Annette Otto

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Why save when youre young?
????
Adolescents saving behaviour
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Saving during adolescence

• Childrens Saving Adult Saving

What do we know about childrens saving?
What do we know about adults saving?
WHY SAVE WHEN YOURE YOUNG? INVESTIGATING
ADOLESCENT SAVING BEHAVIOUR
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Childrens saving behaviour the early years

• What do we know about childrens saving?

• Six-year-olds are able to save - but dont like
  it (Sonuga-Barke Webley, 1993 Otto et al.,
  2006) and sometimes try to get more money out of
  their parents

• Older children save more (Ward et al., 1977) and
  in a different way (Furnham Thomas, 1984)

• Earnings are associated with savings in 10 to
  15-year-olds (Hollister, Rapp and Goldsmith,
  1986 Doss, Marlowe and Godwin, 1995)

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Childrens saving

• More saving
• ? .. the result of higher earnings?
• Residual saving (Katona, 1975)
• Habit lag (Wärneryd, 1999)
• Hesitation to change standard of living (Keynes,
  1936)

• ? .. the result of developing understanding of
• How to delay gratification, resist temptation
  (Sonuga-Barke Webley, 1993)
• Saving itself (Webley, Lewis Levine, 1991)

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Adult saving
What do we know about adult saving?

• Marginal propensity to save (Keynes Absolute
  Income Hypothesis, 1936)
• Dont parents provide for the basic needs and
  essentials?

• Saving ability to save willingness to save
  (Katona, 1975)
• Low level of economic responsibility
• Pocket money is usually seen as spending money
  (author, year)
• Are they willing to save? / Who tends to save
  rather than spend money?

• Saving attitudes are deeply rooted and connected
  with upbringing and life style (Ölander Seipel,
  1970)
• The role of parents / Saving in the family context

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WHY SAVE WHILE YOURE YOUNG?

• The importance of saving during adolescence
• Ways of getting large sums of money

• Who tends to save rather than spend money?
• Socio-economic variables, psychological
  variables, attitudes, motives

• Saving in the family context
• Saving, money management skills and perceived
  parenting style (adolescent perspective)

• A chip of the old block? The role of parents
• Parents attitudes towards their childs saving
  behaviour
• Parental practices to encourage saving

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Saving during adolescence

• Saving is just one way of obtaining larger sums
  of money

How likely are young people to save
money taking alternative ways of getting larger
sums of money into account?
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1) The importance of saving
What strategies to young people use for getting
larger sums of money?

• STUDY 1
• 470 students (from various schools/ colleges in
  Exeter, UK at 5 different ages)

• MEASURES
• Monthly income
• pocket money, activity money, , small jobs for
  parents, small jobs for people other than
  parents, part-time or Saturday-jobs, other money

• General money management skills
• Money management
• Temptation inhibiting strategies

• Ways of getting larger sums of money (saving and
  saving alternatives)
• Saving by adjusting expenditure
• Negotiate, borrow, dissave
• Work outside home
• Sell things

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1) The importance of saving
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1) The importance of saving
Results

• Monthly income
• In year 7, main income comes from pocket money,
  followed by activity money
• From year 10 they start earning more than the
  amount received from parents

• General money management skills
• Mental accounting Money earned is spent more
  carefully than money received from parents (t
  4.779, df 291, p lt .001, two-tailed).
• Temptation inhibiting strategies
• put money out of reach or sight (behavioural)
• use will-power, control myself (cognitive)
• a combination of behavioural and cognitive
  strategies

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1) The importance of saving
Ways of getting larger sums of money
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1) The importance of saving
Results

• Who considers saving?

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1) The importance of saving
Results

• Who considers saving?

