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Saving Habits of Graduates
Article · January 2016

DOI: 10.5958/2249-6270.2016.00016.7
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International Journal of Social and Economic Research Volume-6, Issue-2 (April -June) 2016
Doi: 10.5958/2249-6270.2016.00016.7
4. Saving Habits of Graduates
Karan Sabharwal
G D Goenka University, Sohna Road, Gurgaon, india
Abstract
The present study is carried out in the universities of Delhi/NCR on undergraduate and
post graduate students, regarding the student perception about savings. The development of
saving habit is to enhance capital formation and reduce the financial burden of the parents. The
aim of the study is to examine the saving habits of the students and their preference towards
different saving methods such as teachings at primary school level, setting goal, recurring
accounts, etc. Data has been collected through personal survey. The results showed that students
want to save money and know the importance of savings. However, they need some policies and
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programmes to nudge them to save. Most of them chose the reasons for not being able to save
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are self-control problems, want to live in the present, etc.

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1. Introduction
With the advent of westernization and advancement, the spending pattern has undergone
drastic change. The introduction of plastic money such as credit cards, debit cards etc. and online
shopping has contributed to the diverse spending patterns and lower saving habits among the
people. Due to lack of financial literacy, people do not understand the important of savings in the
short run. The sooner we start to save, lower monthly savings are required in the long run to
achieve the goals of self-care. According to CSO data, the rate of final consumption expenditure
as a component of GDP at current prices has increased to 72.1 in 2014-15 from 68.6 in 2011-12.
Due to huge domestic driven demand and changing demographic profile, foreign investors are
targeting India as potential market for their products. India is a young country with a large
proportion of its population below 35 years of age. According to the UN, India has the world’s
largest young population of 356 million aged between 10-24 years. To achieve gains of
demographic dividend, heavy investment is required in health and education of the young
population. This will reduce the dependency of young population and working age population
will increase.
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In the current scenario where economic policy changes severely affect the savings of the people,
the role of financial literacy has become very important to manage personal spending and
savings. During recession, consumer spending decreases and individual saving increases.
However, this increase in personal savings has resulted in order to overcome the loss of credit
markets and increasing unemployment etc. Introducing a course to improve financial literacy by
an educational institution would be a proactive approach to promote wise personal spending and
savings choices. According to CSO data, the gross savings as percentage of GDP at market
prices has been reduced to 30.6 in 2013-14 from 33.9 in 2011-12. According to economic survey
2014-15, household’s acquisition of financial assets is declining. The rate of financial savings
has not increased due to the fact that the financial liabilities have simultaneously increased from
9.7 percent of gross savings to 13.2 percent.
During 2013-14, the per capita income growth has increased to 4.3 percent as compared to
2.4 percent in the previous years. With the rise in disposable income and standard of living, the
people have been empowered with more money and higher spending power. Personal finance
education has received much attention due to alarmingly low personal savings rates and a
changes in retirement policy. Most of the parents leave their children’s financial education to the
formal education system.
2. Literature Review
In the review of studies on “money Pathology” by Furnham and Argyle, 1998 shows
that males have greater confidence, take independent decisions, risk lovers and gamble more
with respect to money while females report envy and deprivation.
Hayhoe, Leach, & Turner, 1999 conducted survey to examine the influence of credit
and money attitudes on the number of credit cards students held by the college students. The
results show that students with four or more credit cards scored lower on the retention money
attitude and higher on the affective credit attitude. Students with more credit cards are less likely
to borrow from others.
Danes, Huddleston-Casas, & Boyce, 1999 conducted research to assess the impact of
high school planning curriculum on the students. The students were asked eight financial
52
behaviours (e.g., budgeting), three questions about their financial knowledge (e.g., understanding
the cost of credit), and two about their financial self-efficacy (e.g., confidence in the money
management skills) before and after studying the curriculum and three months after completing
the curriculum. The curriculum had positive impact on student’s financial knowledge. Most
students reported increased knowledge levels after completing the curriculum. Around 40
percent of the participants have started savings in the follow-up program after three months.
There has been a significant change in the behaviour and financial efficacy of the participants.
Thus, introduction of the financial planning curriculum increased savings and changed the
behaviour of the participants.
Furnhum, 1999 collected data over 250 British children and adolescents on their source
of income, amount saved by them, their purpose of saving etc. Young people are found to be
economically active citizens. Most of the young people were found to borrow, send and save
money. The data showed that males receive more pocket money than females. Sex differences
indicate that females are economically less active and more economically conservative as
compared to males.
Adam et al., 2003 surveyed college students in Hungry to find out the financial
knowledge of the students and how they manage their family wealth. It was found that students
lack financial knowledge and are not familiar with the various incentive plans through which
