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Results for Research

Main Findings on Young people and Financial Matters : By FSA

November 04, 2011
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. 
Main Findings on Young people and Financial Matters : By FSA Main Findings on Young people and Financial Matters : By FSA Reviewed by BARI.0492 on November 04, 2011 Rating: 5

Methodology on Young people and Financial Matters : By FSA

November 04, 2011
This research project took a multi-stage approach combining various methodologies to explore different facets of young people’s understanding of financial matters.
1. Quantitative research The main elements of this research were qualitative but to provide some more quantitative measures we asked a sample of young people about their attitudes and experiences of finances.   A number of questions were asked on a BMRB face-to-face omnibus survey in January and February 2003 and a total of 338 interviews amongst a representative sample of young people in GB aged 15-19 were achieved.  Findings from this quantitative study are used throughout this report.
2.  Overview of qualitative methodology 
In order to fully understand the influences, attitudes and behaviours of young people towards money and finance a programme of qualitative research encompassing  ethnographic sessions (see following section), family and individual depth interviews and group discussions was designed. Each of these methodologies helped to reveal different aspects of young people’s relationship with personal finance.  

Objective Methodology 1  To find out what influences their financial behaviour, understanding and knowledge, the extent of that influence and why it influences them ! Ethnographic sessions
!  Family & individual depths

2  To determine whether it is felt schools are providing their pupils with adequate education regarding finance and managing money and any improvements that could be made !  Family & individual depths
! Group discussions
3  To find out what hopes and fears they have regarding their financial future, how they think these can be achieved or addressed and what shapes future expectations 
 ! Ethnographic sessions
!  Family & individual
depths
! Group discussions

A total of 74 young people and 26 mothers and/or fathers were included in the research,
through:
•  10 ethnographic sessions
•  26 family and individual depth interviews (10 of these interviews were conducted with participants from the ethnographic sessions)
•  6 group discussions

A sequential approach was taken to allow different aspects of the research to inform each other. The ethnographic sessions were conducted first, followed by the family and individual depth interviews and finally the group discussions.
The research was undertaken during March and April 2003 across a geographical spread of locations throughout Great Britain.
3. Ethnographic sessions
Ten ethnographic style sessions were conducted with the young people and, for those aged 15-18, their parents – see Appendix 1 for details.  Ethnographic research has its origins in anthropology, but has been introduced to mainstream research relatively recently to introduce cultural context and insights to research that traditional qualitative and quantitative research methods have only a limited scope to provide. It was selected as an ideal tool for understanding the context within which personal finance fitted into the lives of 15-19 year olds. One of the key features of ethnographic research is the shift in the power balance between ‘researcher’ and ‘respondent’ - the research is taken to the respondent rather than the respondent being taken to the research so that the respondent’s world is the true focus of the methodology.  This may involve the researcher going beyond a traditional interview by spending more time with the respondent and accompanying them to typical activities and to the places they would go. It may also involve the respondent undertaking self-completion tasks in their own time, away from the researcher, to express elements of themselves and their ‘world’. Ultimately, the researcher is able to gain a greater exposure to and understanding of the respondent’s world.  Ethnographic style research is an ideal approach to take in instances 
•  where we know little about a target market, 
•  where we want to know a person better – for example what is important to them, what makes them tick, how do they live, what ‘language’/vocabulary they use,
•  and when we don’t know exactly what questions need to be asked – for example what are the priorities, what are the key words to use or avoid.  Another benefit of ethnographic research is that it helps us understand and access attitudes, values or behaviour that people cannot necessarily tell us about, e.g. habitual behaviour or thoughts, cultural assumptions or impulses. People find it hard to articulate answers to specific questions about matters they have not actually considered in depth 10
or at length.  Also, we all take a good deal of our own behaviour for granted and would not consider it worthy of comment.  The overall objective of this research was to understand influences and points of influence on the attitudes to and behaviour around money and finance of young people.  However, it is more than likely that money and finance make up but a small part of young people’s ‘worlds’ – there are likely to be an awful lot of other things going on, many of a greater priority, and greater interest, than money and financial matters.  To properly address the objectives we really  need to know what role money and finance play in these young peoples’ worlds.  For this reason we felt it was important to include ethnographic sessions as part of the overall methodology. 
The ethnographic sessions designed for this research project involved two visits to the respondent’s home and self-completion of a task diary over the course of a week. The purpose of the initial visit was to deliver and explain the task diary and associated equipment (Polaroid camera and camcorder), get to know the young person and, importantly, to develop a rapport.   During the course of the following week the participants undertook a series of open-ended tasks that needed to be completed in different manners, the idea being to tap into means of expression with which each individual was most comfortable and to generate richer insights overall. Some tasks involved answering written questions in a ‘diary’. Some involved talking to a camcorder (in a Big Brother ‘diary room’ style) about specific questions put to them in the task. The third type of task involved taking Polaroid photographs as directed
After a week the researcher returned to the respondent’s home for a second visit to go through the completed tasks to understand these from respondent’s perspective, drawing and building on the rapport previously developed to elicit deeper insights. The last phase of the ethnographic sessions involved a depth interview with the participants; these either took the form of family depths (i.e. individual interviews with the young person and with a parent) where the young person was 15-18 years old, or individual depth interviews where the young person was over 18 years old.Family and Individual Depth Interviews In addition to the depth interviews at the end of the ethnographic sessions a further series of depth interviews was  also conducted with young people and parents in order 11 to understand the detailed and personal processes surrounding financial education,
influences, attitudes and behaviours. As with the final stage of the ethnographic sessions, for the
15-18 year olds these depth interviews took the form of family depths. This involved an interview with the young person and a separate interview with a parent, selected as the main person who helped/ discussed/ advised the young person on financial matters. We knew from previous research that parents are a major source of information and influence over young people’s financial behaviour and thus have relevance to the objectives. The views of the young person and their parent were compared and contrasted and the influences further explored at the analysis stage.
For the 18-19 year olds individual depth interviews were conducted. This age group is in a different lifestage than those under 18 years and tend to be more independent and less influenced by their parents. Most 18-19 year olds have taken a step away from their parents as they have left school and are either embarking on a university career or starting work. As a result, they have started to take charge of their lives to a much greater extent. For this reason, parental interviews were not conducted with this section of the sample.  

