The average South African student is in debt, yet spending like there’s no tomorrow. Students spend an average of R2 702 each month – far more than the average South African who spends R2 100. This is according to the most recent Student Village Student Spend Survey.
Where does all this cash come from? According to the survey, 86% of students receive money from their parents or other family members. A positive finding of the study is that 11% of students have their own business.
Are students saving? In short, no. Students are not saving as much as they should. Some 35% of students are not saving at all. And 58% of students are only saving up to R540.
Where does the money go? Much like most South Africans, the majority of students’ money goes to just four places. Rent, vehicle repayments, petrol and medical. A large amount also goes to some non-essentials like new clothing, computer games and alcohol.
Who spends more, men or women? Men spend a fraction more than women, with alcohol, bling and sporting equipment draining their cash. Women may be spending less but they are spending a massive amount of money on hairdressers and beauticians.
How are students in debt? One in four students have retail cards with Edgars, Markham and Truworths being the most popular. An alarming 42% of students aren’t aware of how much interest is charged on their accounts.
A positive finding of the study was that students were interested in learning more about managing their finances. They expressed interest in learning more about saving, budgeting and investing.
It is important that students go to college or university already equipped with some financial advice. According to Forbes: “Now is also the time to be thinking about money. Why? Because for many freshmen, this will really be their first time handling money on their own. They will have to pay bills, handle budgets, find a bank, and be faced with choices around credit cards and insurance.”
Some tips include:
- Get rid of your car and use public transport. Car-related expenses accounting for a massive percentage of student spending. Students would be far better off if they’re able to walk and use public transport as much as possible.
- Learn to start saving. This is the most important financial habit to adopt now. Saving is essential throughout your life and the sooner you start, the easier it will be.
- Get a job. Working while you’re studying is an important factor in graduating debt free. Perhaps you should strive to become one of the students who own their own business. If you have an original idea, go for it! Create a business plan, apply for business finance and make your dreams a reality.