they can make savings. They are aware that financial security is very important but they do not
know how to make savings. Thus, the research throws light on the importance of financial
literacy among adults.
Pritchard, Myers, & Cassidy, 1989 studied the factors associated with the spending and
saving habits of the adolescents in United States. Students were divided in three categories based
on their responses: savers, necessity spenders and discretionary spenders. Student’s savers
belonged to those families who save and plan the use of money. Necessity spenders were those
whose families have financial difficulties and have fewer resources. Discretionary spenders
belonged to families with high income and socioeconomic status. The study highlights the
impact of family background on the saving and spending patterns of the students.
Varcoe, Martin, Devitto, & Go, 2005 analysed the effectiveness of the financial
education curriculum on the financial knowledge and behaviour of teens. They reported
53
significant improvement in the results obtained after the finance course. The saving scores
increased, knowledge about different ways to decrease cost of insurance, made better choices
while shopping, etc. shows positive change in the behaviour of the high school students. The
study highlights the importance of such programs which can be introduced to prepare them for
the financial demands of the future.
Peng et al., 2007 conducted study to analyse the impact of financial education on the
financial knowledge and saving rates of the high school and college. The study was conducted
through an online survey measuring past and current financial experiences, demographic
characteristics, income and savings. The results suggest that personal financial course improves
financial literacy. The savings of the college before and after the course were found higher than
savings of school. The study highlights the importance of finance courses to develop saving
habits at the college level.
Jobst, Vicki J. 2009 offered a course entitled “Managing Your Personal Spending and
Savings” to college students to increase financial literacy. The data reports improvement in the
money management skills of the students. After taking the course, students were able to pay their
credit card bills on time, prioritise their spending and avoid overdraft. During the course, the
participants developed the habit of keeping track of their savings and personal spending, learned
to reduce the purchase of unnecessary items, etc. The participants of the course started a savings
program to save money for retirement and emergencies and starting using cash instead of credit
cards to watch their spending.
According to Visa 2012 study of the Global Financial Literacy, India stands 23rd out
of 28 markets. Although the savings are highest among its global peers, it lacks financial literacy.
To reduce this gap of knowledge, Government has taken many steps such as conducting
seminars, workshops on savings, investment, etc., organising nationwide campaigns conducted
by SEBI to promote financial literacy, financial inclusion in school curriculum etc. However,
involving university in the promotion of financial literacy would be of great help. Universities
offer wide range of courses choices during the first year of college which would be beneficial to
promote saving among students.
54
According to the youth survey 2013, conducted by College Saving Foundation in USA,
found strong desire in college saving habits and a willingness to make choices and prioritise their
needs to attain higher education. The participants in the survey are willing to work and go to
school part time to reduce the financial burden of higher education. The reliance on grandparents
and extended family to get fees for higher education has increased to 45.5 percent as compared
to 41 percent last year. Around 29 percent students are looking for online courses to reduce cost
of education. Besides savings and working part time, students are looking for education loans to
meet the cost of education. More than 78 percent of the students feel that their costs and savings
affect their future plans for higher education. Survey also showed that students are also learning
from their parents and guidance counsellors to save for their higher education. Most of the
students do not know about the 529 college saving plan run by the foundation to build saving
habits among students. However, Nearly 29 percent of the students are saving with the help of
the plan introduced by the foundation. Most of the students have not yet exactly planned to pay
on their own for their higher education. But nearly 67 percent students intend to cover their cost
of education. This paper intends to find out the saving habits of the students attending college in
India and the attitude of students towards saving. This research will throw light on framing
policies towards promoting better saving habits for the students which will help in reducing the
financial burden of higher education on the parents and economy. A lot of research and survey
has been conducted in United States about the savings of the college graduates and the impact of
financial literacy. The literature in context of Indian students saving habits is very less.
Dewan, Goel, & Malhotra, 2013 have conducted survey of the undergraduates and
postgraduates in the Palwal and Faridabad districts to study student perception about student
loans. The rate of interest, processing time, disbursement scheme, procedure etc. are the
important factors which students changes their perception towards taking loans. For instance,
higher rate of interest is more burdensome especially for the students from financially backward
households.
Balint & Horvathne, 2013 conducted a survey among the college students of
Aurangabad city as their sample. The research was conducted to know the spending pattern of
the students in different categories like shopping, movies, fast food, alcohol, etc. It was found
55
that youth spend majority of their money on shopping, fast food and mobiles. This shows little
concern for saving and investment among the young population.
According to Anya Kamenetz, author of “Generation Debt” has closely looked at the
debt problems faced by the 18-34 year olds. Due to the increasing cost of education, the student
loans negatively affect student’s financial and educational decisions.
Firmansyah, 2014 conducted a survey among the college students in Jabodetabek,

