Student Spending: Credit or Savings?In Trends
It would seem students are torn between saving and getting into debt to keep up appearances and experiences, depending which is easier to manage. Savings is a familiar hypothetical term to students but one that isn’t necessarily practiced. The Student Village Student Spend Report 2017 had students asking why they should save when they have so little to spend. The expansion of retail and credit cards however, shows that students are still finding a way to buy those things they really want. You may be wondering, which side should your brand be paying attention to? We’ve taken a deeper look at the insights to help you decide.
Is Saving A Priority?
According to the Student Spend Report, three key reasons for students’ limited savings, range from their habit of saving to spend on experiences, their limited earnings and very little future planning. On the other hand, as we mentioned, a very large percentage of students make up for their lack of saving by having some form of credit facility at their disposal.
A whole 46% of students referenced saving less than 20% of their monthly earnings, whilst 32% of students claimed to save between 20-40% of their income. The Student Spend Report found that students save a mere R326 per month, on average.
How The Cash Flows
If the bulk of student revenue isn’t being saved then where is it being spent? For majority of student’s general expenses such as mortgage, rent, motor vehicle insurance and repayments, extra tuition, mobile costs (data & airtime), petrol, medical and , as well as food and groceries, remain the regular spending items. Where does that leave their big ticket purchases?
Well, this is where credit and retail cards come in to play. Students’ big ticket purchases included clothing and cellphones in this year’s report. From a student’s perspective, the world of credit is one that requires an immense amount of discipline – a value many students find challenging within their highly spontaneous and impulsive world.
Despite this outcry that credit and incurring debt is a death trap, we see within the Student Spend Report that 66% of students admit to having some form of credit. 46% of students have either a retail or credit card, with a significant increase in the number of students from 9% in 2015 to 20% in 2017 that admit to having both.
Within the retail space, Edgars remains the key player, but the research suggests that the brand’s appeal has started to decrease. Players like Truworths, MRP, Foschini and Woolworths still offer appeal amongst consumers making use of those retail stores for credit. Students have reported gravitating towards stores that provide the best value to them, from special offers to affordable or exclusive premium options.
Bank of the people?
The world of banking and banks according to students is highly functional. In terms of loyalty to banking brands, Capitec emerged at the top of students’ list. The banks could be seen ranking in the order of Capitec (30%), Standard Bank (23%), ABSA (20%), FNB (18%) and lastly Nedbank (12%).
According to the Student Spend Report, the key reasons for many students having an account with the banking institutions that they’ve chosen is primarily two-fold: Parental influence and preference of certain banks, and low admin fee promises.
Capitec seems to know exactly what Afrillennials like. What are they doing right? Deemed to be the “bank of the people”, Capitec emerged as having grown quite a bit in terms of its appeal to students in 2017, thanks to their low admin fees and easy to use banking app.
How These Worlds In Credit Collide?
Earlier we asked whether your brand needs to choose a focal area between student savings or credit. Thankfully, it doesn’t. Where the money comes from isn’t that important, students are still spending it and that leaves an opportunity to engage them. The idea is to understand where students get their money and where they plan to spend it in that context, so that you can be prepared to get their attention and help your brand live in their world.
If you want to know more about what South Africa’s best loved brands are doing right or you simply want to find out how to tap into the hearts and wallets of students, connect with Student Village on 011 885 3918 or email firstname.lastname@example.org.