Spending cutbacks hit hard, but some family members escape pain

Households everywhere have slashed spending in recent months, but some family members fare better than others. See the list.

Anthony KeanePersonal finance writer

@keanemoney

2 min read

July 16, 2024 - 12:31AM

The Australian Business Network

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Cost-of-living pressures have prompted households to increase their spending cuts in several key areas, but children and pets are largely escaping the chop.

The new NAB Consumer Sentiment Survey, released on Tuesday, shows more people have been cutting back on dining, holidays, food deliveries and household appliances than a year ago.

In the past three months, about half of all households have reduced spending in these categories, as well as entertainment, coffees, snacks and fuel, to help cope with cost increases.

However, only 14 per cent have cut spending on children’s activities, and 20 per cent have trimmed back their pet expenses, NAB found.

Living costs have crunched countless household budgets. Picture: iStock

NAB personal everyday banking executive Paul Riley said more people were being thoughtful about their personal spending.

“It’s human nature to put those you love before your own needs and wants … that is very much the case when it comes to making financial cutbacks,” Mr Riley said.

“For many, it’s about prioritising spend in the areas that mean the most, and unsurprisingly children and pets are high on the list.

“Our love for our kids and supporting their activities, and pets, often means that less takeaway coffees or heating up lunch at work is a small sacrifice if those we care about have treats of their own.”

Mr Riley said he expected household cutbacks to continue.

“Regardless of what is happening in the economy, these are really positive behaviours that will help Australians with their future budgeting,” he said.

“We think about it as building a new muscle – a budgeting muscle that will always be useful.”

Finder.com.au personal finance specialist Sarah Megginson said luxuries such as restaurant meals, expensive alcohol, beauty treatments and designer clothes were on the chopping block.

“Prices of nearly everything are far higher than before the pandemic, and some are having to make drastic lifestyle changes to cope,” Ms Megginson said.

“Aussies have been forced to become more budget-conscious with their spending habits.”

NAB personal everyday banking executive Paul Riley. Picture: iStock

Finder.com.au’s Sarah Megginson. Picture: Supplied

Ms Megginson said for many people, the reality was much more harsh than cutting out weekly pamper sessions.

“Now more than ever, it’s crucial to direct any lifestyle savings to a high-interest savings account,” she said.

“Savings rates have increased significantly over the past two years and savers are getting much more bang for their buck.

“If you create a savings habit during tough times, even if it’s as little as saving $5 a week, you’re much more likely to continue those good habits in the future.”

NAB’s Mr Riley said average balances of NAB’s high-interest savings account had risen 25 per cent in the past year.

“It’s definitely surprising to see this growth in savings balances, especially when prices remain quite high, but it’s a welcome sign that Australians are more deeply engaged with their finances now than they have been for a long time,” he said.