Indonesia to study the influence of family background towards student saving behaviour. The
research showed high correlation between the parents experience and parent’s support towards
saving behaviour of the students.
Rodríguez & Saavedra, 2015 conducted field experiment to measure the influence of
different type and intensity of text messages on the formal savings patterns of low income
youths. The study had four groups: first experimental group received twelve monthly financial
education text messages; second group received twelve monthly savings reminders; third group
received twenty-four semi-monthly savings reminders; the control group received no messages.
The second and third group showed increase in the savings while the first group did not show
any increase in the savings. The study shows that a reminder strategy can increase the rate of
savings while education through messages is not effective to increase savings.
M.Gowri, collected data through interviews from the young employees in Coimbatore
city to assess the level of financial literacy among them. The data reports lack of financial
literacy among the employees. The paper also discusses the determinants of financial literacy,
their attitudes and behaviour towards meeting their financial goals.
3. Methodology
3.1 Sampling
The study is targeting college students of different universities as respondents.

Respondents are chosen by purposive sampling method, which is each respondent is willing
to answer the questionnaire by survey monkey as a third party agent to collect data. In this
research, probability random sampling is used to collect the data, i.e. each respondent has
56
equal probability of being selected. The sampling technique is also convenience as the
respondents were chosen which are easy to reach. The sample size of the study is 500.
3.2 Participants
In all, there were 352 males and 148 females in this study. Based on an analysis of
their father’s occupation, it seemed that 262 (52.4%) were business class, 209 (41.8%) were
service class and 29 (5.8%) were retired. The respondents were from undergraduate level and
postgraduate level only. The number of respondents from undergraduate level were 470
(94%) and those from postgraduate level were 30 (6%). The data analysis showed that the
number of respondents from year 1 were 94 (18.7%), year 2 were 128 (25.4%) and year 3
were 278 (55.9%).Based on the analysis of their mother’s occupation, 424 (84.8%) were
housewife, 55 (11%) were involved in service, and 21 (4.2%) were running business.
3.3 Questionnaire
Each participant was given a two page questionnaire. The first part was based on how
much money they earned, how much they save, why they save and how long they have been
saving. All the questions were close ended except age. The questions had multiple choices.
The participants were sent link of the questionnaire to be filled online. Over 1500 students
were sent the link out of which 500 responded. The questionnaire was designed in such a
way that suited with their age group and students fill out the questionnaire accurately and
honestly.
Data Analysis
The graph 1 shows the number and percentage answering yes or no to regular source of
income. Nearly 393 (76.4%) of the respondents claimed to have a regular source of income
and 107 (23.1%) of the respondents does not have any source of income. Although all the
students have personal expenses like phone bills, entertainment, gifts, birthday parties, etc.
Those who have opted for no source of income might be of the view that the source of
income is only from jobs, stipends, etc. They might not have included pocket money as their
source of income.
57
The graph 2 showed vast majority of student income came from multiple sources.
Majority of income came from pocket money around 92.3%, festivals or birthday presents
contributed 29%, interest from bank deposits in the personal bank account accounted for
11.8%.Those working part time and getting scholarships are nearly 10% of the 500 students.
The credit cards and friends are 4% and 5% respectively. It shows students are not dependent
on credit cards and friends for their consumption spending.
Graph 3 shows most respondents earn below Rs.3000 which are 49.1% of the
respondents, 33.1% of the respondents earn between Rs.3000 – Rs.8000, around 8.7% and 9.1%
students earn between Rs.8000-Rs.13000 and Rs.13000 and above respectively.
58
The graph 4 studies the consumption sending pattern of the respondents through the
expenditure on various items such as clothes, books, travel, food, drugs, rent, mobile phones, etc.
Majority (88%) of respondents send their income on food, 76.4% on clothes, 63.5% respondents
spend on travel, 61.9% of them spend on mobile phones, 54.2% spend on books, 32% pay their
bills out of their income, 22.8% respondents pay rent, nearly 8% of the students spend on drugs.
Graph 5 showed that most (52.8%) of the respondents noted that they do not receive more
money if they exhaust all their income. This confirms their middle class status. This might help
in controlling the consumption habits of the students and will inculcate the habit of saving. The
limited amount of money helps students manage resources in an efficient manner and will save
