Australian consumers are looking to reduce their lifestyles through simpler living amid pressures of heavy debts, new research shows.

According to Datamonitor's latest study on 'Five key consumer issues for Australian financial services', 41.7 per cent of consumers in the 25-34 and 46.2 per cent of consumers over 65s age groups show the highest levels of streamlining. The younger consumers are most likely to be taking on substantial home loan repayments as they enter the property market for the first time; while the older consumers are more likely to be on a fixed income that is vulnerable to any rising costs.

"The main evidence for the switch to streamlining is the high proportion of consumers reducing the number of big purchases that they are making, cutting non-essentials from their budget, scaling back on treats and generally adopting a lower-key lifestyle with an emphasis on making do with less," said Andrew Haslip, senior analyst at Datamonitor and author of this research.

In the Datamonitor survey, 55 per cent of Australian respondents' stressed that they were 'all of the time' of 'most of the time' cutting back on non-essentials and 60 per cent said that they were budgeting more closely.

"When consumers start to streamline their lifestyles, it leads them to manage their monthly budget much closer with direct implications for banks and other FS providers," Mr. Haslip said.

The major effect of streamlining finances is that consumers seek to cut down on all costs, particularly those considered to be luxury. This requires active engagement with their finances and active measures to control their spending.

Streamlining consumers are also becoming increasingly price sensitive, with 44 per cent saying they focus more on the lowest price in 2010, compared to just 35 per cent in 2009.

"The increasing costs of servicing high debt loads have led streamlining consumers to focus on price, with this being the most important change in what they look for in an FS provider. If providers do not learn to accommodate streamlining consumers, by appealing to other aspects of the trend such as the desire for simplicity, they will be forced to deal with higher rates of churn as consumers seek out lower cost deals" Mr. Haslip said.