By Paul Feeney, Founder and Chief Executive Officer, Otivo
Interest rates are rising, living costs are climbing and economists are warning of recession-like conditions. Australia might not officially be in a recession, but the financial pressure is already real. Here are five things you can do in Otivo right now to get a clearer picture of your finances and prepare for what's ahead.
Australia's economy is growing. Apparently, we're getting richer. So why does it feel like we're going backwards every time we open a bill, fill the car or check the mortgage?
And here's a more uncomfortable question. If things get worse, would your finances be ready?
The answer is that the economy Australians read about in the headlines isn't necessarily the economy they're experiencing at home.
In the year to June 2026, Australia's economy grew by 2.1%. But once population growth is taken into account, growth per person was just 0.7%. In the June quarter itself, it was zero.
Meanwhile, annual inflation hit 4% in August, unemployment climbed to 4.6%, and the Reserve Bank lifted the cash rate to 4.60% in September, its fourth increase of the year.
It's an uncomfortable combination. The country is growing, but for many households, the financial breathing room is disappearing.
And Deloitte Access Economics expects the pressure on households to continue.
The good news? You don't need to predict a recession to prepare for one. There are practical steps you can take today to put yourself in a stronger financial position.
The recession we're feeling, but the numbers aren't showing
Technically, Australia isn't in a recession.
The commonly used definition is two consecutive quarters of falling real gross domestic product (GDP). Australia's economy grew by 0.3% in the March quarter and 0.4% in the June quarter.
But that definition doesn't tell the whole story.
Deloitte Access Economics warned in its October Business Outlook that while Australia is likely to avoid a technical recession, households could continue experiencing recession-like conditions.
It's a distinction that matters.
GDP measures the size of the economy. It doesn't measure how comfortable you feel paying your mortgage, whether your wages are keeping up with groceries, or how much money is left after the bills arrive.
And right now, those everyday measures are telling a very different story.
Four reasons Australians are feeling poorer
1. The economy is growing, but the benefits aren't evenly shared
Australia's GDP per person was unchanged in the June quarter, following a decline of 0.1% in March.
Put simply, the economy is getting bigger without everyone necessarily getting a bigger slice.
That's why a headline growth rate of 2.1% doesn't necessarily feel like progress when you're looking at your own bank balance.
2. Everything costs more, and prices are still rising
Inflation of 4% means prices are still rising, not falling.
For a household spending $1,500 a week, a 4% increase in the cost of the same basket of goods and services would mean another $60 a week, or $3,120 a year.
That's money that has to come from somewhere.
And if your income isn't increasing at the same rate, you're effectively going backwards.
3. Higher interest rates are squeezing borrowers
The Reserve Bank increased the cash rate by a total of one percentage point during 2026, bringing it to 4.60% in September.
For mortgage holders and people with variable-rate debt, higher interest costs can consume money that might otherwise go towards savings, investments or everyday spending.
The problem is that these higher repayments arrive at exactly the same time as more expensive groceries, fuel, insurance and other essentials.
4. Not everyone is experiencing the same economy
Deloitte identified government spending, data centre construction and spending by older, wealthier Australians as important contributors to economic growth.
Meanwhile, lower-income households, mortgage holders and businesses outside the AI boom are particularly exposed to higher interest rates.
An older couple who own their home outright and a young family with a substantial mortgage can experience the same economy in completely different ways.
That's why the headline numbers don't always match what's happening around the kitchen table.
Five things you can do in Otivo right now
Here's the encouraging part.
You can't control interest rates, inflation or the economy. But you can make decisions about your own finances that put you in a stronger position.
And you don't have to wait for the economy to improve to get started.
1. Find out where your money is really going
When everyday expenses keep creeping up, it's surprisingly easy to lose track of how much you're spending.
A streaming subscription here, an unused membership there, a few extra takeaway meals. Individually, they might not seem like much. Together, they can make a noticeable difference.
Otivo's Spending tool lets you see your spending in one place, helping you identify patterns, forgotten subscriptions and expenses that might be worth reviewing.
It's not necessarily about giving up everything you enjoy. It's about knowing where your money goes so you can decide what matters most.
One place to start is Otivo's Spending tool.