59
resources of the economy. There are nearly 47.2% of the students who receive money easily
when they exhaust their income.
Those who receive more income after exhausting their pocket money are 47.2%. Out of
them 41.1% get the amount that they need, 15.2% get less than the amount they need and 10.3%
get the same amount of money that they earn. Graph 6 shows the sources from which the
students earn money can be parents, friends, employer, credit cards or savings in the bank
accounts. The data showed that 89.5% of the respondents turn to their parents for more money
when they need, 47.5% of the respondents turn to friends, 29.8% drew money out of their saving
bank accounts, and nearly 1% and 4% of the respondents turn to employers and use credit cards
when they need money.
60
After knowing the income and consumption pattern of the respondents, the analysis based
on the saving habits of the students will help to know the attitude of students towards savings.
Graph 7 shows almost 45.6% of the respondents save below Rs.1000 every month. Nearly 20%
respondents save between Rs.1000-Rs.3000 per month. About 27% of the students spend all their
income and save nothing.
Graph 8 shows most (34.3%) of the students started saving when they were aged between 15
years -19 years. Some of the students below 15 years also save some money. However, 26.7%
students do not save anything. Few students started saving when they were aged 19 years- 25
years.
61
The respondents were asked about the utilisation of their savings. Graph 9 shows most
(40.2%) of the respondents prefer to keep money in their personal bank accounts, 19.7% keep
money in piggy bank and 18.5% of the respondents keep their savings with their parents. Some
of them make investment which accounts for 14.7% of the sample.
62
The number of respondents who have been saving from 1 year -3 years are 133. Graph 10
shows 26.3% have been saving from 1 year- 3 years, 19.4 % have been saving from less than a
year and 15.4% have saving for more than 5 years. Graph 9 shows the period they have been
saving money. The data analysis showed that 38.3% of the respondents have saved below
Rs.10000, 23.1% of the respondents have saved between Rs.10000- Rs.50000 and very few have
gone above Rs.50000. When the respondents were asked about their expected saving during their
lifetime, 29.7% expected to save above Rs.1 crore, 25.5 % expected to save below Rs.1 lakhs,
around 24.6% expected to save between Rs.1 lakhs to Rs.10 lakhs. Few expected to save
between Rs.10 lakhs to Rs.1 crore.
The following were the choices given to the respondents to choose from the reasons for not
saving much. The table 1 shows the responses that most (60.2%) of the students want to enjoy
the present moment and will not sacrifice their present needs for future consumption. Nearly
45.3% of them admitted that they have self-control problems and cannot stop themselves from
consuming what they want. About 22% of the respondents cannot save due to the peer group
they have or the society to which they belong.
Table 1: Why can't you save much? (Multiple options can be selected)
Answer Options Response Percent
Want to live in moment 60.2%
Self-control problem i.e. can't control myself from spending 45.3%
63
Peer pressure i.e. friends circle 22.3%
Not required as I have permanent source of income 16.7%
The respondents were asked to choose the reason for savings to show that students know
the importance of savings and still they don’t save much or can’t save anything due to the
reasons mentioned above. Table 2 shows that 92.3% of the respondents believe that people save
to meet emergency needs, 61.7% believe that people save to meet their family needs, 48.1% of
the respondents believe that people save for their children. The other reasons for savings can be
for retirement (35.1%), set up business, travel (47.3%) and buy home (35.7%).Based on the data
analysis, 97.6% of the respondents believe that everyone should develop the habit of savings.
Table 2: Select the reasons why people save? (Multiple options can be selected)
Response Response
Answer Options
Percent Count
To meet emergency needs 92.3% 468

To buy home 35.7% 181
To get regular income during retirement 35.1% 178
For their child education 48.1% 244
To meet family needs 61.7% 313
To set up business, travel abroad, etc. 47.3% 240
Other studies have shown that savings improve when the people are nudged to save and people
have motivation to save. The respondents in this study were asked to their views on the
initiatives that can be taken to develop the habit of saving. Graph 10 shows majority (67.7%) of
the respondents believe that parents should develop the habit of saving among children since
childhood, 40.7% believe that schools should teach about the saving methods at primary level,
33.9 % believe that saving habit can be developed by deductions some amount of money as
savings before the person gets the income to spend. 48% say setting goals might help.
Which of the following options you will suggest to develop saving habits among young
people? (Select multiple options)
64
Answer Options Response Percent
Teaching about savings at primary level in schools 40.7%

