Bold statement: Many Australians feel like they’re trapped in a salary trap, even when earnings rise—because the cost of living has surged faster than wages. And this is the part most people miss: the gap between income growth and real purchasing power is widening, making even high salaries feel tight. Here’s a clear, beginner-friendly rewrite of the original piece that preserves all key details while expanding a bit for clarity and context.
Aussies warned: a salary crisis is unfolding
If you’re starting 2026 feeling financially stretched, you’re not alone. One expert explains the stark reason behind the sense of widespread financial strain across Australia.
Rhianna Farnan, Chief Communications Officer at mortgage broker Derwent Finance and State President for Tasmania of the Finance Brokers Association of Australia (FBAA), outlines the sobering reality of Australia’s salary situation today. In a recent video posted to her social media, the 27-year-old Hobart resident highlights how the buying power of a $100,000 income has shifted over the decades.
Using the Reserve Bank of Australia’s inflation calculator, Farnan notes that what counts as a $100,000 salary in 1990 would equate to about $248,000 now. Conversely, a current $100,000 salary would have been worth roughly $40,000 in 1990.
“This is why Australians feel broke,” she explains.
Her video struck a nerve, racking up over a million views and generating hundreds of comments from people describing their own circumstances.
Examples from viewers illustrate the broad unease:
- A couple with two professional salaries says they had to buy only bread after spending $20 on fuel, feeling utterly broke and unsure how families get by.
- Another household earning about $210,000 combined says they can’t identify cost-cutting measures sufficient to save for a house deposit, noting that they skip coffees, takeouts, and subscriptions to save.
- A third commenter with a $320,000 annual household income still feels far from wealthy, saying they don’t stress about bills but aren’t “flying high.”
- Some report feeling poorer despite high earnings, while others note that house prices in their area have doubled over the last decade even though salaries have largely stagnated.
In conversations with news.com.au, Farnan says a recurring remark she hears is that buying a home isn’t “that hard.” She explains that older generations sometimes claim they earned “peanuts” yet could still buy a house, but they miss the current realities many people face in 2026.
What they don’t realise, she argues, is that today’s overall cost of purchasing a property is higher—even with lower interest rates—because both the initial price and the ongoing costs to buy are greater than in the past.
As a result, many people find it harder to buy now than in the 1990s, despite higher wages and lower rates.
Australia’s average annual income now sits above $100,000, roughly four times higher than in the 1990s. Yet the national median house price is approaching $1 million, up from $184,000 in 1990; after adjusting for inflation, that 1990 figure equates to about $457,000 today.
Farnan notes that the feeling of being “broke” is a daily reality in the mortgage broking industry. Someone earning a combined $210,000 yearly would have been a high-income exception a few years ago, she says, but today the costs of daycare, dual workers in a household, and groceries—such as a top-up shop around $200—mean living costs are stacking up more than before the Covid period.
She highlights particularly affected groups: home buyers who purchased during the Covid-19 era when rates were as low as 0.1% are now feeling the squeeze as the cash rate sits at 3.85%.
The cost-of-living crisis remains influential, Farnan emphasizes, with people cutting back on small luxuries like morning takeaway coffee to stretch their budgets further.
What happens with interest rates this year will heavily determine whether financial pressure eases or intensifies. If rates hold steady or rise only modestly, many households may manage to endure. If rates continue to climb, Farnan warns that more people could face renewed struggles—as mortgage repayments return to more manageable levels for some while squeezing others again.
For those feeling the pinch, Farnan offers a practical reminder: this situation isn’t permanent. It’s a good moment to reassess finances. She suggests looking at non-essential expenditures that might be trimmed—such as beauty appointments, frequent takeouts, or weekend outings—and, most importantly, reviewing your budget to identify where you can cut costs.
If you’d like to navigate this period with greater clarity, consider a simple, structured budget review: track all essential costs (housing, food, transport, childcare), distinguish needs from wants, and set a realistic savings target that aligns with your income. Creating a plan now can help mitigate the impact of rate movements and market shifts in the months ahead.
Would you like this rewritten version tailored to a specific audience (e.g., first-time buyers, young families, or renters) or adjusted to a particular tone (more formal, more casual, or more persuasive)?
