A Beans Group Insight Report STUDENT SPENDING REPORT image: Zurich Tourism A LOOK AT UK STUDENTS, THEIR MONEY AND WHAT THEY DO WITH IT
Introduction This summer The Beans Group surveyed 1,401 current UK students about money. We asked them about their spending habits, their income, their budgeting and savings. The results provide a breakdown of the student population s financial health and clear up questionable truths that have skewed the conversation around students and money. We hear stories, for example, of wealthy students storing their loan money in highinterest savings accounts and profiting from the low interest rate they borrowed on. Does this really happen? We find out. At the other end, stereotypes of the poor student still abound, with jokes about scrimping and scraping still evident in popular culture. Are most students really poor? We also find out which banks students prefer and why. We learn where students get their money from and how they spend it. And we discover what students themselves think about the lifetime of debt that the media reminds them of weekly. This report gives a peek inside the finances of the UK s 2.5 million students, an audience that contributes 20 billion to the economy every year and represents the ABC1 consumers of the future. Read on to get an overview of students and their money. 2
WHERE DO STUDENTS GET THEIR MONEY FROM? We hear a lot about loans as the key source of student income, and about their heavy burden on the student. Yet the majority of students are not very concerned about debt on graduation. While just under half (47%) express some slight concern, most accept that debt is a necessary and manageable by-product of their decision to go to university. And let s be clear: today s student makes a considered decision to go to university, based on the benefits a degree can offer them. When asked what factors influence their choice of university, answers such as good social life scored low in our survey. For the majority, it s about the course and its academic reputation, because young people want to make the choice that will propel them closer to their career target. This endgame view of higher education, which is much more marked than with previous generations, raises student expectations. Their university must deliver quality and value-for money if they are to attract and keep them as customers. Cancelled seminars and hard-to-pin-down lecturers are difficult to stomach in 2013; 66% of current students do not believe their course is worth the price they are paying. So where do students get their money from? A student loan is taken out by 84%, meaning there is a small but surprising number who most likely do not face any debt on graduation. Around 3/4s say their loan is used to pay for rent or everyday living costs. With 12% of students putting their loan money into a savings account, we can ascertain that 28% have no immediate need to spend 3
borrowed money and, among them, 16% have no need at all. The largest number of students - 45% - say: I live off my student loan but try and save some money from working part-time. The two main sources of extra income for students are parents and part-time work. The bank of mum and dad supports 61% of students, with a quarter receiving over 500 per month from parents. 41% of students believe they are impacting on their parents finances a little, while 22% say not very much or not at all. When it comes to part-time work, just under half of all students have a job. Bar work (22%) is the most common, with clothing store (13%) and supermarket (12%) work following. Half (51%) work between 10 and 19 hours per week and receive between 6.00 to 6.99 per hour. Among other ways to source money, just under half (41%) have sold their possessions on the internet, for example via ebay or Facebook. While some have tried their luck occasionally with scratch cards (23%) and lottery tickets (34%), more serious gambling is only a minority student interest. Online casinos have only attracted 5% of students and sports betting has only ever been experienced by 12%. 4
WHAT DO STUDENTS SPEND THEIR MONEY ON? (Weekly Breakdown) GROCERIES LESS THAN 10 10% 10-19.99 35% 14% 30-39.99 3% 40-49.99 3% 20-29.99 10+35+34+14+3+3 50 OR MORE 3% ENTERTAINMENT (e.g going out, pubs, cinema) LESS THAN 10 20% 10-19.99 30% 26% 30-39.99 15% 40-49.99 5% 20-29.99 20+30+26+15+5+5 50 OR MORE 5% LEISURE ACTIVITIES (e.g the gym, sports clubs) LESS THAN 10 68% 10-19.99 23% 7% 30-39.99 2% 40-49.99 1% 20-29.99 68+23+7+2+1+0 50 OR MORE 0% TRAVEL (e.g bus pass, petrol) LESS THAN 60 60-69.99 4% 1% 80-89.99 1% 90-99.99 1% 100-109.99 1% 70-79.99 92+4+1+1+1+1+0+0 110-119.99 120+ 0% 0% 92% BOOKS & COURSE EQUIPMENT LESS THAN 10 10-19.99 22% 6% 30-39.99 3% 20-29.99 66+22+6+3+1+3 40-49.99 1% 50 OR MORE 3% 66% 5
Going out expenses account for a disproportionate portion of a student s weekly spending money. Alongside groceries, which cost 48% of students between 20 and 39.99 per week, entertainment is a key outgoing with 39% spending the same amount ( 20 to 39.99) on going to the pub, cinema and club. Meanwhile travel costs indicate that most students live close enough to uni not to experience lengthy commutes and don t live the taxi-riding high life. A third of students are dedicating at least 10 a week of their income to leisure activities such as the gym or sports clubs. Figures relating to course books may seem low, yet they match an earlier research survey from Sodhexo (University Lifestyle Report 2012) which shows similarly low expenditure on study materials. 6
STUDENTS, THEIR BANKS AND THEIR BUDGETING According to our survey, the most popular bank among students - attracting 28% of the UK student market - is NatWest. Around half of students say they were with NatWest before they got to university ( Same bank I ve always banked with - 46%) while free gifts (18%), large overdrafts (22%) and same bank as my parents (29%) were the most popular reasons for their decision. However the most often cited reason for choosing a bank was the availability and quality of online banking - a typical indicator of the importance of internet connectivity to UK youth. After NatWest came Lloyds TSB (15%), closely followed by HSBC (14%) and Barclays (11%). Beyond the big four, Santander is nearest to challenging their grip on the youth audience with 8%. They are followed by Halifax on 7% and Nationwide with 6%. Another definitive statistic of this generation is the number accessing their bank accounts by mobile phone - a whopping 34%. The common quote that people are more likely to get divorced than change banks rings true, with the majority of students (56%) revealing they are unlikely to change after graduation. With only 7% saying they are very likely to move, this could also be said to strengthen evidence that - contrary to popular belief - students are brand loyal. 7
Students are generally on top of their finances, with 64% checking their account at least once a week and a huge 83% stating they either know exactly how much they ve got or they have a pretty good idea. Perhaps surprisingly, given the ideas we have about students buying the things they want whether or not they can afford them, students are not big credit card users. A majority of 73% do not have any credit card. Of those that do, 39% say they only use them in emergencies and most do not have a good awareness of interest rates, with 54% of cardholders admitting they have no idea what charges they would incur with a card. But apart from interest rates, the impression of students and their finances that our survey gives is one of a reasonably aware and money-savvy audience. Most do not owe money to anyone at all (63%), 82% consider themselves knowledgeable about debt and budgeting and the same number say they would never, under any circumstance, take out a sameday or payday loan. Meanwhile most have adopted money-saving strategies to ensure their loans stretched to the end of term, including leaving their debit cards at home before a night out (51%), walking home rather than taking a taxi (51%) or buying supermarket own brands (80%). 8
The financially-clueless, penny-scrimping student living in cold accommodation and scraping margarine from the lid is a thing of the past. Today s student survives comfortably and plans their spending carefully. They enjoy a good life most of the time, with social activity a priority, but they know how to make money stretch when they need to. We know from other research that students are keen to look good, have up-to-date technology and make the most of their time at uni, all of which require money. Those that can t rely solely on parental support supplement their income by working. Today s student achieves the lifestyle they want as they ultimately pursue the career they want. They are entrepreneurial, self-aware and driven. Want to know more about The Beans Group s work? We d love to talk. Get in touch on 0870 3831 599 or hello@thebeansgroup.com 9