Parents should develop the habit of saving since childhood 67.7%
Deduct some money as savings before getting income 33.9%
Making it compulsory to transfer any amount to the bank accounts 23.8%
Keeping yourself busy in other activities to avoid spending 19.6%
Set a goal to reach a specific amount. 48.4%
Keep few friends to avoid outings and unnecessary expenses 14.5%
Set up a recurring deposit to put some amount every month which can
28.6%
only be withdrawn after maturity.
4. Conclusion and Recommendations

The study attempted to examine the saving habits of the graduates studying in various
universities. There is no doubt that the students are economically active. Whilst the majority of
their income comes from pocket money, gifts received on birthdays and festivals and many had
saved money. This study focuses on investigating the attitude of college graduates towards
savings. Students do not save as they prefer to live in the present and are well versed with the
importance of savings in their life. They admit the fact that one should develop the habit of
savings and the savings habits can be developed when they are nudged to save. The respondents
held parents responsible for developing saving habits among children.
The study was done to know the saving habits so that policies can be framed to increase
saving habits among students at a very young age. Studies have shown that savings can be
increased through financial literacy. The study does not account for gender differences,
demographic differences and cannot be generalised to all Indian students as the sample size is
restricted to Delhi/NCR only. Further detailed investigations are required to develop policies and
introduce financial programmes to improve financial literacy in the country.
65
5. References
1. Youth survey executive summary 2013. (2013).

2. Balint, A., & Horvathne, A. K. (2013). Saving habits of hungarian college students.
European Scientific Journal, 9(34), 1857–7881.
3. Birari, A., & Patil, U. (2014, May). Spending & Saving Habits of Youth in the City of
Aurangabad.
4. Danes, S. M., Huddleston-Casas, C., & Boyce, L. (1999). Financial Planning
Curriculum For Teens: Impact Evaluation. Retrieved April 28, 2016, from
Association for Financial Counseling and Planning Education.
5. Dewan, A., Goel, D. R, & Malhotra, R. (2013). Student’s perception regarding
student financing (a case study of palwal and faridabad district of haryana).
International Journal of Social Science & Interdisciplinary Research, 2(7)(7).
6. Firmansyah, D. (2014). The influence of family backgrounds toward student’s saving

behavior: A survey of college students in Jabodetabek. International Journal of

Scientific and Research Publications, 4(1).

7. Furnham, A. (1999). The saving and spending habits of young people. Journal of
Economic Psychology, 20(6), 677–697.
8. Gowri, M. a study on financial literacy among young employees in Coimbatore city.
9. Jobst, V. J. “The 800 Pound Gorilla in the Room”: Changing College Students’
Spending and Savings Habits.
10. Peng, T. M., Fox, A. J. J., Bartholomae, S., Cravener, G., Martina, T.-C., Ae, P.,
Cravener, G. (2007). The impact of personal finance education delivered in high
school and college courses. J Fam Econ Iss, 28, 265–284.
11. Union Budget, Economic Survey 2015-16, Delhi
12. Pritchard, M. E., Myers, B. K., & Cassidy, D. J. (1989). Factors associated with
adolescent saving and spending habits. Libra Publishers,Inc., XXIV No.95.
13. Rodríguez, C., & Saavedra, J. E. (2015). Nudging Youth to Develop Savings Habits:
Experimental Evidence Using SMS Messages. Cesr-Schaeffer working paper series,
2015-018.
66
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Saving Habits of Graduates

Article · January 2016

The user has requested enhancement of the downloaded file.

are self-control problems, want to live in the present, etc.

Firmansyah, 2014 conducted a survey among the college students in Jabodetabek,

The study is targeting college students of different universities as respondents.

of them make investment which accounts for 14.7% of the sample.

Answer Options Response Percent

Want to live in moment 60.2%

Self-control problem i.e. can't control myself from spending 45.3%

Not required as I have permanent source of income 16.7%

To meet emergency needs 92.3% 468

To buy home 35.7% 181

To get regular income during retirement 35.1% 178

For their child education 48.1% 244

To meet family needs 61.7% 313

To set up business, travel abroad, etc. 47.3% 240

Answer Options Response Percent

Teaching about savings at primary level in schools 40.7%

4. Conclusion and Recommendations

1. Youth survey executive summary 2013. (2013).

6. Firmansyah, D. (2014). The influence of family backgrounds toward student’s saving

behavior: A survey of college students in Jabodetabek. International Journal of

Scientific and Research Publications, 4(1).

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