Australia life satisfaction financial pressure is becoming clearer, with Australians reporting lower life satisfaction than they did during the height of the COVID-19 lockdowns, according to KPMG research drawing on Australian Bureau of Statistics data. Overall life satisfaction fell to 7.1 in 2025, down from 7.2 in 2020 and 7.5 in 2019.
That matters because it suggests the main drag on wellbeing is no longer a short, acute shock, but a prolonged squeeze on household finances, living standards and confidence.
Why life satisfaction in Australia is falling
The core message from the KPMG study is straightforward: economic pressure is increasingly shaping how Australians feel about their lives. While the pandemic disrupted daily routines and social connection, today’s decline in wellbeing is tied more closely to ongoing financial strain.
Households have spent years dealing with higher essential costs, weaker purchasing power and less room to absorb unexpected expenses. That combination can wear down wellbeing gradually. It affects decisions about rent, mortgages, food, transport, childcare, insurance and savings, turning financial pressure into a persistent quality-of-life issue.
This is why the fall in life satisfaction is significant. It points to a deeper problem than temporary hardship. Many households are not just facing one bad quarter or one-off bill shock; they are adjusting to a lower sense of financial security over an extended period.
Cost-of-living pressure is now a wellbeing issue
For many Australians, the cost-of-living squeeze has become the backdrop to everyday life. Even where employment has remained relatively resilient, that has not always translated into stronger household comfort. Prices rose faster than incomes for long enough to erode confidence and reduce the sense that work is delivering better living standards.
That helps explain why wellbeing can fall even without the kind of social restrictions seen during lockdowns. People may still be working, commuting and participating in normal life, but they are doing so under tighter budgets and greater financial anxiety.
How financial pressure affects daily life
- Households have less flexibility to deal with surprise expenses.
- Saving becomes harder, even for middle-income earners.
- Debt or savings drawdowns become more common.
- Long-term goals such as home ownership and wealth building feel less achievable.
- Financial stress spills into family life, mental wellbeing and future planning.
Financial stress data shows the pressure is broad-based
The KPMG analysis highlights how many households are operating without a strong financial buffer. In 2025, 21.7% of households were unable to raise $2,000 within a week, up from 19.5% in 2019. That is a clear sign that financial resilience has weakened rather than improved.
More than a quarter of Australians have also faced cash flow problems or turned to “dissaving” behaviours, such as drawing down savings or increasing debt. These are important warning signs. When households need to use savings to cover regular expenses or rely more on borrowing, it usually reflects sustained pressure rather than isolated hardship.
In practical terms, dissaving can mean:
- using savings meant for emergencies or long-term goals
- adding to credit card balances
- falling behind on bills
- cutting discretionary spending to protect cash flow
- delaying major purchases or financial commitments
These behaviours can stabilise finances in the short term, but they often reduce resilience over time. That weakens confidence and can feed directly into lower life satisfaction.
Real wages have fallen, and household wealth has stalled
One of the most important drivers behind weaker wellbeing is the decline in real wages. KPMG notes that real wages fell by 4.1% between 2019 and 2025. In other words, even where nominal pay has risen, many workers have still gone backwards after inflation is taken into account.
That loss of purchasing power matters because it changes how secure households feel. If groceries, rent, mortgage repayments, utilities and insurance all take up a bigger share of income, there is less left for saving, investing or discretionary spending. Over time, this can create the sense that people are working hard without getting ahead.
Median household wealth has also stalled at around $700,000. On paper, that may still sound substantial, but the key issue is stagnation. When wealth growth slows while living costs remain elevated, households may feel less protected against future shocks.
Why stalled wealth matters for wellbeing
Household wealth is more than a balance-sheet number. It affects confidence, retirement planning, borrowing capacity and the ability to support children or ageing parents. If wealth is no longer rising meaningfully, people may feel that their financial progress has paused, even as costs keep climbing.
That combination of weaker real incomes and stalled wealth growth can be especially damaging for morale. It reduces both current comfort and future optimism.
Younger adults aged 25 to 34 are under the most pressure
Australians aged 25 to 34 recorded the lowest life satisfaction at 6.8 in 2025, down sharply from 7.5 in 2019. This is one of the clearest signs that financial pressure is not being felt evenly across the population.
