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4102.0 - Australian Social Trends, 1998  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 03/06/1998   
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Contents >> Income & Expenditure >> Expenditure: Spending patterns and life cycle

Expenditure: Spending patterns and life cycle

In 1993-94, young couples without children paid more off their home mortgage principal ($63 per week) than any other life cycle group.

Household expenditure patterns are influenced largely by household composition and the needs, preferences and financial means of household members. These characteristics are closely linked to life cycle. While most household expenditure is on goods and services for day to day use, many households also purchase assets. For most households, the family home is the largest asset they will ever own. Equity in the family home and superannuation are the two main assets that Australians build up during their working lives.

In 1993-94, Australian households spent an average of $602 per week on goods and services such as food, clothing, transport, current housing costs, recreation and medical care. They also spent an average of $66 per week on selected assets: $18 on superannuation; $21 on home mortgage principal repayments; and $27 on home improvements.

In addition to their current income, households may finance their expenditure from a number of sources such as savings, lump-sum superannuation or insurance payouts, proceeds from disposal of property, cash gifts from other households, credit cards and loans. However, the level of household income is a major determinant of expenditure, and differences between life cycle groups in overall expenditure levels and patterns of expenditure are largely a reflection of differences in income for those groups (see Australian Social Trends 1998, Income distribution and life cycle).


Household expenditure

The 1993-94 Household Expenditure Survey (HES) provides estimates for average household expenditure on a vast range of commodities and services for private use. It excludes expenditure for business and other investment purposes. This review distinguishes two broad groups of household expenditure: expenditure on goods and services; and expenditure on selected assets.

Goods and services - refers to expenditure on goods and services which are consumed, either immediately/short-term (e.g. food, medications, entertainment, petrol, bus fares) or over a longer period (e.g. motor vehicles, household appliances). Includes current housing costs associated with the selected dwelling such as rent, mortgage interest payments, rates, house and contents insurance, repairs and maintenance, and interest on loans for home improvements.

Selected assets - includes expenditure on superannuation/annuities, mortgage principal payments on selected dwelling, and home improvements including additions, extensions, alterations, renovations, insulation and outside building or improvements (e.g in-ground swimming pools, landscaping). Excludes expenditure on investments such as stocks, shares and rental property (which were not collected in the HES).

Selected dwelling - dwelling in which the household is living at the time of the survey.

EXPENDITURE ON GOODS AND SERVICES AND SELECTED ASSETS(a), 1993-94

Average weekly expenditure

Goods and services
Selected assets(a)
Selected household types
$
$

One-person, under 35
395
33
Couple only, reference person under 35
722
115
Couple with dependent children only
742
108
    Eldest child under 5
672
102
    Eldest child 5-14
728
109
    Eldest child 15-20
837
110
Couple with dependent and non-dependant children only
976
116
Couple with non-dependant children only
873
78
One-parent household
517
28
Couple-only, reference person 55-64
553
54
Couple-only, reference person 65 and over
407
11
One-person, 65 and over
210
4
All households
602
66

(a) Superannuation, home mortgage principal repayments and home improvements.

Source: Household Expenditure Survey, Australia, 1993-94: Household Characteristics (cat. no. 6531.0) and unpublished data, Household Expenditure Survey, 1993-94.


Young singles
In 1993-94 young (under 35) one-person households spent an average of $395 per week on goods and services. About 25% of this went on current housing costs, a higher proportion than for any other life cycle group. They also spent a higher proportion than most other households on recreation (15%) but less than others on food (14%) and medical, health and personal care (4%). Young singles spent an average of $11 per week on superannuation and $19 per week on home mortgage principal repayments.

Young couples without children
Young couple-only households (reference person aged under 35) spent an average of $722 per week on goods and services. They were more likely to be buying their own home than young singles and spent more on current housing costs, $141 per week, compared to $100 per week. However, the proportion of their total goods and services budget spent on current housing costs (20%) was lower than for young singles, but still relatively high compared to most other life cycle groups.

