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SPENDING & SAVING HABITS OF YOUTH IN THE CITY OF INDORE

Dr.RekhaAttri,
Associate Professor, Core Business School, Indore, India, rekha.attri@gmail.com

ABSTRACT
India is a developing country where the middle-class has relatively grown monetarily stronger and with the increase
in the spending power of the adults, even the young have become free-hand spenders and spendthrifts in some
cases.This paper addresses the question of why, where and how the youth spend? The youth referred to here are of
the age group 14-30 years. With the rocketing economy, the buying trends are also changing. The age group of 1530 years is that part of the society which is immortalized in advertisements. The west depicts this youth as
financially and emotionally free, but in India the case is not the same. Despite being financially dependent on the
parents till about an age of 25-26 years, there is a radical difference observed in the spending behaviour of the
youth of our country. This paper is an attempt to study the spending and saving habits of the youth in the city of
Indore.

INTRODUCTION
With the revolution in the retail sector in India and

being financially dependent on the parents till about

advent of mall culture, the spending and saving habits

an age of 25-26 years, there is a radical difference

of the youth have changed over the years. An over

observed in the spending behaviour of the youth of

exposure to marketing communication activities of

our country.

the companies, the youth has turned to be more brand

conscious and also spend a considerable amount of
their income on entertainment and gadgets. With the
increase in spending power of the adults, even the
young

have

become

free-hand

spenders

and

spendthrifts in some cases.This paper addresses the

question of why, where and how the youth spend?
The youth referred to here are of the age group 15-30
years. The age group of 15-30 years is that part of the
society which is immortalized in advertisements. The
west depicts this youth as financially and emotionally
free, but in India the case is not the same.Despite

LITERATURE REVIEW
With the rocketing economy, the buying trends are
also changing. The mentioned age group, have
entertainment, leisure, food, clothing, etc. as their
priorities in spending and this generation is willing to
spend on everything from mobile phones to sneakers
to french fries (Schuman, 2006).Over 250 British
children and adolescents completed a questionnaire
on their sources of personal income (pocket
money/allowance, part-time job, gifts), as well as
how much they had saved, where it was stored, and
for what purpose it was intended. The participants

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VOLUME 3, NO.-2, MAY-AUGUST -2012

EISSN 2277-4955
also responded to various attitude statements about

many graduates continue to live at home after

money and the economic situation in general

University. While they remain there, they have the

(Furnham, 1999).Like no other generation, today's

ability to persuade their parents to buy new brands

youth are growing up in a culture of debt facilitated

and

by expensive lifestyles and easy credit (Dugas, 2001).

Global,2004).According to Young Asian survey by

Teen spending reached $175 billion in 2003 through

Synovate, today's young Asian is a multi-tasking,

parental allowances and youth's personal job earnings

interactive, digital-driven consumer. Conducted in

(Teenage Research Unlimited 2003). With access to

conjunction with MSN, MTV and Yahoo!, Young

this amount of wealth, youth are the target of

Asians surveyed over 7,000 respondents aged 8 to 24

marketing

companies.

across Hong Kong, Singapore, Taiwan, Malaysia,

According to Synovate (2005) the 2004 credit card

Thailand, Indonesia, Philippines and India. The study

mailings increased 5.2 billion, superseding the 2001

revealed the hearts and minds of Asia's connected

record in U.S. In the west the credit card companies

youth, exposing their favourite brands, spending

are bombarding college campuses where students are

habits, dreams and aspirations (Change Agent,

enticed with pre-approved credit to avoid using their

2005).According to a survey conducted by Keycorp

limited cash supply (Grable and Joo 1999). A survey

(2005), 55% of the people surveyed said that they

on the spending habits of young people in

were decent savers. The survey also found that 49%

Guangzhou, Hong Kong and Macau found that Hong

respondents said that cable T.V and

Kong youths have the most pocket money but spend

television were essential for their lifestyle ,46% need

it

and

cell phones,44% high speed internet access,32%

accessories.Hong Kong youths would borrow from

spent on entertainment, movies & dinning (Keycorp,

friends or take up part-time work, in order to earn

2005).Marketing director of Levi Strauss, India said

enough money to spend.The survey concluded that

in 2005 that they have tripled their sales in Bangalore

the more pocket money an average Hong Kong youth

city in the last three years. According to him this was

is given; the chances are that the proportion spent on

largely due to the effect of disposable income coming

enjoyment will be greater.In addition, nearly 20% of

into the hands of the 18-22 age group employed in

Hong Kong youths say they spend all they have.

BPO jobs.

