The year 2026 has started with a stark reality check for many Australians, as a leading financial expert sheds light on the country's 'salary crisis'. This crisis, as Rhianna Farnan, Chief Communications Officer at Derwent Finance, puts it, is a result of a significant shift in the value of income over the past few decades.
In a viral social media video, Farnan, a 27-year-old from Hobart, highlights how a $100,000 salary today pales in comparison to its worth in the 1990s. According to the RBA's inflation calculator, a $100,000 earner in 1990 would be making the equivalent of $248,000 today. Conversely, a person earning $100,000 now would have been on a $40,000 salary back then.
"This is precisely why Australians feel broke," Farnan explains. Her video resonated deeply with many, accumulating over a million views and sparking hundreds of comments from individuals sharing their own financial struggles.
"We have two professional salaries, yet I just put $20 worth of fuel in so I could still buy bread. I've never felt so broke, and I can't imagine how families are managing," one person commented. Another wrote, "On a combined income of $210k per year, I don't know where to cut to save up for a house deposit. We don't buy coffee or take-outs, and we have no subscriptions."
Farnan's insights have shed light on a critical issue, with many high-income earners feeling the pinch. "I have a combined household income of $320,000 a year, but I don't feel rich," one person shared. "We don't stress about bills or expenses, but we're not rolling in money either."
In an interview with news.com.au, Farnan revealed that one of the most common comments she hears is that "it's not that hard to buy a house." Older generations often point to their own experiences of buying homes on "peanuts," but Farnan emphasizes that this perspective fails to acknowledge the harsh financial realities of today.
"What they don't realize is that it's still more expensive to buy a property now, even with lower interest rates, due to the increased cost of purchasing and the higher property prices compared to the past," she said. "So, people are struggling more now to purchase properties because everything is more expensive, despite higher wages and lower interest rates."
The average annual income in Australia has now surpassed $100,000, which is around four times what it was in the 1990s. However, the median house price nationally is approaching $1 million, up from $184,000 in 1990, which, adjusted for inflation, is equivalent to roughly $457,000 today.
Farnan, who works in the mortgage broking industry, hears the feeling of being "broke" every day. "We see people with a combined income of $210,000 a year, which a few years ago would have been considered a comfortable income," she said. "But now, with the cost of daycare, both parents working, and a $200 grocery bill for a quick top-up shop, the cost of living has significantly increased compared to pre-Covid times."
The 27-year-old expert highlights that those who bought properties during the Covid-19 pandemic, when interest rates were as low as 0.1%, are now struggling with the cash rate at 3.85%. Farnan believes Australians are still feeling the effects of the cost-of-living crisis, with people cutting back on small expenses like takeaway coffee to save money.
"Whether people continue to feel financial pressure this year will largely depend on interest rates," she said. "If they remain steady or only rise slightly, many should be able to hold on. But if they continue to increase, we may see people struggling again, especially as some have started saving again with more manageable mortgage repayments."
For those struggling, Farnan advises, "Hopefully, this isn't a permanent situation, and it's a good time to assess your finances. Consider cutting back on non-essential expenses like nail and eyelash appointments or weekend drinking. Really look at your budget and see where you can cut down. That's the most important thing right now."
The salary crisis in Australia is a complex issue, and Farnan's insights have sparked a much-needed conversation. What are your thoughts on the matter? Do you agree with her analysis? Feel free to share your experiences and opinions in the comments below.
