2026 Smart Cost of Living Report

How cost-of-living pressure is changing household spending in Australia

Australians are tightening their household budgets, with nine out of 10 respondents indicating that they had cut back spending in the past six months.

Dining out or takeaway meals and holidays are the top areas for cutbacks. And the majority of respondents are planning to further reduce spending in these areas over the next six months. However, not everyone has changed their spending. Around 16% of men had made no changes to their spending in the past six months - compared to just 9% of women.

Workers are also concerned about potential increases in the costs of everyday essentials. Almost two-thirds of respondents (62%) are very or extremely concerned about potential increases in grocery prices by the end of 2026, with 59% saying the same about electricity prices. Petrol prices are also a major concern, with 52% very or extremely concerned about further financial pain at the bowser this year.

How higher costs are impacting car ownership 

Cost is a significant factor influencing car ownership decisions. One in three respondents (33%) who have sold a car in the past year said they needed the money from the sale, while one in four (25%) said they could not afford the ongoing costs.

The survey found running costs are also impacting the types of cars people are planning to buy in the future, with 50% of respondents saying they are considering purchasing either an electric vehicle (EV), a more fuel efficient or smaller vehicle within the next 12 months.

• 22% are considering an EV

• 20% are considering a more fuel efficient or hybrid vehicle

• 8% are considering a smaller car

• 4% are considering a new car but do not consider fuel efficiency to be important

Thinking about purchasing an EV or fuel efficient vehicle? Find out more about novated leasing an EV.

Why take-home pay is a higher priority than total salary 

The research suggests that take-home pay is a key consideration for many employees when considering their overall remuneration. Cost of living pressures on household budgets are prompting more employees to make take-home pay their number one priority.

98% of respondents said that maximising their take-home pay and reducing their tax are important considerations when it comes to remuneration, with eight out of 10 rating them very important or non-negotiable. By comparison, only 73% rated flexible work arrangements as very important or non-negotiable, 72% for a market-leading salary and 66% for additional leave benefits.

Benefits employees won’t compromise on

How salary packaging can help employees reduce taxable income and increase take-home pay

Salary packaging – also known as salary sacrificing – is an Australian Tax Office (ATO) approved way for eligible employees to pay for some everyday goods and services from their pre-tax income.

It can be an effective tool for Australians to ease pressure on their household budget and directly addresses the top two remuneration priorities identified in the research - helping workers to maximise their take-home pay and reduce their tax.

Find out more about salary packaging.

However, the research found many Australians who have access to salary packaging not be  making use of the available benefits to stretch their salary further. Eight out of 10 respondents were familiar with salary packaging and more than half (59%) said their current employer offered it as a benefit. But among those respondents whose employer offers salary packaging, 23% hadn’t utilised it in the past 12 months.

While most Australian workers can salary package if their employer facilitates it, the benefits available depend on the industry you work in, your employer and potentially your employment status (full-time, part-time or casual).

Explore what you may be able to salary package.