Money Management: Challenges
Faced by Young Adults (17-21) in
Handling Finances
Akanksha Mukundala, Harsh Warrier, Puru Raj Sahu, Priyanka Gajera, Rupal Sharma, Meghna
Firdaus Ghosh
ABSTRACT:
“This research paper is an ethnographic representation of the intricate
relationship between young individuals and their financial challenges. In
an era defined by rapid changes and evolving societal norms, the
management of personal finances assumes a central role in shaping the
life trajectories of emerging adults. As they navigate the complexities of
financial decision-making, the aim of this study is to provide a
comprehensive exploration of the obstacles that young individuals, aged
17 to 21, encounter while dealing with their financial matters.”
INTRODUCTION:
In today's world, how young people manage their money matters a lot. Figuring
out how to handle money can be tricky, especially for those who are between 17
and 21 years old. This is the time when they're becoming more independent and
taking on responsibilities. Making good financial decisions now can have a big
impact on their future.
In this research, we're going to dig into the challenges that young people face
when it comes to managing their money. We want to understand the things that
make handling money tough for them. This research is like an adventure, where
we'll explore the different reasons why money can be a bit tricky for young folks.
As we go forward, we'll talk about how we did this research, who we talked to,
and the things we discovered about the challenges young people face with their
finances. By doing this research, we hope to learn more about what young
people go through when it comes to money and how we can help make things
easier for them.
FORGROUNDING DEBATE:
The findings of this ethnographic exploration illuminate several key
debates and discussions surrounding the challenges faced by young
individuals in managing their finances. These debates revolve around the
intricate interplay of priorities, income dynamics, parental roles,
investment motivations, and the pursuit of financial stability.
Balancing Priorities:
One of the central debates centre's around how an individual's spending
behaviour is influenced by their priorities. The study highlights that young
adults' spending choices are deeply rooted in their personal priorities,
such as education, comfort, and leisure. While some prioritize prudent
spending by selecting items that offer a balance between cost and value,
others might exhibit impulsive spending behaviour driven by the pursuit of
comfort. This dynamic gives rise to an ongoing discourse about the factors
that shape spending habits and the implications of these choices on their
financial well-being.
Income and Decision-Making:
The role of income in shaping decision-making processes has been an
ongoing point of discussion. The study underlines that the state of an
individual's income significantly influences their financial choices. This
influence spans across various life stages, impacting the way people
allocate funds, prioritize essential needs, and make budgetary decisions.
The observation that limited income can prompt careful budgeting and
frugal decision-making raises questions about the broader societal
implications of income disparities and the support systems available to
individuals facing such challenges.
Parental Involvement and Autonomy:
The parental role in managing young adults' finances introduces a
nuanced debate regarding autonomy and dependence. The study
indicates that transparent communication and trust-based exchanges
between parents and dependents contribute to responsible financial
decision-making. However, instances where young individuals withhold
financial information due to differences in viewpoints signify a struggle for
autonomy. This dichotomy underscores the evolving dynamics of the
parent-child relationship and prompts discussions about fostering financial
independence while maintaining familial bonds.
Investment Motivations:
Investment motives and strategies also occupy a significant place in the
discourse. The study unveils that young individuals are motivated to
invest in pursuit of greater returns, aiming to secure a financially stable
future. This revelation triggers discussions about financial literacy, risk
tolerance, and the need for accessible avenues for investment education.
The distinction between current investors' approaches of reducing
expenditure for future investments and aspiring investors' quest for a
stable financial foundation spark debates about the strategies employed
to achieve long-term financial goals.
Varied Paths to Financial Stability:
The pursuit of financial stability emerges as a common aspiration among
young individuals, yet the means to achieve it diverge. The study
illuminates two contrasting paths: one prioritizing experiential learning
and the other emphasizing high-paying professions. This divergence
prompts conversations about the multifaceted nature of financial stability,
questioning whether it primarily hinges on monetary achievement or
encompasses broader life aspirations and preparedness.
METHODOLOGY:
Finances play a crucial role in a young individual’s life. Managing financial
matters presents distinct challenges. The primary aim of this study is to identify
the obstacles encountered when dealing with finances. To achieve this, an
exploratory research approach was adopted, investigating challenges associated
with financial management in the domains of investment, budgeting, lending,
borrowing, earning, saving, monthly allowances, and future goals among young
individuals aged 17 to 21.
The sample size for this qualitative research are two male users, aged 18 and 20
both pursuing their undergraduate degree. User 1, age being 20, is pursuing his
undergraduate degree in business comes from a family with an upper middle
class economic background, whereas user 2 comes from a lower middle-class
family is pursuing his undergraduate degree in Computer Applications. Both the
uses reside in Jaipur but with origins from Prayagraj UP (User 1) and Sawai
Madhopur (User 2) Rajasthan respectively.
For this qualitative research, two male participants, aged 18 and 20, both
pursuing their undergraduate degrees were engaged. User 1, aged 20, is
studying business and comes from an upper middle-class background, while User
2 is pursuing a degree in Computer Applications and comes from a lower middle-
class family. Both individuals reside in Jaipur, with origins in Prayagraj, Uttar
Pradesh (User 1), and Sawai Madhopur, Rajasthan (User 2).
