When Times Get Tough, What Do We Stop Paying For First?
New research just released shows what expenses we’re most likely to cut back on first.
In a recent survey NobleOak asked over 1,000 Australian adults to prioritise expenses they would cut back on if they lost some or all of their income or financial support for an extended period of time.
Unsurprisingly, discretionary expenses such as holidays and entertainment are the first to go. Respondents are also willing to cut back on transport, life insurance, and education investment.
What is surprising is people’s reluctance to part with their mobile phones.
Our mobiles are now considered something we can’t live without as they are an integral part of our daily lives and keeping connected.
Table 1 – Research Question
If you lost some or all of your income or financial support for an extended period of time, in which order would you cut back your expenses?
Theory still holds true
Many of us have studied Maslow’s Hierarchy of Needs at school. This theory appears as relevant today as it did when developed in the 1940s, with physiological needs such as shelter (mortgage or rent payments), food (grocery costs), and warmth (gas and electricity) being the last expenses to cut back on, if income or financial support is lost for an extended period of time.
Maslow’s Hierarchy of Needs
These results reinforce that the Life insurance industry still has some work to do to outline the true value it provides customers. While the emotional implications of a family tragedy or major illness are often devastating, many of us don’t contemplate the lasting financial implications to our lifestyle and families.
It is this reason that Australians are more likely to cut back on Life insurance premiums, than car or home insurance premiums, or even mobile phones
For more details on the full report click here.
If you want to ensure you have the right Life insurance or Income Protection cover, please contact NobleOak.