Majority of students do not save enough
While student loans do contribute to this problem, Student Village found that it’s also lavish spending that’s pushing students into further debt.
“With an earning average of R2 702 per month, students could be saving up to R6 480 per year and R25 920 by their fourth year of study which is quite a significant amount of money for a student to put to good use. Unfortunately, it remains that students are more interested in spending, than saving,” said Ronen Aires, CEO of Student Village.
Source of income
In addition to taking out credit in order to fund their lifestyle, students are finding other ways to get money.
Eighty six percent of students receive their current income from their parents or other family members. Thirty percent of the students surveyed received an income from either part time or full time work, with 15% of respondents revealing that they received an income from a bursary or sponsor. Encouragingly, 11% of students that took part in the study stated that they received an income from their own business.
The reported highlighted that as students advance in their studies, they earn more, however, they also spend more and have higher debt.
What do they spend the money on?
According to the report, students are spending a lot of their income on items such as cell phones, laptops, tablets, and premium and brand name clothing, as well as more regular expenses such as rent, groceries and vehicle repayments.
The survey found that female students spend more of their income on “hairdressers and beauticians, medical and health, contraception, and cigarettes and tobacco.” While male students spend more on “alcoholic beverages, bling and jewellery, recreation and sporting equipment, as well as clothing and footwear.”
Student Village found that students do not manage their finances and are not interested in saving. However, a number of students expressed interest in increasing their understanding of financial matters. Their interest was as follows:
· 61% expressed an interest in learning about saving,
· 54% of students said they wanted to know more about budgeting,
· 46% of respondents were interested in investing,
· 19% wanted to know how home loans work, and
· 14% revealed an interest in understanding more about credit.
The survey revealed that 24% of students have retail cards, with 65% of these students being the main card holder. Only 22% of respondents claimed that they owned no form of credit, while 51% of students stated that they believe retail lenders are irresponsible. Of the students with retail cards, 42% did not know how much interest they were being charged.
A concerning 35% of students do not save. Those that save put less than 20% of their monthly income (about R540) away. However they often spend it soon after saving.
“A greater degree of saving, although minimal, appears to be more evident among students who earn R3 000 [or more], while students’ hunger for wealth and thirst for revenue grows with each passing year,” said the report.
For more information on saving, click here.