The Costs We Prioritise In Times Of Financial Hardship

13 January 2017
New research from NobleOak reveals some interesting insights into how we prioritise our expenses.

Have you ever considered how you’d rearrange your expenses in the case of financial hardship? Unless you’re already living the frugal life, it’s likely that you’ve got at least a handful of fortnightly or monthly expenses that would have to go if you found yourself struggling financially. But which one would hit the chopping block first?

That was the question posed by NobleOak Life Insurance to over 1,000 Australians aged between 30 and 60, who were then required to order their expenses based on how likely they were to be cut as a result of loss of income. Let’s have a look at how Australians prioritise their regular expenses.

The costs we’re not willing to part with

First let’s have a look at the expenses that were ranked as least likely to be cut. It’s a relief to see that there aren’t any trivial expenses to be found at this end of the rankings, with Australians rating the following three expenses as the most important/least likely to be cut:

NobleOak notes that these rankings fall rather neatly in line with Maslow’s hierarchy of needs, which postulates that “physiological” needs such as shelter and food are the most crucial and essential to human survival. This is reflected in mortgage payments and grocery costs coming in at most important and fourth-most important respectively, out of 13 different expenses.

A photo posted by Melanie (@mellymoo0) on

However, the one outlier among the supposedly “essential” expenses is mobile phone usage, which was ranked as fifth-most important, right after grocery costs and before transport expenses and education costs among others. People must really love their mobile data these days and as Canstar Blue points out, some even use their mobile data instead of paying for home internet.

The costs we can do without

At the other end of the rankings, we come across some predictably less essential expenses, with the following three expenses being designated the first to go in times of hardship:

While the top three make sense, they’re followed by some slightly more troubling choices. Clocking in at fourth and fifth to go are savings/investment plans and life insurance. Keeping in mind that mobile phone usage was ranked at ninth to go, it seems like Australians might need to take a look at their financial priorities!

Australians don’t appear to value their life insurance

That being said it seems that, apart from a few anomalies, Australians have (thankfully) got their heads screwed on straight when it comes to their financial priorities.

However, NobleOak CEO Anthony Brown says that the research shows that Australians are undervaluing their life insurance, and that the life insurance industry “still has 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 families,” Mr Brown said.

“It is for this reason that Australians are more likely to cut back on life insurance premiums, than car or home insurance premiums, or even mobile phones.”

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