4. Group Discussions
The final stage of interviewing comprised six group discussions, each lasting one and a half-hours, conducted with 15-19 year olds Prior to attending the group discussion the young people were asked to complete a pre-group task which consisted of noting in a diary approximately how much money they had spent that day, how they felt about that and what their main monthly expenses were. They were also given a disposable camera and asked to take photographs of items they spent their money on or were saving for.  Within the group discussions the output from these tasks was shared and creative exercises were undertaken to generate further insights into how young people ‘see’ money and financial matters and how these fit into their lives/worlds. The group environment, being dynamic and interactive, enabled the discussion and development of ideas and experiences.
Methodology on Young people and Financial Matters : By FSA Methodology on Young people and Financial Matters : By FSA Reviewed by BARI.0492 on November 04, 2011 Rating: 5

Research Summary on Young people and Financial Matters : By FSA

November 04, 2011
Introduction
1. Background
This document reports the findings from  research into young people (15-19 years old) and their financial matters undertaken by NOP Family and NOP Financial on behalf of the Financial Services Authority (FSA). 
One of the statutory objectives of the FSA is to promote the public understanding of the financial system. The understanding of financial matters is of particular importance to the 15-19 year old age group now and in the future. This group is faced with many life changing events, for example leaving school, starting a first job, going to university, which result in the need for an array of financial products, services and money management skills.
Young people own a range of financial products.  Over four fifths (81%) of 16-19 year olds have a current account but only 39% have a savings account. There are lower levels of uptake of other financial products: 18% of 18-19 year olds hold a credit card; 12% hold at least one store card; 17% have motor insurance. As would be expected, there are very low levels of uptake of investment products amongst this group, for example only 2% have stocks and shares compared with 21% of all adults.
 Although young people own financial products this does not tell us about their level of financial knowledge and understanding. The purpose of this research was to enable a better understanding of the key influences and the points of influence on the attitudes and behaviour of young people towards and around money and finance. This understanding will be used to help the FSA to develop more relevant interventions and to determine when such interventions might be most effective in changing young people’s behaviour and knowledge regarding financial matters.

2. Research Objectives

The overall objective for the research was to look at young people and the influences
and points of influence on their attitudes to money and finance and their behaviour
around these. 
Specific objectives included:
•  To find out what influences young people’s financial behaviour, understanding
and knowledge, the extent of that influence and why it influences them
•  To determine whether schools are providing pupils with adequate education
regarding finance and managing money and pin point any improvements that
could be made
•  To find out what hopes and fears young people have regarding their financial
future, how they think these can be achieved or addressed and what shapes
future expectations

Particular areas for consideration within the research included:
•  Financial products and services held or used
•  Factors influencing product choice
•  Influences on financial attitudes and behaviour (e.g.  handling money; savings;
credit and debt; pensions)
•  Life events past, present and future and associated financial preparation
•  Financial education in schools
•  Interest in financial services
•  Knowledge of financial services
•  Hopes and fears for their financial future
Research Summary on Young people and Financial Matters : By FSA Research Summary on Young people and Financial Matters : By FSA Reviewed by BARI.0492 on November 04, 2011 Rating: 5
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