For this group, the timing is particularly difficult. These are often the years when people try to establish careers, form households, rent independently, buy a first home or take on a large mortgage. But high rents, elevated property prices and weaker real incomes have made those milestones harder to reach and riskier to maintain.
Many in this cohort are being squeezed from multiple directions:
- rents have absorbed a larger share of income
- mortgage holders face high repayment burdens
- deposit saving has become more difficult
- real wage declines have limited upward mobility
- wealth accumulation has been slower than previous generations expected
This helps explain why life satisfaction has fallen so sharply among younger working-age Australians. The issue is not only today’s bills; it is also the feeling that the traditional path to financial stability has become less attainable.
Australians aged 45 to 54 face sandwich generation stress
Another group under notable pressure is Australians aged 45 to 54. For many, this is the phase of life associated with “sandwich generation” stress: supporting children who are struggling to build wealth while also helping ageing parents.
That financial pressure can take several forms, from helping adult children with rent or deposits to assisting parents with care needs, health costs or day-to-day expenses. Even households with reasonable incomes can feel stretched when multiple generations depend on them at once.
This matters for life satisfaction because it reduces both financial and emotional bandwidth. People in this age bracket may be in peak earning years, but they are also often exposed to peak obligations. If wealth growth has stalled and costs remain high, the burden can become more difficult to carry.
Single-parent households are experiencing especially high financial stress
The KPMG findings also point to severe pressure among single-parent households. Almost half report cash flow problems, making them one of the most financially vulnerable groups in the data.
That is especially concerning because cash flow stress tends to compound quickly in single-income households. There is often less flexibility to absorb higher rent, childcare costs, transport expenses or school-related bills. If multiple cash flow issues are reported at once, the level of financial stress is typically much more acute.
In these households, lower life satisfaction is closely tied to practical economic pressure rather than abstract sentiment. When day-to-day budgeting becomes more fragile, wellbeing can deteriorate rapidly.
Why single-parent financial stress deserves attention
- there is less income diversification in the household
- unexpected expenses can have a larger impact
- time constraints can limit earning flexibility
- child-related costs are unavoidable and often rising
- cash flow problems can turn into debt dependence more quickly
The one bright spot: life satisfaction improved for Australians aged 15 to 24
There was one positive result in the research. Australians aged 15 to 24 were the only group to record an improvement in life satisfaction, rising from 6.9 during the pandemic to 7.2 today.
That suggests younger Australians may have recovered somewhat from the social disruption, isolation and uncertainty that hit them especially hard during lockdowns. Even so, this does not cancel out the broader trend. Across much of the population, cost-of-living pressure and weaker financial resilience are still weighing on wellbeing.
What the KPMG study says about Australia’s economic wellbeing outlook
The broader takeaway from the australia-life-satisfaction-financial-pressure-kpmg-study is that wellbeing cannot be separated from household economics. Life satisfaction is being shaped by whether incomes keep up with costs, whether savings buffers are intact, and whether people feel they can make progress on housing and wealth.
This is an important shift in the public conversation. During the pandemic, the threat to wellbeing was obvious and immediate. In 2025, the challenge is less dramatic but more persistent: a drawn-out squeeze on living standards.
If this pressure continues, the effects are likely to extend beyond household mood. Lower confidence can influence spending, borrowing, saving decisions and broader economic momentum. In that sense, wellbeing is not just a social metric; it is also a window into the health of the household economy.
Conclusion
Australians’ life satisfaction has fallen below lockdown-era levels not because of a single crisis, but because of sustained pressure on household finances. With life satisfaction at 7.1 in 2025, real wages down 4.1% since 2019, median household wealth stalled near $700,000, and 21.7% of households unable to raise $2,000 in a week, the message is clear: the cost-of-living squeeze is now a major wellbeing issue.
The groups under the greatest strain, including Australians aged 25 to 34, those aged 45 to 54, and single-parent households, show how unevenly the burden is being felt. Improving life satisfaction from here will likely require more than temporary relief. It will depend on sustained gains in real incomes, better housing affordability and stronger household financial resilience.
