Eccles, S A and Bird, D (2004) Mental budgeting: how young people manage their money, credit and debt. Working Paper. The Department of Marketing, Lancaster University.
Abstract
Students' spending and levels of debt have already been researched both within the marketing arena (e.g. Prince [1]; Palmer, Pinto and Parente [2]) and other disciplines - in particular, economic psychology (see, for example, Scott, Lewis and Lea [3]; Webley et al. [4]). This current research extends previous studies to include a broader sample of young people in the UK aged between 17 and 21 years, exploring how they spend their money and how they manage their finances. Findings from depth interviews and focus groups suggest that for all these participants there is recognition of the importance of structured financial planning and money management, but that in reality any such planning is via mental budgeting which may lead to over- and under-consumption patterns. This in turn may result in some younger consumers accruing significant and disorganised personal debt. For the providers of financial services, this presents opportunities to attract and educate new or switching customers, but at the same time, the reality that many younger consumers are setting themselves up for several years of extensive personal debt