Which Expenses Get the Chop in Tough Times?

New research reveals which household expenses Australians are most likely to cut back first.

In a recent survey, NobleOak asked over 1,000 Australian adults to prioritise the expenses they would cut back on if they lost some or all of their income for an extended period of time.

It’s hardly surprising that discretionary expenses like holidays and entertainment are first on the chopping block when it comes to reining in spending. And household staples including mortgage or rent and energy bills are the last to go.

Mobile phones remain an essential part of our everyday lives, and we guard them fiercely. They are among the top five things we hang on to when the going gets tough.

What the survey uncovered

Our survey respondents were asked the 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?

Here are the results, ranked in order from least to most important.

Total respondents 1006 (2017) Source info: PureProfile Pty Ltd

Entertainment, mobiles and income protection

As in our 2016 survey, respondents in 2017 prioritised payment of mortgage or rent and energy bills as absolute essentials when it comes to household expenses.

And, while savings, investment and Life Insurance are among the first things to go in hard times, there is interesting news for another kind of insurance.

Our 2017 figures show more respondents are prioritising Income Protection insurance than in 2016, citing income protection as more important than transport expenses.

Entertainment has also pushed out holidays in the top slot as the item most likely to be cut back when necessary.

We still can’t do without our mobile phones though. Our mobiles remain as the fifth most important household expense behind mortgage or rent, energy bills, car and home insurance and grocery costs.

This is not surprising as the ‘Mobile Consumer Survey 2017 – The Australian Cut’ by Deloitte shows that Australia remains one of the leading global adopters of smartphones with 88 % of Australians now owning one. The Deloitte survey also revealed that our phones are a major part of our daily lives as ‘thirty-five % of us check our phone within five minutes of waking up in the morning, with 70 % using phones during mealtimes with family and friends’.

Cutting back – while keeping an eye on the future

It can be easy to prioritise spending on immediate, short-term needs, while under-estimating the impact of life’s unforeseen events.

It might seem that Life Insurance is a discretionary expense, but as well as taking an emotional toll, an unexpected family tragedy or major illness can have lasting financial implications for our lifestyle and families. Life Insurance (including Life and Trauma cover) can provide financial protection and help cover mortgage or rent payments, education expenses and everyday living costs in the event of the unexpected.