Compared to most other life cycle groups, young couples, like young singles, spent relatively small proportions of their budget on food (15%) and medical, health and personal care (5%), but a relatively high proportion on recreation (15%).

Young couples spent an average of $21 per week on superannuation, about the same amount per person as young singles. They also spent an average of $63 per week on home mortgage principal repayments, more than three times as much as young singles. This is partly because young couples were more likely to be purchasing a home (47% compared to 24%) and partly because those young couples who were purchasing a home made larger mortgage principal payments than young singles. Many of these young couples may have been aiming to get a head start on the purchase of their first home before starting a family.

HOUSEHOLD EXPENDITURE PATTERNS OF SELECTED LIFE CYCLE GROUPS, 1993-94

Proportion of household budget spent on selected goods and services(a)

Food
Transport
Current housing costs
Recreation
Medical, health & personal care
Selected household types
%
%
%
%
%

One-person, under 35
13.5
13.9
25.3
14.9
4.4
Couple only, reference person under 35
14.8
15.1
19.6
14.7
5.1
Couple with dependent children only
19.8
14.5
14.2
12.2
6.3
    Eldest child under 5
17.7
16.1
18.3
9.9
6.4
    Eldest child 5-14
20.5
14.2
14.0
12.9
6.0
    Eldest child 15-20
20.0
14.0
11.6
12.8
6.7
Couple with dependent and non-dependant children only
19.8
18.9
9.6
12.9
6.5
Couple with non-dependant children only
19.0
19.9
7.7
14.4
7.2
One-parent household
18.4
12.8
16.7
12.3
5.4
Couple-only, reference person 55-64
18.7
16.5
8.9
15.2
7.5
Couple-only, reference person 65 and over
21.0
13.8
10.6
13.0
9.1
One-person, 65 and over
21.1
11.0
15.8
11.4
8.3
All households
18.4
15.5
14.2
13.2
6.4

(a) Average weekly expenditure on each expenditure group expressed as a percentage of average weekly expenditure on all goods and services.

Source: Household Expenditure Survey, Australia, 1993-94: Household Characteristics (cat. no. 6531.0).


Couples with children
Couples with young dependent children (eldest child under 5) spent an average of $672 per week on goods and services, $50 less than young couples without children. Incomes were also considerably lower because of the relatively low rate of full-time paid employment among women with young children (see Australian Social Trends 1998, Trends in women's employment). Average expenditure on goods and services increased with income and was highest ($976 per week) for older family households with both dependent and non-dependant children.

As equity in the family home increases, expenditure on mortgage interest declines and current housing costs consume less and less of the household budget. While the proportion was still relatively high (18%) for couples with young dependent children (eldest under 5), this declined rapidly over the life cycle - down to 8% for couples with non-dependant children only.

Couples with dependent children only, spent from 14% to 16% of their budget on transport, close to the average for all households. Those with non-dependant children spent a higher proportion on transport (20%) than other life cycle groups. This was because these households, with children of driving age, owned more vehicles, on average, than other life cycle groups. Couples with non-dependant children spent an average of $56 per week on motor vehicle purchases and $110 per week on motor vehicle running costs, each about double the average for all households.

As families have children they tend to spend a larger proportion of their budget on food. Overall, couples with children spent about 20% of their household budget on food, a much higher proportion than young couples without children. However they spent less per person on food, averaging from around $34 per week for couples with younger dependent children (eldest under 15) to $51 per week for older families with non-dependant children only. This compared to $53 per person per week for young couple-only households.

For the majority of couples with children, the proportion of the household budget spent on medical, health and personal care was about the same as for all households, while the proportion spent on recreation was generally lower, particularly for couples with young dependent children (eldest under 5).

Couples with children spent less than young couples without children on home mortgage principal repayments but, as family size increased and children grew older, they spent more on home improvements such as additions, extensions, renovations, insulation, in-ground swimming pools and landscaping.

Couples with older children (eldest over 14) spent more than younger families and young couples on superannuation. This could be partly because the partners in older families had higher earnings, on average, and partly because some of the older children were also employed and contributing to a superannuation fund.