When they run out of pocket money, they either

(consumer banking), Standard Chartered Bank, India,

borrow from friends or take up part-time work.(MSE,

estimates that India adds around 3 million young

2004).According to new research from Euro monitor

earners in the age group 20-24 annually. These first-

International, University graduates are the key

time earners account for 7-8% of its credit card base

emerging economic force within China's "youth

of 1.4 million - a figure that is expected to more than

generation", which includes all those aged between 0

double in the next few years. (Joshi, 2005)According

and 29 years old. Marius Dundulis, global market

to Kamath (2006) the age group of 17-25 year spent

research manager at Euro monitor International,

more on apparel and was becoming more brand

commented, This segment of the population also

consciousness because of the easy availability of

exerts influence beyond its own buying power, as

information on just a click away. In 2006, Youth

mostly

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campaigns

on

and

credit

entertainment,

clothes

products

VOLUME 3, NO.-2, MAY-AUGUST -2012

(Market

Trends

satellite

VishuRamachandran, regional head

EISSN 2277-4955
believed in live for today attitude rather than a

advertisements, product design or just make on-a-

mindset of Saving for the future. Contribution of

whim purchase decisions. They also came up with

the youth segment to total brand sales was as high as

three major areas of spending in various countries. In

60 percent. (Kamath, 2006).Indian youth is showing

Singapore and South Korea, youth spends more on

a preference for ready-made apparel with a massive

Food (45% and 30% respectively), Clothing (27%

75% hike in such purchases. Another major change in

and 25% respectively) and Entertainment (14% and

consumer behaviour was found in the way India

15% respectively). In UK and Amsterdam youth

connects. Telephone expenditure, per person per

mostly liked to spend on going out i.e. 52% and 32%

month had increased by a whopping 515% since

respectively and in Hong Kong and US, youth spent

1999-2000 in rural areas and by 230% in urban areas.

mostly on Clothing i.e. 40% and 52% respectively

The deep inroads made by the mobile revolution was

(Mobile Behavior, 2008).In 2009 when recession hit

visible in the proportion of households incurring

all over the world, the researchers were keen to know

expenditure on telephone going up from 5% to 32%

about the spending habits and reactions of teens

in rural areas and from 25% to 63% in urban areas.

towards the recession. 75% of teens behaved in the

Expenditure on education has gone up from 45% to

same way and spent in the same way as they were

57% in urban India and from 29% to 44% in rural

spending in the previous year.The research results of

India while expenses on healthcare have also gone up

seven countriesincluding India showed that, teens are

substantially. All of these are clear indicators of

basically focusing on saving for three things i.e

change culture and values in modern India (George,

Clothes

2007).According to the NSSO survey, Indians

(38%)(Meredith, 2009).It was also pointed out that

seemed to be spending more on trendy clothes,

the young generation rarely practiced basic financial

mobiles and cars. Major change has been seen in

skills, such as budgeting, developing a regular

ready-made apparel showing a massive growth as

savings plan or planning for long term requirements

75% of Indians purchase ready-made garments.

(Pillaiet.al.,2010).

(57%),

College

(54%)

and

Car

Increment in the demand of cars and motor bikes had

also seen substantial increase over 11 years. About
4.6% urban households owned motor cars in 200405
compared to 1.2% in 1993-94 (The Times of India,
2007). According Global youth panel, a survey was
conducted on spending habits of youth all over the
world and the age group was 14 29 years. Their
main aim to conduct this survey was to find out the
factors influencing youth decision-making process.
The results pointed that 43% respondentsliked to

RESEARCH OBJECTIVE
From the review of the available literature on the
spending and saving habits of the youth a gap was
identified in terms of limited research carried out to
study the spending and saving habits of youth with
special reference to the city of Indore. Hence the
objective of this research is to:

purchase only after carrying out online research about

the product, 40% were influenced by family or
friends and 17% were influenced by TV/magazine

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Study the segment wise spending habits of

the youth

Modes of saving practiced by the youth of

today

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Influence of demographic variables, peer

questionnaire to get a complete understanding of the

group and media in the purchase habits of

topic under study.

the youth

Study the gender wise spending and saving

habits of the youth.

DATA ANALYSIS AND INTERPRETATION

As can be seen from table 1, 48% of the respondents
in the age group of 15-19 years claimed that they had
savings account while 22.9% of the respondents in
the age group of 20-24 years said that they used

RESEARCH METHODOLOGY
The research was conducted in the city of Indore with
a representative population size of 275 respondents
falling in the age bracket of 15-30 years. The
sampling

method

followed

was

convenience

sampling and care was taken to have an almost equal

representation of both the genders. The respondents
were approached in schools, colleges, malls and

savings account for money either transferred by their

parents for their education purpose in case they are
studying at a different location from their parental
home or for depositing the money received as a
pocket money from their parents. 81.5% of the youth
in the age group of 25-29 years extensively used the
saving accounts of various banks.

multiplexes. A pilot test was conducted on 15

60.2% of the respondents in the age group of 20-24

respondents to get insights into the problem areas

years had fixed deposits done either by them or by

which might be faced by the respondents while

their parents in their name. 88.2% of the respondents

answering the questionnaire. Both open ended as well

in the age group of 25-29 years had made

as close ended questions were included in the

investments in some mutual funds while 11.9% of the

respondents loved investing in share market.

