Study identifies vulnerable group of rapid young spenders
A quarter of Hungarians aged 18-35 are anxious about their financial situation, but as soon as they get money, spend it rapidly and make no financial plans in the longer term, according to recent research studying the financial literacy and spending habits of young Hungarians.
The study, carried out by a trio of academic researchers and published by social policy quarterly Esély, studied the financial literacy and spending habits of young Hungarian adults. One of the tasks was for respondents to answer eight questions aimed at measuring financial intelligence. The respondents scored an average of 5.73 points out of a maximum of 8, and only 13% were able to answer all the questions correctly, online news portal index.hu reports.
The research showed that only 20% of respondents had a realistic perception of their own financial knowledge. Another finding was that many young people prefer spending money rather than saving. In a comparative chart, the young generation agreed in a much higher ratio than their elders with the statement: "I prefer to live for today, Iʼll manage tomorrow somehow." This seemingly contradicts another finding of the research, which shows that 40.5% of respondents have savings while more than half have financial goals.
The authors also identified three distinct groups among young people aged 18-35. The largest group consists of those who make prudent and considered decisions (45%), followed by those who take conscious risks (31%), and finally those who are anxious about their situation but also tend to spend their money rapidly (24%).
The research notes that those belonging to the latter group are the most vulnerable, least likely to save or make a budget, and most in need of financial education. They make decisions on their finances alone, or someone else decides for them, and they tend to live in smaller settlements, earn little and have no financial goals.
Those who take conscious risks, according to the study, are most at home in financial matters, trust themselves the most, and are also the most likely to make financial decisions jointly. The largest group of cautious young people, meanwhile, though less well informed, more often draw up budgets and set money aside for the future.
The authors conclude that schools should teach youngsters how to set financial goals, work out a strategy, and learn to postpone their goals.
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