High inflation continues to impact the global economy, and rising living costs are putting sustained pressure on families, weakening financial resilience and leaving households less prepared for the future.

In Asia, household budgets are significantly strained, with more than eight in ten people surveyed ( 83% ) saying inflation has made it harder to cover their monthly costs, a new report finds.

Geopolitical and macroeconomic headwinds, including Middle East tensions and the resulting oil price shock, are squeezing family budgets, Sun Life Asia says in its third Financial Resilience Index.

Rising everyday costs are the most immediate pressure on households in Asia, with grocery prices affecting 95% of people, followed by utilities ( 94% ), transport fuel ( 92% ), cooking fuel ( 91% ) and healthcare ( 91% ).

Nearly half ( 48% ) of those surveyed say rising costs are the biggest barrier to taking control of their finances, highlighting how much financial decision-making in 2026 is shaped by affordability, and more than eight in 10 ( 83% ) say it is harder to cover their monthly expenses.

In response, households are making short-term trade-offs to balance the books, yet these compromises are coming at the expense of long-term financial security and the ability to weather future storms, according to the report.

"What stands out this year is not just the scale of cost pressure but how it is changing financial behaviour,” says David Broom, chief client and distribution officer at Sun Life Asia.

“Rising living costs are forcing people to rethink how they manage their money on a day-to-day basis, with the price of food, fuel, and household bills placing increasing pressure on budgets. As a result, many people are becoming more focused on short-term financial decisions, and that shift is starting to affect their financial resilience.”

Thinking short-term

In an uncertain economic environment, the proportion of highly resilient households has fallen from 32% in 2025 to 25% this year. As families live with a reduced financial buffer, only 13% say they feel fully secure about their financial situation, down from 19% last year, underscoring the scale of the financial impact across Asia.

In response to rising everyday expenses, people are shortening financial planning horizons and making decisions that compromise their long-term stability.

Short-term decisions are becoming a key driver of declining resilience across the region; one in four respondents are drawing down savings, 27% are reducing or skipping essential spending, and 10% have paused retirement contributions.

Managing day-to-day expenses is the top priority for 53% of people over the next 12 months, ahead of saving, investing, or long-term planning. More than half ( 55% ) of respondents have no financial plan or are planning no further than a year ahead, and 61% would not be able to cope for more than six months without external financial support in the event of job loss or illness.

Financial literacy 

While cost-of-living pressures are widespread across Asia, their impact is not felt evenly. Financial literacy emerges as a key differentiator, with those who have stronger knowledge and skills significantly more likely to feel confident about their financial situation and optimistic about the future, despite current challenges.

Households with higher financial literacy are more likely to feel confident ( by 48 percentage points ), more likely to feel optimistic ( by 43 points ), and less likely to experience frequent stress ( by 14 points ), according to the Financial Resilience Index.

These differences are also reflected in behaviour, as households with stronger financial capability are more likely to plan ahead and maintain longer-term financial habits, while others remain focused on immediate costs.

Professional advice

Against a challenging economic backdrop, access to financial information has expanded significantly, including the growing use of generative AI tools in financial decision-making. Around two-thirds ( 60% ) of respondents say they use GenAI tools regularly for financial advice, compared with 18% in 2025.

However, greater access to information has not consistently translated into stronger financial confidence or preparedness across the board. Strong financial literacy remains a key differentiator in how households react to economic pressure.

In volatile times, household financial resilience is becoming increasingly uneven across Asia. While cost pressures affect households across all income levels, differences in financial knowledge and access to guidance are influencing how people respond, with those better informed more likely to sustain confidence and stay focused on longer-term goals despite ongoing pressures.

“As financial decisions become more short-term, the risk is that people lose sight of longer-term outcomes,” Broom says. “Even with more access to information and tools, navigating complex financial decisions still requires guidance. This is where professional financial advice continues to play an important role in helping people turn short-term choices into long-term plans.”

The Financial Resilience Index is based on a survey of more than 6,000 respondents across Hong Kong SAR, Indonesia, Malaysia, the Philippines, Singapore, and Vietnam, and highlights trends in financial planning, literacy, risk appetite, and the role of professional advice in building long-term resilience in May 2026.