When good money doesn’t mean financial security
Not so long ago, a six-figure salary was considered a solid income. But you didn’t suddenly become extravagant, so why are you now feeling like you need to tighten your belt?
You’re not imagining that growing sense of financial unease, nor are you alone. Chances are you’re experiencing what’s become known as the “middle-class squeeze.”
Middle-class squeeze is a concept that describes households on respectable incomes that are considered too well-off to qualify for government welfare or meaningful rebates, but are experiencing cost-of-living strain.
According to recent figures released by the Australian Bureau of Statistics (ABS), the average Australian Consumer Price Index (CPI) over the year to March 2026 was 4.6%.
More specifically, housing increased by 6.5%, transport by 8.9% and grocery bills by 3.1%.
It’s not that you’re bad with money, but the economic definition of ‘comfortable’ has shifted, and even households bringing in above average incomes are experiencing financial stress across areas like:
- housing,
- food,
- utilities,
- insurance,
- school and childcare,
- healthcare, etc.
Compounding wage pressure is lifestyle inflation; we move to nicer suburbs, buy bigger, more expensive homes to run. We upgrade our cars. The kids need mobile phones, participate in costly activities, and are constantly growing out of their shoes and clothes. It’s a quiet, almost invisible creep into financial uncertainty.
So, what’s the solution?
Firstly, figure out how you’re spending your money. The government’s MoneySmart website offers a budget planning tool to get you started.
Alternatively, your financial adviser will help you create a system to track your spending so you can spot patterns and areas of potential savings.
You’ll specifically look for spending habits that seem to have taken hold while you weren’t looking, such as:
- tap-and-go purchases,
- online shopping,
- food delivery services,
- subscriptions and memberships, etc.
This could be a confronting exercise as you may uncover many areas of discretionary spending you weren’t aware of.
Your adviser will then assist you to understand where you can make spending cuts. There’ll be some easy wins, and some more difficult, or emotional, decisions to make.
Besides the immediate relief to the household finances, your adviser will help you redirect saved money into areas that support your family’s needs and desires.
Financial security is rarely lost all at once and early understanding of the source of your concerns enables you to deal with them before they get out of hand. So while cost-of-living pressures can sometimes feel overwhelming, it’s important to remember that you are in control!
Seeking professional advice, tailored to your personal circumstances, will help you clarify your position and develop a resilient financial plan that aligns with your goals.
Forget the headlines, financial security is still possible. It’s all in your hands.
The information provided in this article is general in nature only and does not constitute personal financial advice.
