2026 Financial outlook – A guide for families

After a turbulent few years of rising prices and interest rates, many couples in their 30s and 40s are looking ahead and asking what’s next. In this blog, I explore three key questions:

• What the economic climate looks like in early 2026, including inflation trends, interest rate forecasts, consumer confidence, and global influences.
• Practical financial strategies couples and families can use to combat high inflation and fluctuating rates.
• Positive changes to help grow your wealth and stabilise finances in 2026.

Australia enters 2026 with inflation still above the Reserve Bank’s target, but showing signs of easing. In late 2025, headline inflation spiked to about 3.8% in October after government electricity rebates ended, and core inflation was 3.3%, higher than the RBA’s 2–3% comfort zone. A welcome moderation came in November, with inflation slipping to 3.4%, lower than expected and cooling fears of an immediate rate hike.

The RBA’s own forecasts (as of August 2025) anticipate headline inflation hovering just above 3% by mid-2026 before gradually returning under 3% thereafter. In other words, price pressures remain, but the trajectory is slowly improving. High inflation has been painful for households, but the expectation is that it will moderate through 2026.

Interest rates are also at a pivotal point. After aggressive rate rises in 2022–2023 to tame inflation, the RBA eased off in 2025 with three rate cuts, bringing the cash rate to 3.60% by August 2025. However, with inflation still sticky, the RBA has signalled a more hawkish stance going into 2026: Governor Michele Bullock ruled out further cuts for now and warned that a rate rise might be on the table if inflation doesn’t subside.

Market watchers predict either a prolonged pause or a small increase. Major banks are divided. NAB economists expect two 0.25% hikes in February and May 2026, while Westpac and ANZ foresee rates staying on hold, though even they acknowledge a risk of an
early-2026 hike. Some forecasters, such as the Commonwealth Bank, believe a single fine-tuning hike to ~3.85% cash rate could occur to ensure inflation returns to the target. For Australian families with mortgages, this means borrowing costs will likely remain high with only a modest chance of relief toward the end of the year.

Consumer confidence is surprisingly good. Households showed an improved outlook on their finances and the economy heading into 2026, buoyed by a resilient job market, despite lingering concerns about inflation and interest rates. This suggests that Australians are starting to feel more hopeful after a prolonged period of cautiousness. However, there are still some concerns in the background: surveys show people remain wary of potential rises in unemployment over the next year. On balance, consumer spending and the housing market have been showing signs of improvement. Lower interest rates, which were expected to persist through 2025, helped revive housing activity, especially in Sydney and Melbourne, and home prices began rising again as buyer confidence returned.

The outlook for 2026 includes solid consumer demand and a housing sector that’s defying earlier gloom. Some analysts even predict that house prices could climb further in 2026, although affordability remains a challenge with interest rates still higher than they were a few years ago.

Global economic and geopolitical factors will continue to have a significant impact on Australia’s economy. On the positive side, the global outlook entering 2026 is cautiously upbeat. The feared global recession hasn’t materialised. China’s economy, crucial for Australian exports, has been supported by recent rate cuts and stimulus measures, helping demand for commodities like iron ore. This global resilience is good news for Australia. Indeed, experts describe the international backdrop as “constructive”, expecting global growth to run close to trend in 2026 and major central banks such as the US Federal Reserve to cautiously lower rates in the first half of the year.

However, there are still risks abroad. Geopolitical tensions. For instance, any escalation in conflicts or new trade disputes could unexpectedly drive up oil and commodity prices, reigniting inflation. Trade policy shifts, such as tariffs or sanctions and uncertain politics in major economies also loom as wildcards. Australian families should be aware that events such as shifts in China’s demand, volatility in currency exchange rates, or overseas instability can impact domestic petrol prices, grocery costs, and investment markets.

Australian families can adjust their budgeting, debt, and savings strategies to stay on track. For couples and young families, a proactive approach to finances is essential in this environment.

• Audit your budget and identify areas for reducing major expenses. Begin by reviewing all your major expenses, including housing, utilities, and groceries, to identify potential areas for savings. Homeowners should compare mortgage options and refinance if possible: even a small rate reduction can save thousands over a loan’s life. Don’t be afraid to call your lender and negotiate a better deal or consider fixing a portion of your loan if you need certainty against future rate rises. Renters, while facing a tough market, can try negotiating a longer lease in exchange for smaller rent increases. Landlords value stable tenants, and most states now limit rent hikes to once per year.
• Tackle utilities. Compare providers for cheaper electricity, gas, and internet plans, especially when introductory rates expire.
• For groceries and everyday expenses, plan your meals and buy in bulk when discounts are available; switch to supermarket own-brands and track specials to avoid sneaky price rises.
• Manage debt wisely and build a buffer. Prioritise paying down any high-interest debts, such as credit cards or “buy now, pay later” balances, before they snowball.
• If you have a mortgage, consider redirecting any spare cash or tax refunds into an offset account or extra repayments. Building even a modest offset/buffer on your home loan provides breathing room.
• Avoid overleveraging yourself: in 2026, banks might still be willing to lend, but borrowing to your maximum can be risky when rates are fluctuating.
• Ensure your savings work harder: move idle cash from low-interest accounts into the highest-rate savings accounts or term deposits you can find, as banks are now finally offering better interest rates to savers. Don’t forget to check regularly, as banks profit if you become complacent with a subpar rate.
• Be smart with any spare funds: consider investing in assets that historically outpace inflation. For example, making additional contributions to your superannuation or investing in a diversified portfolio can, over the long run, grow your wealth faster than cash in the bank.

Building financial security is not just about surviving. It is possible to proactively position your finances. In 2026, couples and young families can make several initiatives to grow their wealth.

• Focus on long-term financial goals: Take time to sit down with your partner and a financial advisor and map out your key goals. Once your priorities are clear, create a long-term plan and start saving or investing accordingly. For example, if you plan to upgrade to a bigger house in a few years, set a specific savings target for the deposit and consider putting aside extra funds now while being mindful of interest rate trends. It’s also an ideal moment to review your financial plan with a professional adviser and make sure it still aligns with your ambitions.
• Even amid the current uncertainties, there are opportunities for smart investing. Continue to contribute regularly to your superannuation and take advantage of any employer-matching or tax-deductible benefits. Consider a diversified investment strategy outside of super, such as investing in low-cost index funds or exchange-traded funds that spread your money across different asset classes. Avoid chasing fads or taking on excessive risk. Stick to investments you understand and that suit your risk tolerance.
• Ensure you have adequate insurance and protections in place. For example, life and income protection insurance. Double-check your health insurance and consider whether it provides value for money and covers what your family actually needs.
• Maintain or grow your emergency fund while investing for the future. Three to six months of expenses is advised, ensuring you don’t have to dip into long-term investments or go into debt when an unexpected cost arises.

By staying informed about economic trends and implementing smart financial strategies, individuals, couples and families can protect their budgets and keep their wealth-building on track. Small changes will pay dividends over time. Every family’s situation is unique, and it often helps to get expert guidance tailored to your goals.

Contact us today for experienced, compassionate, and professional financial advice.