We all know how expensive it is to live in Australia's largest cities. A recent survey by Demographia International found that Sydney, Perth, Melbourne and Adelaide housing is the most unaffordable in the English-speaking world. Amidst all this financial pressure for the average Australian family, one very important expense is often overlooked... insurance. Should you be forking out for the security that life insurance, income protection insurance and mortgage insurance bring? Or will that leave you with nothing to eat but Vegemite, bread and two minute noodles? We examine both sides of the issue today.
Cost of Living Pressures
It isn't difficult to see the cost of living pressures faced in Australia. Expensive land flows onto other purchases, and since employers also face price rises, wages are less likely to go up. The obvious and sensible option is to limit your outgoings, cutting back on unnecessary spending to make the most of what you have.
Are Income Protection and Life Insurance Unnecessary Spending?
These cost of living pressures create an unfortunate catch-22 situation. People 'have' to spend more money on various household expenses, and so choose not to insure their ability to earn an income (either in sickness or in death).
However, the cost of living pressure faced by the average family often mean that 'Plan B', for when one adult cannot work, is radically different to your ordinary life. Kids must change schools. Housing has to shift to the outer suburbs. Sports cannot be played, pets cannot be kept, and various other little luxuries disappear.
Income protection insurance and life insurance are more necessary than ever in a life situation with high financial pressure... if you have little spare cash now, just imagine what would happen if your weekly wage suddenly disappeared!
It becomes clear that cutting spending other than insurance is a smarter option.
What Unnecessary Spending Can Be Cut?
Many of us become trapped in the belief that every cent of our spending is necessary - that we must put petrol in the car, we must eat, we must send the children to school and we must dress ourselves for work.
However, the level of expense that each individual family experiences often has an incredible amount of room for movement! Within 'necessary' expenses are often hidden unnecessary preferences. Consider the following:
Do you need all the packaged food in your weekly supermarket shop? Do you waste food at home? Can you combine car trips to cut down petrol costs? Can the kids take the bus to school instead of being driven? Do you have more pets than you need? Do you look first at opportunity shops for clothing... especially kids' clothing? Do you always shop around for different quotes on your products and services... even on income protection insurance and life insurance? Do you really need your home phone line? Do you need to have a post paid mobile, or could you use a prepaid mobile instead? Do you sell things you don't need on eBay, instead of just giving them away? Do you utilise your network to have your household appliances repaired and serviced? Do you smoke cigarettes, or regularly drink alcohol? These increase both your weekly bills and your eventual healthcare bills, as well as causing more time off work. Do you utilise your library to its full extent?There are plenty of ways to save money on your everyday expenses without cutting into the true essentials like income protection insurance and life insurance!
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