In a stark reflection of the ongoing economic challenges faced by Australians, the Commbank iQ Cost of Living Insights report has shown a generational divide in spending habits due to an increase in the cost-of-living.

The new data, released on Wednesday, shows adults under 35 are tightening their belts and significantly cutting back on expenses, while older Australians are increasing their spending. 

According to a comprehensive study conducted by the Australian Bureau of Statistics (ABS), individuals under the age of 35 have experienced a significant reduction in discretionary spending over the past year.

Rising housing costs, soaring education fees, and limited employment opportunities have led many younger Australians to adopt a more frugal lifestyle.

CommBank iQ Head of Innovation and Analytics Wade Tubman said single and double-income households without children have reduced their spending faster than families

“Young singles and couples can turn things on and off faster because they don’t have as many commitments,” he said.

“What we’re seeing is a continued Covid rebound effect, with consumers catching up on the experiences that they missed out on during the pandemic. It seems counter-intuitive that at a time of increased cost of living pressures, consumers are choosing to boost their discretionary spending.”

Data drawn from the CommBank iQ Cost of Living Insights Report has indicated that young adults are focusing on essential expenses such as rent, utilities, and groceries, while discretionary spending on entertainment, dining out, and travel has seen a notable decline. 

This trend can be attributed to the limited financial resources available to this age group, as they grapple with the burden of student loans, high rental costs, and stagnant wage growth. 

According to the CommBank iQ Cost of Living Insights Report under 35s have reduced spending on clothing and shoes by more than 8 per cent, before accounting for inflation, whereas over 35s have increased spending on clothing by more than 3 per cent.

Over 35s are spending the most on eating out, apparel and retail services.

National Seniors Australia chief advocate Ian Henschke called on the government to index the age pension each quarter during times of high inflation.

“If you’re an older person renting or on a low income, you’re more likely to be hit hard by rising living costs,” he said.

However, older Australians have increased their spending despite the mounting cost-of-living pressures. The CommBank iQ report reveals that individuals aged 55 and above have seen a rise in their discretionary spending, particularly in areas such as travel, leisure activities, and healthcare. 

One of the key drivers behind this trend is the demographic shift toward an ageing population. 

Older Australians, often referred to as “empty nesters,” are finding themselves with more disposable income as their children leave home and financial responsibilities decrease. 

Recent studies suggest many of them are opting to enjoy their retirement years by indulging in activities and experiences they may have postponed earlier in life.

The government’s policies aimed at supporting retirees, such as pension increases and tax breaks, have played a significant role in providing financial security to older Australians. This, coupled with rising property values in some areas, has further bolstered their confidence and willingness to spend.

The generational divide in spending patterns raises concerns about the long-term implications for the economy. 

The reduced spending power of younger Australians may impact various industries, particularly those heavily reliant on discretionary spending, such as hospitality and tourism. 

The widening wealth gap between generations also raises questions about intergenerational equity and access to opportunities.

Policy experts are calling for a comprehensive approach to address the cost-of-living challenges faced by younger Australians, including affordable housing initiatives, increased investment in education and skills training, and improved job prospects.


Journalist and Demographer Bernard Salt told Perpetual Group that bridging the generational divide and creating an equitable economic landscape will be crucial for Australia’s long term sustainable growth and social cohesion.

Photo Credit iStock

With reporting from Emilia Campbell