutrition (25%), indicating broader lifestyle adjustments. The survey also highlights differing views on the role of external support. Almost six in 10 respondents (59%) believe governments should provide more assistance to households, while 33% say individuals should assume primary responsibility for their own financial security.
Youi chief customer officer Anthony Antonucci said respondents are signalling a desire to regain control of their money in the year ahead. “Aussies are under real pressure, but we’re seeing a shift from reacting to costs to protecting what matters most. Our research shows that almost 80% of Australians review their insurance spending annually, which is a great start, but far fewer, less than 40%, say they are likely to review or switch their insurance provider in the next 12 months. Many could be missing savings simply by not shopping around or comparing their options. With budget pressures impacting most households, affordability without compromising on your cover should be a priority. Take a look closely at your policy and make sure your insurance still fits your needs and budget,” Antonucci said. For insurers, the combination of high review rates and relatively low switching intent points to a customer base that is monitoring its cover but not always testing alternatives, with implications for retention strategies, product design, and how value and features are communicated.
Youi’s data indicates that rising costs are influencing longer-term aspirations as well as immediate spending. Almost half of respondents (46%) believe they may never be able to purchase a home, and another 11% do not see home ownership as realistic within the next decade. Only 5% say they feel confident they could buy a home in 2026. Respondents’ leading concerns for the year are meeting everyday expenses (61%), managing housing costs (39%), and maintaining or building savings (36%).
When reassessing their budgets, many households appear reluctant to remove certain forms of protection. Insurance (16%) and gym memberships (17%) rank among the items least likely to be cut, while more discretionary categories are nominated as the first to be reduced. For insurers, this points to insurance being treated as a relatively fixed expense even as other spending areas are adjusted. Among the almost 30% of respondents who report an improved financial situation over the past two years, 44% say they achieved this by cutting costs and tightening budgets, 40% by changing spending habits, and 36% by being more organised. Looking ahead to 2026, the top financial objectives identified are building savings (24%), lowering expenses (20%), and increasing income (13%).
Economic futurist and behavioural economist Evan Lucas said the environment is prompting more active financial management. “Households are under strain, but they’re becoming more deliberate and vigilant with their money to protect what matters most. 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. Exercising discipline here can help identify potential areas of savings. Oftentimes people sign up for a service, and neglect to check whether there are cheaper options out there, a mistake that could be costing you. Moving away from ‘set and forget’ and regularly reviewing fixed costs is one of the simplest ways to build financial strength,” Lucas said. He outlined practical steps for households, including scheduling periodic reviews of bills, subscriptions, services, and credit cards; automating regular contributions to savings; prioritising debt repayment to reduce interest costs; and using budgeting tools to calculate spending and identify potential savings.
The Youi findings sit against official data showing continued pressure on household budgets. The Australian Bureau of Statistics (ABS) reports that living costs increased for all household types in the 12 months to the December 2025 quarter. Michelle Marquardt, ABS head of prices statistics, said: “Rises in annual living costs ranged from 2.3% to 4.2% in the December 2025 quarter, depending on the expenditure patterns of the different household types.”
According to the ABS, housing, food and non-alcoholic beverages, and recreation and culture were the main contributors to higher annual living costs across the household groups. Households whose main source of income is government payments recorded the largest annual increase in living costs, partly due to rising electricity charges and the impact of state government electricity rebates in Queensland and Western Australia being used up. Employee households saw the smallest annual rise, at 2.3%, supported by lower mortgage interest charges after banks reduced rates on variable and new fixed home loans following the Reserve Bank of Australia’s (RBA) cash rate cuts in February, May, and August 2025.
On a quarterly basis, the ABS notes that living cost growth slowed in the December 2025 quarter compared with September. Lower electricity and health costs offset increases in other categories, assisted by the timing of the Commonwealth Energy Bill Relief Fund extension and reduced out-of-pocket medical expenses. All household types recorded falls in health costs over the quarter, reflecting more households reaching the Pharmaceutical Benefits Scheme safety net threshold and the expansion of bulk-billing incentives. Households reliant on government payments experienced the smallest quarterly increase in overall living costs, while employee households recorded a 0.2% quarterly rise, with further reductions in mortgage interest charges helping to offset other increases. For insurance professionals, these trends point to a market in which household budgets are under sustained pressure, policyholders are reviewing their spending more frequently, and expectations around price, coverage, and clarity of terms are likely to remain central to purchasing and retention decisions.