Table1: Age wise use of various savingoptions

Investment options

The

20-24 years

25-29 years

(%)

(%)

(%)

Savings Account

48

22.9

81.5

Fixed Deposits

60.2

17

Mutual Funds

0.2

1.8

88.2

Share Market

12

11.9

respondents

asked

through

years

the

influencers whose inputs or guidance they normally

questionnaire to tick against the top three purchase

resort to while purchasing a product or service. As

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were

15-19

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can be seen from table number 2, 24% of the youth

decisions. A very less percentage of the youth did

below 15 years are influenced by family members

online shopping. The effect of television, magazines

while making their purchase decisions. Influence of

and advertisements was higher for the age group

family is much lower in case of other age groups.

below 15 years and those in the age bracket of 25-29

25% of the respondents in the age group of 15-19

years. 49% of the respondents in the age group of 25-

years are influenced by their friends and peer group

29 years relied on examining the product features

while purchasing products or services. Again 19% of

while making purchase decisions and 60% of the

the respondents below the age of 15 years get

respondents in the same age group made independent

influenced by their peers while making purchase

decisions while purchasing products or services.

Table 2: Purchase Influencers for purchase decisions made by youth

Purchase Influencer

Below 15years

15-19 years

20-24 years

25-29 years

(%)

(%)

(%)

(%)

Family

24

Friends

19

25

Online Purchase

TV/Magazine

12

18

Advertisement

14

10

15

Product/Service Features

10

30

29

49

Independent Decision

30

50

60

Table 3A depicts the gender wise spending habit of

respondent agreed spending this big an amount per

the youth. Table 3A shows that just 5.3% of the male

week on the same. The male respondents spent a

respondents spent less than or equal to 300 rupees on

higher amount per week as can also be seen from the

entertainment and gadget while the percentage of

28.4% male respondents stating that they spent

female respondents spending this amount was much

between Rs. 901-1200/- per week on gadgets,

higher

male

entertainment or eating out. This was considerably

on

lower in case of female respondents where only 5.5%

i.e.18.2%.

respondents

spent

Also

11.6%

more

than

of
Rs.

the
1200/-

entertainment, gadgets etc. while no female

of the female respondents stated that they spend

between Rs. 901-1200/- on entertainment.

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Table 3A: Gender wise spending in Rupees per week

Gender

Rs.0-300

Rs.301-600

Rs.601-900

Rs.901-1200

Above Rs.1200

(%)

(%)

(%)

(%)

Male

5.3

18.4

36.3

28.4

11.6

Female

18.2

43.6

32.7

5.5

(%)

Table 3B highlights the gender wise spending options

gadgets and personal needs, the female respondents

of the youth. Where on one hand the male

spent the highest on personal grooming, followed by

respondents spent the highest on entertainment

spending

followed by eating out and thereafter investing on

entertainment.

on

personal

needs

and

thereafter

Table 3B: Gender wise spending options

Gender

Eating Out

Gadgets

Personal

Personal

Entertainment

(%)

(%)

needs

Grooming

(%)

(%)

(%)

Male

25.3

18.4

16.3

8.4

31.6

Female

18.2

13.6

22.7

25.5

20.0

Table 4 depicts the gender wise survival period of the

could survive for 30 and 40 days with their monthly

youth with their pocket money. As can be seen in the

allotted pocket money as compared to the male

table a higher percentage of the female respondents

respondents

where

higher

percentage

of

respondents (45.3%) could only survive with their

pocket money for 25 days..
Table 4: Gender wise survival of Youth with the pocket money/income
Gender

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20 days

25 days

30 days

40 days

(%)

(%)

(%)

(%)

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Male

8.4

45.3

37.9

8.4

Female

10.9

24.5

49.1

15.5

Change Agent. (2005). The lives of Asian Youth.

CONCLUSION
This research clearly depicts the change in the
spending and saving habits of the youth of today.
There is a huge influence of peer group in the youth
below nineteen years while making purchase
decisions. This is more so in the smaller age group
i.e. for respondents below 15 years and those in the
age group of 15-19 years. With the maturity of the
respondents this influence of friends and family
decreases and he/she relies more on evaluating
product/ service features and characteristics and
hence makes an independent decision. A difference
was also observed on the gender wise purchase
behavior and their saving habits. The youth also does
not believe much in saving and believes in spending
more on entertainment, gadgets, eating out and
personal grooming.
SCOPE FOR FUTURE RESEARCH
There is a huge scope of future research in this area
of study. A research can be carried out to compare
the spending and saving habits of youth in metro
cities versus tier II cities. Also a study can be carried
out on how youth who have just got employed have
changed their spending and saving habits. A gender
wise spending and saving habits of middle aged
people can also serve as an interesting topic of study
for the researchers.

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