Saving by adjusting expenditure The regression
was significant F(7,338) 15.78, lt .000 R2adj
.23. The variables age and spending behaviour
had a significant impact on the perceived
likelihood of choosing to save.
Negotiate, borrow, dissave The regression was a
rather poor fit (R2adj .08) but the overall
relationship was significant (F(7,338) 5.22, lt
.000). The variables I like spending money and
I usually give in to temptation had a
significant impact on the perceived likelihood of
choosing to negotiate, borrow, dissave.
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1) The importance of saving
In short

• Saving is one way of getting large sums of money,
  and young people do think of it
• After the age of 15, saving becomes more
  important than asking parents for financial
  short-term support
• Likeliness of choosing to save
• increases with age
• not related to income
• associated with cognitive strategies to resist
  temptation

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2) Who tends to save rather than spend money?
taking into account socio-economic variables,
psychological variables, spending behaviour,
attitudes and motives

• STUDY 2
• 290 students (from two colleges in Devon, UK at
  3 different ages)

• MEASURES
• Age, gender, income
• Conscientiousness
• Present-hedonistic / Future time orientation
• Consideration of future consequences
• General tendency to save rather than spend
• Temptation inhibiting strategies
• Need for money
• Planning behaviour
• Saving attitudes
• Saving motives

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2) Who tends to save rather than spend money?
Some measures explained

• General tendency to save rather than spend
• What do you usually do with your pocket money/
  allowance?
• save all of it save
  most of it save some spend some
  spend most of it
  spend all of it
• How do you deal with your money in general?
• keep as much as I can spend it
  carefully spend some save some
  spend it easily spend it easily quickly

• Temptation inhibiting strategies
• MENTAL EFFORT limit myself, try to budget.
• dont break into large notes.
• USE MUM/SOMEONE ELSE AS SOCIAL SAVINGS AID
• give my bank card to mum or someone else to
  look after.
• make my mum or someone else put it in my
  bank account.

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2) Who tends to save rather than spend money?
Some measures explained

• Need for money
• Activities I do in my free time usually involve
  spending money.
• I need a lot of money for all the things I do
  (i.e. going out, hobbies, sport, etc.)

• Motives

precaution, cash management, avarice, goal
saving, independence, enterprise, pride,
calculation, foresight
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2) Who tends to save rather than spend money?
Some measures explained

• Attitudes

• Sub-scales
• saving struggle
• saving is a good thing
• pride
• dependency on parents
• parental guide

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2) Who tends to save rather than spend money?
Some results
Importance of various SAVING MOTIVES during
adolescence by AGE
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2) Who tends to save rather than spend money?
Some results
Importance of various SAVING MOTIVES during
adolescence by INCOME
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2) Who tends to save rather than spend money?
Overview of Significant Predictors for
Adolescents General Tendency to
Save (BEST-SUBSETS, Minitab)
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2) Who tends to save rather than spend money?
Hierarchical Regression to explore the relative
importance of socio-economic, psychological,
behavioural, attitudinal and motivational
variables for someones general tendency to save
rather than spend
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2) Who tends to save rather than spend money?
Hierarchical Regression to explore the relative
importance of socio-economic, psychological,
behavioural, attitudinal and motivational
variables for someones general tendency to save
rather than spend
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3) Saving in the family context
Theoretical background

• Positive effect of an authoritative parenting
  style above the authoritarian, neglectful or
  permissive style (Dornbush et al., 1987 Lamborn
  et al., 1991 Steinberg et al., 1992).

• The dimensions underlying the parenting styles
  are
• Warmth and support
• Strictness and supervision
• Autonomy granting
• Psychological control

• For example, an authoritative parent is described
  as being
• warm and involved
• firm and consistent in establishing and enforcing
  guidelines, limits and developmentally
  appropriate expectations

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3) Saving in the family context
Theoretical background

• Some of the characteristics that are fostered by
  authoritative parenting are
• self-reliance
• achievement motivation
• pro-social behaviour
• self-control
• cheerfulness
• social confidence

• Self-control and the ability to delay
  gratification are considered important skills for
  being successful at saving

• Self-reliance might play a role when it comes to
  more independent means of getting larger sums of
  money

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3) Saving in the family context

• STUDY 3
• 443 students (from two colleges in Devon, UK, 13-
  and 14 year-olds)

• QUESTIONNAIRE
• Section 1 age, gender, income
• Section 2 money management
• Section 3 ways of getting larger sums of money
• Section 4 psychological variables
• conscientiousness, time perspective, attitudes
  towards saving, saving-strategy self efficacy
  (based on Banduras self efficacy measure, YEAR)
• Section 5 perceived parenting style (42 items,
  Lamborn et. al. 1991
• Silk et al., 2003 Finkenauer et al., 2005 and
  Brown et al., 1993)

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3) Saving in the family context
Some measures explained

• Self efficacy with regard to the use of saving
  strategies

• Autonomy granting (one of the parenting style
  dimensions)

My parents (step-parents/ guardians) say that you
should always look at both sides of the issue.
(never-rarely-sometimes-often-always) My parents
(step-parents/ guardians) keep pushing me to
think independently. (never-rarely-sometimes-often
-always)
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3) Saving in the family context
Questions addressed

• Question 1 Is there a relationship between the
  dimensions of perceived parenting and a young
  persons tendency to rely on parents when it
  comes to getting larger sums of money?

