Main Findings on Young people and Financial Matters : By FSA

1.  Role of Money
Money was important to all young people  for socialising and creating an image for themselves. This is supported by the quantitative research3 commissioned to supplement this study, which found that 54% of 15-19 year olds said that they were interested in things to do with money. Examples given of creating the right image included buying the right clothes, having the latest mobile phone, owning a motorbike etc. 
The role that money played depended to a large extent on the young person’s lifestage and income. For 15-16 year olds who were still at school money was primarily used for socialising and creating the right image.  “The way I see money now is that you need it to survive, it buys you things that you want and you need and it can make you happy” (17 year old boy, full time working, Hedonist)
 “I used to (save) when I was younger and didn’t go out so much.  I was able to save up for anything I wanted but I can’t any more.  You want to spend time with your friends.  You want to look good so you spend money on make up”  (First Year Student)
As young people moved into the world of work they began to undertake a limited amount of financial responsibility, for example having to pay for board, their own clothes, mobile phone rental, and travel. Some of the 18-19 year olds who were working had started to think about planning for their financial future, and were beginning to become concerned about being able to own their own home and support a family.  Those who had gone on to further education were weighing up the financial pros and cons of continuing on to higher education. The 18-19 year olds who had already gone into higher education perceived money (and student debt) as a way of facilitating their future. Many were confident that a university degree would enable them to get a well-paid job and enable them to pay back their student loans.

2.  Information Sources about Finance Financial matters – as opposed to having money to spend on things - was a subject that most young people in our sample showed very little interest in. Many young people in 3 mnibus survey conducted on behalf of FSA by BMRB January/February 2003 13 the sample were very reactive when seeking information about financial matters and only sought information when they ‘needed’ to.  “I should take a lot more interest [in financial matters]. I tend to get a letter through the door that says I owe money, because I don’t want to know how much I spend. I need to keep an eye on my finances” (First Year Student)

“[I’d say I had a poor knowledge of financial products] It’s sad but it’s true. Maybe it’s because I don’t talk about it much, it’s not something I have any interest in. Maybe because I don’t have any need to… when the time comes I will get interested in it” (17 year old boy, full time working, Hedonist) Typical occasions mentioned as prompts to financial information included getting a job, going to university and getting a car. For example, getting a job could require a young person to open a current account as well as looking into ways of saving a proportion of their earnings. Going to university often required investigation into student loans, student accounts and overdrafts, at least where and how to get these if not further product details. If this was coupled with leaving home, then there were the added information requirements of insurance and accommodation. Getting a car often prompted a search for information about insurance, savings accounts and loans. The number of information sources that young people were aware of and used increased with age and life experiences such as work, going to university. Information sources included parents, banks and building societies, advertisements, the Internet and television. 

Many young people relied on their parents as their main source of information and advice on financial matters. The omnibus survey conducted to support this study found that the overwhelming majority (88%) of young people said that their parents were an important influence on decisions regarding money and 45% said their parents were their most used source of information concerning money. The qualitative work reported here supports these findings of the importance of parents as a financial information source and influence. Although this age cohort are epitomised by a drive to exert their independence and individuality, financial advice is one of the very few areas where young people will defer to their parents’ opinions and advice. Young people are generally reticent about seeking information, yet they are also worried about making mistakes with money due to their lack of knowledge in this arena. Parents, or another family member perceived to be more qualified to impart such advice, are seen as an easily accessible and reliable/safe information source. The young people felt that their parents understood their specific circumstances and were therefore able to offer them tailored advice about financial matters. There was a feeling that parental advice could be trusted as the child’s best interests would be at heart, even though in reality this information and advice was limited. Reliance on parental advice (or other family members) therefore afforded a way for the young person to ‘play it safe’.  “Parents are a good source, more honest than adverts, as they are trying to lure you in under false pretences. Whereas parents say this is the way to do it, you do it.” (15-16 year old girl, part time working, Conservative) “If you go to a company they’re biased, but your parents know what’s best for you” (First Year Student) Other FSA qualitative research confirms that of all age groups, 18-24 year olds show the heaviest reliance on family and friends for financial advice. As young people moved into work they also started to talk to their colleagues about financial issues, for example, ways of saving and managing money. Work was also a source of information about work based pensions.  For higher education students, university also became an important source of information about student loans in particular, but student advisers were also occasionally used to advise on more general student banking issues such as overdrafts.  For those in full-time work or at university, friends were often an important source of information about financial issues. At these life stages money became an increasingly important issue in their lives as they were managing more money and had increasing financial commitments that they had to meet. Friends were less important as a source of financial information for the under 18s who were not in full-time work. At this stage in life, money had less impact on the young peoples’ lives as their parents paid for the majority of their outgoings and income was also relatively low. Thus the under 18s not in work
were less likely to discuss financial matters with friends as there was ultimately less to discuss and hence less need to discuss finances. Many of the young people said banks and building societies were a source of information about financial matters, with the majority having considerable trust in this source.  However, banks and building societies were used infrequently primarily due to the perceived hassle factor of approaching them.   Television programmes, particularly some of the storylines in soap operas, were mentioned by a few as a source of information about money and finance. However, these storylines were few and far between and were perceived to have little impact. The internet was also mentioned as a potential source of information, although young people associated the internet with entertainment and were unlikely to use it as a reference tool regarding finance.

Advertisements were commonly mentioned as an information source but, in contrast to the aforementioned sources, advertisements were perceived largely negatively by young people. Many believed that advertisements in general were encouraging them to spend. Financial advertisements were felt to be attempts to entice them into debt and take advantage of their financial naivety by over-charging them on interest or hiding unpalatable terms in the small print that they did not read.
Interestingly, school was not mentioned spontaneously by any of the young people as a source of information about financial matters. See section 5.5 on schools for more information about this.

3.  A typology summarising the behaviour and attitudes of young people towards money and financial issues
We observed a wide spectrum of behaviours and attitudes towards money and financial issues amongst 15-19 year olds. However, despite this heterogeneity, four key distinct groups were identified that displayed very consistent behaviour in relation to money and finance and we found all respondents could be placed firmly within one of the four groups.  It was not in the scope of this research to uncover what causes people to be in these groups: whether it is an innate value system, the result of certain influences or a combination of factors. Neither did we explore whether these characteristics might be fixed or whether there is some movement between groups, for example as the result of wider experiences. What we did find was that these categories were useful summaries
of the characteristics that different types of young people display and will be helpful to the FSA in future work. 
We have labelled the four groups:
• Conservatives
• Hedonists
• Mixed
• Aspirers

Conservatives and Hedonists represented the two largest groups found in this sample. In contrast, very few of the participants in this qualitative study would be classed as a member of either the Mixed or the Aspirer group.