Sunday, March 4, 2012

Spending and Saving Habits of Kalamazoo College Students

A study was conducted by Kalamazoo College Students Katharine Moffit and Ramon Rochester to investigate the trends of spending and saving by Kalamazoo College students. The purpose of this study was to investigate and compare the spending and saving practices of different groups; Michigan natives vs. non-Michigan natives, males vs. females, lowerclassmen vs. upperclassmen among others. 162 surveys were sent out to students and of those 162 surveys, 65 students responded.

Participants were asked how much they save monthly and from our study we concluded that $150 was the average amount saved by students. We then, through testing found with 95% confidence that students save between $112 and $188 per month. Our studied also showed that male students on average saved $171 and female students saved $105.

We also asked the participants to report what percentage of the money they earn or receive they save. This resulted in an average of 53% of their money saved. We expanded this estimate and came up with a range of 40% to 60% of students’ money being saved. We then compared the group Michigan natives vs. non-Michigan natives and found that on average Michigan natives saved 56% of their money and non-Michigan natives saved 46% of their money.

Another important question we asked was for students to report how much they spent the week prior to completing the survey. We also had to clarify if the amount reported was the typical weekly spending of that student. These surveys were done in the weeks following major events so the amounts reported contained multiple extreme values. This being said the mean we calculated was $81 in a week. We then compared the weekly spending of Lowerclassmen (First Year/Sophomore) to Upperclassmen (Junior/Senior). Lowerclassmen spent an average of $64 and upperclassmen spent on average $104.

We went on to further test the factors that affect some of our main variables, namely amount saved monthly and percentage saved when money is earned or received. When we tested monthly savings we found that monthly earnings had the highest effect on this variable. Factors such as class year, hours worked per week and family income didn't have a significant effect on monthly savings. After testing percentage saved, the factor that had a significant effect on this was whether or not the student had a job. We also tried the amount the student received for allowance, but this wasn't a significant factor.

Our study also sought to rank what students spend most of their money on in a month based on 8 categories: Food, Entertainment, Technology, Personal Care, School Expenses, Transportation Expenses, Charity and Gifts. The graph below shows the distribution of these categories based on how much students said they spend. The categories are ranked out of 100 and in order from highest to lowest it is: Food, School Expenses, Transportation Expenses, Personal Care, Entertainment, Gifts, Technology and Charity.

We concluded based on our results that there are maybe only a few similar factors that influence student spending and saving habits. Potentially, this could mean that spending and saving habits vary from student to student and are difficult to generalize; it may be more of a personal choice.

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