• Question 2 Are young people who perceive their
  parents as autonomy granting more likely to save
  by adjusting expenditure or work outside home
  when trying to get larger sums of money?

• Question 3 What is the relationship between the
  dimensions of perceived parenting and a young
  persons tendency to give into temptation?

• Question 4 What is the relationship between the
  dimensions of perceived parenting and a young
  persons self-efficacy beliefs with regard to
  their use of saving strategies?

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3) Saving in the family context
Preliminary results

• Question 1 Is there a relationship between the
  dimensions of perceived parenting and a young
  persons tendency to rely on parents when it
  comes to getting larger sums of money?
• Psychological control appears to be positively
  related to relying on parents (r .114, p lt .05)

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3) Saving in the family context
Preliminary results

• Question 2 Are children who perceive their
  parents as autonomy granting more likely to save
  by adjusting expenditure or work outside home
  when trying to get larger sums of money?
• Autonomy granting appears to be positively
  related to saving by adjusting expenditure (r
  .117, p lt .05).
• Psychological control appears to be negatively
  related to saving by adjusting expenditure (r
  -.098, p lt .05).

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3) Saving in the family context
Preliminary results

• Question 3 What is the relationship between the
  dimensions of perceived parenting and a young
  persons tendency to give into temptation?
• I usually give into temptation was positively
  related to
• psychological control (r .097, p lt .05)
• I usually give into temptation was negatively
  related to
• warmth and support (r -.173, p lt .01),
• strictness and supervision (r -.089, n.s.),
• autonomy granting (r -.125, p lt .01).

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3) Saving in the family context
Preliminary results

• Question 4 What is the relationship between the
  dimensions of perceived parenting and a young
  persons self-efficacy beliefs with regard to
  their use of saving strategies?
• Saving-strategy self-efficacy beliefs were
  positively related to
• warmth and support (r .210, p lt .01),
• strictness and supervision (r .165, p lt .01),
  and
• autonomy granting (r .207, p lt .01).
• Saving-strategy self-efficacy beliefs were
  negatively related to
• psychological control (r -.178, p lt .01).

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4) A chip off the old block? The role of parents
Parental practices to encourage childs saving

• STUDY 4
• Response rate of both parents from students of
  study 3 21 ? sample
• 94 students (from two colleges in Devon, UK, 13-
  and 14 year-olds)
• 94 parents (both mother and father)

• PARENT QUESTIONNAIRE
• Section 1 general information (age, gender,
  income)
• Section 2 childs income (pocket money
  management)
• Section 3 parental practices with
  money-management specific goals
• and psychological variables
• attitudes toward childs saving,
  conscientiousness, time perspective
• Section 4 your childhood (when you were between
  8-11 and 12-16 yrs)
• Section 5 general money management

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4) A chip off the old block? The role of parents
Some measures explained

• Parents attitudes toward their childs saving
  behaviour
• Parents as educators (corresponds to parents as
  guides)
• Parents who protect their child (corresponds to
  dependency on parents)
• Saving is a good thing
• Pride

• Parental practices to encourage saving
• Argue
• Support
• Encourage
• Control
• Interfere

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4) A chip off the old block? The role of parents

• How well can we predict adolescents saving from
  adding data from parents?

• Saving attitudes
• What is the relationship between parents
  attitudes towards their childs saving behaviour
  and their childs attitudes towards saving?

What is the relationship between parents
attitudes towards their childs saving behaviour
and the strategies their child uses for getting
larger sums of money?

• Parental practices with money-management specific
  goals
• What is the relationship between parental
  practices to encourage saving and the strategies
  children use for getting larger sums of money?

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time for questions

• THANK YOU !