How do people plan to cut the cost of living? July 13, 2015

How do people plan to cut the cost of living?

With the budget looming and the high chance that consumers will face increased taxes or benefit cuts, we wondered what steps people would take when faced with less money? What would be the first things to go?

We asked this question with the objective of finding out what consumers considered to be inessential or luxury items. We were expecting to find out a list of consumables which would be prioritised over others. Would the annual holiday be ditched first, or the regular evening glass of vino? However something very different came across from our panel; an unwillingness to compromise on anything. When faced with the thought of living on less money than they currently do, instead of making outright cuts, consumers will look for cheaper ways of buying the same things. Modifying instead of changing their shopping habits and finding creative ways to keep the same lifestyle. In other words, smart shopping. In the words of one panel member “You do not have to cut out anything, only modify your actions to save.”

Examples of smart shopping and creative cutbacks include obvious changes such as taking advantage of specials and buying in bulk, but also saving through less obvious ways, for example, working out the best day and time to shop at supermarkets in order to take advantage of reduced prices at certain times. Choosing to shop at Aldi, or shopping around at local shops or markets, and buying cheaper brands where possible. Specific advice offered included “You don’t have to cut out your morning coffee – simply take it with you instead of buying it.” Shop around for things like car and home insurance. Continue to eat out once a week, but choose cheaper deals or weeknight offers instead. In summary, consumers would prefer to spend more time and effort in achieving the same lifestyle and buying the same things, than make actual cuts.

Sentiment is positive. Some declared they would turn a drop in income into an opportunity to reap health benefits, for example by stopping smoking or cutting down on alcohol. A few with adult children still at home – a growing trend – talked about charging them rent and insisting they start contributing to household expenses. So according to our panel, being faced with the prospect of cutting their budget does not mean cutting anything out. It just means adapting to the circumstances and shopping smarter.

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