Against a backdrop of persistent cost-of-living strains, slowing wage growth and ongoing global economic uncertainty, a surprising new trend has emerged in Australia: the nation overall, and its youngest generations in particular, remain far more optimistic about their 12-month financial outlook than many experts would have predicted. This finding comes from new proprietary research conducted by ING, which surveyed more than 2,075 Australian adults aged 18 and over to gauge current consumer sentiment.
The data reveals a stark generational divide in optimism levels. A full 82% of Gen Z respondents and 74% of millennials reported feeling optimistic about the year ahead, compared to just 52% of Gen X and 49 per cent of baby boomers. Matt Bowen, head of consumer and market research at ING, explained the key driver behind this generational gap: time. While younger Australians are not immune to the pinch of rising prices and higher interest rates, they have far more room to adjust their financial trajectories over their working lives compared to older cohorts nearing retirement.
“The younger you are, the more time you have to course correct,” Bowen noted. “Things might feel really tough now, but over the course of a lifetime you can catch up.” For older Australians approaching retirement, by contrast, financial pressures are compounded by tighter time horizons and more complex household financial obligations, leaving less room to recover from unexpected economic setbacks. Today’s economic landscape gives consumers no shortage of causes for concern: inflation remains well above the Reserve Bank of Australia’s 2-3% target range, geopolitical conflicts continue to roil global markets, and wage growth has failed to keep pace with rising living costs for most households. Even as annual headline inflation edged down from 4.6% in March to 4.2% in April, according to Australian Bureau of Statistics data, the RBA’s preferred trimmed mean inflation rate – which strips out volatile price swings to show underlying economic pressure – rose to 3.4% for the 12 months to April, confirming that persistent inflationary pressure remains embedded in the Australian economy.
Despite these headwinds, Bowen argues that years of navigating economic volatility have taught Australian households critical resilience skills, particularly among younger generations who have come of age during an unprecedented period of overlapping crises. “Younger generations in particular entered adulthood through Covid, a couple of wars, geopolitical tensions, and the shift from low to high interest rates,” Bowen said. “Their experience of the economic cycle has been quite compressed over the last little while, and as a result they’ve learnt these things happen, but what is most important is the choices they make within their individual circumstances to get ahead.” This adaptive approach has given rise to what ING dubs the “small wins economy”: instead of making dramatic overhauls to their finances, Australians are focusing on consistent, incremental adjustments to control their costs and build small gains. For example, while 88% of survey respondents reported a rise in grocery costs over the past year – with average weekly grocery spend climbing just $7 from $162 in 2023 to $169 in 2024 – the 7% jump is far more modest than official inflation rates would suggest, thanks to deliberate spending cuts and cost-saving strategies by consumers.
A key cost-saving tool for many households is loyalty programs, which the research found save the average Australian household $255 per year. Beyond grocery savings, Australians are adopting a suite of repeatable, practical financial habits: careful budgeting, prioritizing value when shopping, auditing and cutting unused subscriptions, and comparing financial products across multiple apps. These small steps, Bowen says, add up to a greater sense of control that supports overall optimism, even when big-picture economic conditions remain challenging. Crucially, the research also found that cost-of-living pressures have not shifted Australians’ core long-term financial goals, only changed the timelines and strategies households use to reach them.
Around 34% of all respondents plan to adjust their living situation over the next 12 to 24 months: 10% plan to move into new rental accommodation, 7% aim to purchase a home independently, another 7% plan to buy a home with family members, and 4% are pursuing rentvesting, a strategy where households rent in their desired location while purchasing an investment property in an affordable area. Bowen notes that while traditional milestones like home ownership still matter to most Australians, they are now balanced with new personal priorities that include flexibility, life experience and individual agency. “We’re making more deliberate trade-offs, balancing financial realities with a clear intent to protect the parts of life they value most,” he explained.
Investment also remains a core financial priority for many Australians, especially younger cohorts. Overall, 30% of survey respondents said they plan to invest in shares or exchange-traded funds over the next 12 months. That share jumps to 46% for Gen Z and 43% for millennials, many of whom see investment as a strategic tool to offset cost-of-living pressures, build long-term retirement savings, and capitalize on current market conditions.