2. Get on top of your debt
Higher interest rates make debt more expensive to carry, whether it's a mortgage, a credit card or a personal loan.
Which debts you pay down first, and where any spare cash goes, can change how much interest you pay over time.
Otivo's Digital plan includes personal advice on managing your debt, including mortgages and credit cards, with the aim of reducing the interest you pay.
If you're worried about keeping up with repayments, it's worth talking to your lender early. Most lenders have a hardship team that can discuss your options.
3. Check you're protected without overpaying
When money is tight, insurance premiums are often one of the first costs people consider cutting. But if illness or injury stops you from working, the right cover can matter more than ever.
Many Australians already hold life, total and permanent disability (TPD) or income protection insurance through their super, sometimes without realising it.
Otivo can help you understand the cover you already have, review whether it suits your needs and give you personalised recommendations, so you're not paying for cover you don't need or going without cover you do.
4. Keep your super on track
When the economy feels uncertain, it can be tempting to make quick decisions about your super. But super is a long-term investment, and the right investment option depends on things like your age, your goals and how far you are from retirement.
Otivo provides personal advice on the investment options inside your super, so any decision you make is based on your own circumstances rather than the headlines.
5. Ask Otivo the questions on your mind
Should spare cash go towards the mortgage or stay in the bank as a buffer? Is it worth reviewing your insurance? What would happen to your repayments if rates rose again?
Ask Otivo lets you ask questions about your money in plain English, or in many other languages, and get answers that take into account the information you've given Otivo. A limited version is available on Otivo's free plan, with unlimited access on the Digital plan.
Preparing for whatever comes next
Nobody knows for certain whether Australia's economy will get better or worse from here. What you can control is knowing where your money is going, having a plan for your debt and making sure you have the right protection in place.
Otivo holds an Australian Financial Services Licence (AFSL 485665), which means it can provide personal financial advice based on your own situation rather than general rules of thumb. You can get started for free at otivo.com.
Frequently asked questions
Is Australia in a recession?
Not technically. A recession is commonly defined as two consecutive quarters of falling real GDP, and Australia's economy grew by 0.3% in the March quarter and 0.4% in the June quarter of 2026. But GDP per person fell 0.1% in March and was flat in June, and Deloitte Access Economics has warned that households could continue to experience recession-like conditions.
What is a per capita recession?
A per capita recession generally refers to two or more consecutive quarters of falling GDP per person. It can happen when the economy is growing overall but the population is growing faster, so output per person goes backwards. Australia narrowly avoided one in the June quarter of 2026, when GDP per person was unchanged after falling 0.1% in March.
How do interest rate rises affect my mortgage?
When the Reserve Bank lifts the cash rate, lenders often pass the increase on to variable-rate home loans, which means higher repayments. Fixed-rate loans aren't affected until the fixed period ends. How much your repayments change depends on your lender, your loan balance and your interest rate.
What's the difference between general and personal financial advice?
General advice doesn't take your personal circumstances into account. Personal advice considers your objectives, financial situation and needs. This article is general information only. Otivo provides personal advice based on the information you give it.
Where can I get help if I'm struggling with repayments?
Start by contacting your lender or credit provider, as most have a hardship team. You can also call the National Debt Helpline on 1800 007 007 for free, confidential financial counselling.
Sources
- Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and Product, June 2026 (summary via Queensland Government Statistician's Office) — www.qgso.qld.gov.au/issues/3381/national-accounts-202606.pdf
- Australian Bureau of Statistics, Consumer Price Index, Australia, August 2026 — www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/aug-2026
- Australian Bureau of Statistics, Unemployment rate rises to 4.6% in August — www.abs.gov.au/media-centre/media-releases/unemployment-rate-rises-46-august
- Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, 29 September 2026 — www.rba.gov.au/media-releases/2026/mr-26-27.html
- Deloitte Access Economics, Business Outlook (press room) — www.deloitte.com/au/en/about/press-room/business-outlook.html
- AAP, Population growth not stopping 'recession-like' economy, 7 October 2026 — www.canberratimes.com.au/story/9363928/population-growth-not-stopping-recession-like-economy/
Disclaimer
The information in this communication is current as at October 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.