EXPENDITURE ON SELECTED ASSETS, 1993-94

Average weekly expenditure

Superannuation
Home mortgage principal
Home improvements
Selected household types
$
$
$

One-person, under 35
10.60
19.30
3.00
Couple only, reference person under 35
21.20
62.60
31.30
Couple with dependent children only
25.10
33.00
49.70
    Eldest child under 5
20.10
39.20
42.90
    Eldest child 5-14
23.60
30.40
55.20
    Eldest child 15-20
32.70
32.20
45.00
Couple with dependent and non-dependant children only
35.20
41.70
39.30
Couple with non-dependant children only
30.80
19.70
27.10
One-parent household
7.00
9.80
11.30
Couple-only, reference person 55-64
23.30
3.90
26.50
Couple-only, reference person 65 and over
0.80
0.90
9.00
One-person, 65 and over
-
0.40
3.10
All households
18.40
20.80
26.80

Source: Unpublished data, Household Expenditure Survey, 1993-94.


One-parent households
One-parent households spent an average of $517 per week on goods and services. While they generally spent less than couples with dependent children, in keeping with their lower incomes and smaller households, they spent about the same amount per person on food ($32 per week) as couples with younger dependent children (eldest under 15). The proportions of their budgets spent on food (18%) and current housing costs (17%) were similar to couples with young dependent children (eldest under 5). The proportions spent on transport (13%) and recreation (12%) were closer to those of couples whose eldest dependent child was 5 or older.

However, one-parent households spent less of their budget on medical, health and personal care (5%) than couples with dependent children. They spent an average of $6 per person per week on medical care and health expenses, less than for any other life cycle group. This was largely because one-parent households were much less likely than most other life cycle groups to have private health insurance (see Australian Social Trends 1994, Private health insurance: who has it?). In 1993-94, over half (55%) of one-parent households received most of their income from government pensions and allowances and would have been entitled to a range of health care concessions. This would have contributed to lower costs for medicines and doctor consultations and may have reduced the need for accident and health insurance. However, affordability would also have been an important consideration for many of these low-income households without health insurance.

In line with the low rates of full-time employment among lone mothers, one-parent households had relatively low expenditure on superannuation (an average of $7 per week). One-parent households were less likely than most couples with children to be buying a home and, consequently, their expenditure on home mortgage principal repayments was much lower (an average of $10 per week). They also spent much less than couples with children on home improvements (an average of $11 per week).

EXPENDITURE ON FOOD, 1993-94

Average weekly expenditure

Per household
Per person
Selected household types
$
$

One-person, under 35
53.40
53.40
Couple only, reference person under 35
106.60
53.30
Couple with dependent children only
146.70
35.20
    Eldest child under 5
119.20
34.60
    Eldest child 5-14
149.20
32.90
    Eldest child 15-20
167.40
40.30
Couple with dependent & non-dependant children only
192.80
42.20
Couple with non-dependant children only
165.70
50.70
One-parent household
95.30
32.00
Couple-only, reference person 55-64
103.30
51.70
Couple-only, reference person 65 and over
85.70
42.80
One-person, 65 and over
44.40
44.40
All households
111.00
42.20

Source: Household Expenditure Survey, Australia, 1993-94: Household Characteristics (cat. no. 6531.0).


Early-retirement age (55-64 years)
Both income and expenditure levels decline significantly in the 55-64 years age group. In 1993-94 couples without children (and reference person aged 55-64) spent an average of $553 per week on goods and services, about three quarters as much as young couples without children. They spent $52 per person per week on food, about the same as young couples, though this represented a much higher proportion of their total expenditure on goods and services (19% compared to 15%).

Like young couples, they spent a relatively high proportion of their budget on recreation (15%). Their current housing costs ($49 per week) were much lower than for young couples ($141 per week) and accounted for only 9% of total expenditure on goods and services. This was due to high rates of outright home ownership (81%) and lower average rent payments for those still renting their accommodation.

