BUDGETING TO BLOWOUT: ARE THEY CAUTIOUS OR CAREFREE?
Students are spending more than previous generations but they are also feeling more in control of their finances. They realise they’re going to be in debt but they're not letting it affect their enjoyment of those small everyday luxuries and saving for bigger experiences like travel. Instead they’re getting ever more ‘hacky’ with the things they find less important and want to budget on.
University is usually the first time a young person has to manage every aspect of their budget themselves. It’s also likely to be the first time they face the challenge of basics vs treats.
Students today are spending more than previous generations but they are also feeling in control of their finances. Their means and spending has grown because their loans are larger.
A report by moneysupermarket claims that as of March 2018, the current level of student debt in the UK is at £100.5 billion and will reach £1 trillion by 2044. They are spending around £150 more each term than they get from their student loans. This is why 85% of students rely on additional sources of income to support their lifestyle. Of those, almost half (46%) receive money from their parents or family, while 42% have part-time jobs.
*“I’m a student at the moment but I also do have 3 jobs.” *
Students believe they will leave university with an average of £36,566 in debt. The reality, according to the Institute of Fiscal Studies, is that it’s likely to be above £50,000. This paints a pretty bleak picture of what it means to go to university in Britain today!
When we look behind these numbers, we can start to understand a bit more about the day to day realities and motivations when it comes to student spending. Are they cautious or carefree?
We would say they are cautiously carefree. Although students have traditionally been seen as cheap (and this still holds true for finding the best price), they are also now more discerning than ever. They want those little luxuries and won’t worry too much about treating themselves to a £3 flat white and an Uber home from university after a particularly hard day.
“I definitely treat myself to luxuries, as a student, arguably too much.”
“I do try and give myself little luxuries like takeaways here and there but I try and keep them at a minimum.”
They are also more health conscious and environmentally conscious (being aware of supply chains, carbon footprints, worker abuse, waste produced etc.). But living a responsible lifestyle can be expensive, which means there’s a constant battle between saving money and saving the planet.
The need to be clever about their finances has led students to be innovative and ‘hacky’ when it comes to finding the best deals, renting over buying or just using their wiles to ‘borrow’ things (wearing an outfit but leaving the tags still in it so they can return it).
“I utilise websites like Save The Student which alerts you to promotional offers from many different companies.”
“I buy through Wowcher and Groupon if I’m ever buying Christmas presents.”
And yet they will find resources to get to Coachella or Download and consider this an essential part of their life experience. Why should their student days, which are spent working harder than any generation before them, come at the cost of enjoyment and new experiences, right?
“I want to make sure that every single moment I have is enjoyment so when I get work I won’t feel like I’ve missed out.”
We asked our students if they found they had £50 more in their budget than they were expecting, what would they do with this ‘free’ money? Here is what we found:
48% said that they would put it toward saving for something bigger like a trip. It seems students can sacrifice instant gratification for something they really want to do in the future! However, although they may be painfully aware of debt, only 11% would put it towards paying one off.
“At the moment I’m saving to go to America... and that’s why I’ve got 3 jobs, just to cover the cost of everything without having to ask my parents or go into an overdraft. I want to do it fully self-funded without getting myself into any financial difficulty.”
With students still keen to impress - both on social media and IRL - it’s not surprising that 51% of women and 31% of men would buy some new clothes. 23% of women would buy new beauty products, probably for the same reasons.
Shifting Ideals of Socialising
Interestingly, only 10% would spend money on gig tickets, 9% would use it for clubbing and 7% would buy festival tickets. Instead 38% would prefer to use the money to eat out with their friends and only 21% would use it to go drinking (with 20 year olds and men much more likely to want to drink than 18 year olds and women). It seems that partying is no longer the way students like to be social!
Won’t Pay for Wellness
Despite a growing focus on wellness for students, just 7% expressed a desire to spend their bonus £50 on a fitness related item like new kit, classes or sports clothing. And only 5% would spend it on attending a sporting event. So looks like wellness is in… but only if it’s free.
It is important for brands to stop seeing students as broke and cheap. They are more resourceful than most people give them credit for and will find money for the things that are important to them: looking good, spending time with friends and creating memorable life experiences.