As people grow older they are more likely to experience health problems and incur higher medical and health costs. Early-retirement age couples spent an average of $32 per week on medical care and health expenses compared to $24 per week for young couples. They were more likely than young couples to have private health insurance, and spent more per person ($9 per week) on accident and health insurance than any other life cycle group. Altogether, expenditure on health, medical and personal care accounted for 8% of the goods and services budget of early-retirement age couples.

Despite the relatively low rates of full-time employment in this group, early-retirement age couples spent more on superannuation ($23 per week) than young couples without children. This may be because those still working had chosen to increase their superannuation contributions in the years leading up to retirement.

Since the vast majority of early-retirement age couples owned their homes outright, they had very low average expenditure on home mortgage principal repayments ($4 per week). However, their average expenditure on home improvements ($27 per week) was close to the national average though only about half as much as for couples with children.

Older households (65 years and over)
In 1993-94, average household incomes and consumption expenditure levels of older couple-only and one-person households (reference person 65 and over) were about half that of their younger counterparts (reference person under 35). They spent a higher proportion of their budget on food (21%) than early-retirement age couples, but less per person (about $44 per week).

Their current housing costs ($43 for couples and $33 for singles) were lower than for any other life cycle groups. This was due to high rates of outright home ownership (83% for couples and 70% for singles) and, among renters, relatively high proportions in low-cost public housing (56% for couples and 53% for singles). Even so, because of their lower incomes, older couples spent a higher proportion of their household budget on current housing costs (11%) than early-retirement age couples (9%). Older singles used 16% of their budget on current housing costs, more than the average for all households.

Like early-retirement age couples, older couples and singles spent a relatively high proportion of their budget on medical, health and personal care (9% and 8% respectively). Expenditure on medical care and health expenses was relatively high despite the high proportions of older households dependent on government pensions and allowances, and entitled to health care concessions. Like early-retirement age couples, older households spent around $4 per person per week on medicines and pharmaceutical products, almost double the average for all households. They spent less per person on accident and health insurance, however, in keeping with lower rates of coverage.

The vast majority of people over 65 have retired from the labour force. Many of those who were contributing to a superannuation fund during their working lives would be drawing on their superannuation in the form of a regular pension. Some may have used lump-sum payouts on retirement to discharge their home mortgage, if they had not already done so. While average expenditure on superannuation and the family home was negligible for these households, it is possible that, despite their lower incomes, some may have purchased other assets (e.g. shares and other property).

AVERAGE WEEKLY EXPENDITURE ON MEDICAL CARE AND HEALTH EXPENSES, 1993-94

Total medical care and health expenses(a)
Accident and health insurance
Medicines and pharmaceuticals



Per household
Per person
Per household
Per person
Per household
Per person
Selected household types
$
$
$
$
$
$

One-person, under 35
10.60
10.60
4.10
4.10
2.10
2.10
Couple only, reference person under 35
24.10
12.00
14.50
7.20
4.10
2.10
Couple with dependent children only
33.70
8.10
16.70
4.00
7.50
1.80
Eldest child under 5
33.20
9.60
15.40
4.50
8.80
2.60
Eldest child 5-14
31.80
7.00
16.00
3.50
6.70
1.50
Eldest child 15-20
38.00
9.10
19.30
4.60
7.70
1.90
Couple with dependent and non-dependant children only
42.90
9.40
23.80
5.20
7.50
1.60
Couple with non-dependant children only
43.40
13.30
23.50
7.20
9.40
2.90
One-parent household
17.60
5.90
6.20
2.10
4.60
1.60
Couple-only, reference person 55-64
31.70
15.90
17.80
8.90
7.40
3.70
Couple-only, reference person 65 and over
28.00
14.00
13.70
6.80
7.10
3.60
One-person, 65 and over
12.80
12.80
5.30
5.30
4.20
4.20
All households
27.10
10.30
13.50
5.10
6.20
2.40

(a) Includes accident and health insurance, medicines and pharmaceutical products, practitioners' fees and hospital charges.

Source: Household Expenditure Survey, Australia, 1993-94: Household Characteristics (cat. no. 6531.0) and unpublished data, Household Expenditure Survey, 1993-94.

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