The Data Collection for this research was orchestrated by 6 students pursuing
bachelor's in design who used contextual inquiry, shadowing, and semi
structured interview. Furthermore, Secondary Research was undertaken by
gathering information from research papers. Additionally, a phone interview of a
stakeholder (parent) was conducted who played the role of a figure of authority,
decision maker, caretaker, and provider in the user’s life.
Following contextual inquiry, supplementary semi structured interviews have
been conducted to bridge the gap in the analysed data. With consent interviews
were audio recorded and the data was transcribed in exact verbatim significant
quotations by the user/stakeholder have been read and meticulously analysed to
explore and discover, emerging themes and concepts. To ensure trustworthiness
of data an exercise of writing a self-reflective essay has been done by the
researchers The parameters for the trustworthiness of data were credibility,
transferability, dependability, and confirmability. Similar themes and concepts
have been combined to form a general statement. The above is how data has
been collected and analysed for the research.
FINDINGS AND DISCUSSIONS:
Individuals spend money on what they prioritize the
most.
An individual’s priorities play an important role in their expenditure. These
priorities can include education, comfort, leisure, etc. Depending on them,
young adults choose to purchase or avail items related to their priorities.
For example, in the case of User #2, we found that his priority, being
comfort, urged him to spend his money impulsively.
“Mujhe sabse zyada pese udana khane pe pasand hai. sbka alag
alag satisafction hota hai, log sbse zyada pese kaha udate hai daru
me, smoking me, drinking me kyunki usse unko satisfaction milta
hai or merko khane se. mera pet full hota hai mera mood happy
hota hai.”
This led to his budget depleting quickly and forcing him to spend the rest
of it cautiously. In contrast, User #1 placed emphasis on selecting items
that present a judicious balance between cost efficiency and optimal
value, thereby showcasing a discerning approach to their choices.
Therefore, it is important to know that an individual’s priorities affect their
spending behaviour.
State of income affects how people make choices.
The state of an individual's income plays a pivotal role in shaping their
decision-making process across various life stages. This phenomenon
holds true for people of all age groups, including young individuals who
are navigating the early phases of financial independence. For example,
User #1 stated that his family business, banners and similar plastic-based
products might cease to be in demand soon. However, there isn't a
substantial readiness among customers to switch to cloth printing, despite
the ongoing engagement in plastic printing. The sentiment conveyed was
that there might not be a financial loss, but there's also a lack of growth
potential in this situation.
“banners wagera plastic ke jaldi band ho jaayenge...itni jaldi plastic
printing aur cloth printing jo 40 rupaye ka hai vo gap kam nhi
hoga..itne log engage hone to tayyar nhi hain cloth printing
me...loss nhi he par growth bhi nhi hai”
The sentiment was also seen from User #3, User #1’s mother as their
income from the family business determined their son's future.
“dekho business me bahut zyada up-down hota hai aur hamne
bahut zyada ye cheez dekha hai to ham ye nhai chahte ki wo bhi
yahi cheez face kare ham ye chahte hain ki wo hamari need ke bina
itna acha ban jaaye ki hamnari use zaroorat hi na pade”
In conclusion, limited income might lead to prioritizing essential needs
over discretionary spending, prompting careful budgeting and frugal
decision-making.
The parental role in managing finances for young adults.
The parental role in managing finances is characterized by providing the
dependent with means to essential resources. This exchange completely
depends on trust which is built on the open communication of the
dependent’s needs and priorities. This trust gives the dependent a sense
of responsibility and capability of making smart choices with the money.
In the context of User #1, he got money from his provider occasionally
and was transparent about where he spent it. However, User #1 has also
stated that:
“Family ko bataya hi nhi hai. Unko information nhi he iske baare me
zyaada. Humko pata hai kynki humne padha hai. It’s better not to
involve them. Personal preference hai.”
Sometimes, differences in how they both see things can lead to money
matters being kept hidden. User #1 keeps the information about his
investments from his provider hidden due to difference in opinion. But the
money he invests is his own.
In the context of User #2, he was not fully transparent about his
spendings whenever he is asked about it from the provider.
“Gharwalo ne kabhi mana nahi kara khane pe kharch mat karo, per
vo puchenge ‘roz roz to nahi bahar kha raha na?’. Or me peso ke
bare me sochta hi tb hu jab kam rehjate hai.”
Plus, his parents provide him with resources, separate from his need-
based money system. However, User #1’s parents provided him with the
permission to buy essential resources on his terms.
People generally seek financial stability through
investments
Attaining financial stability is a common aspiration among young
individuals seeking to ensure their future security. This pursuit revolves
around establishing a sense of preparedness and confidence for what lies
ahead. Their approach to achieving financial security, however, varies
based on their future ambitions. In the case of User #1, a five-year plan
emphasises gaining experience and knowledge as priorities, with
monetary factors assuming a secondary role.
“4 saal me kitna hi kamaao usse matlab nahi hai. 10,000 mahine - 1 lakh
mahine mujhe kuch nahi farak padega mujhe.”
Conversely, User #2's decision to pursue a high-paying profession
illustrates a practical approach driven by financial planning, aiming to
avoid future monetary concerns.
“Ethical hackers ka package bahut high jata hain can be even
around 70-80 lakh per annum. High paying job hai and I like coding
to ye attracting factor hai ise as a goal rakhne ka.”
Both scenarios highlight the diverse strategies individuals adopt in their
pursuit of financial stability, reflecting their unique perspectives and life
goals.
However, gaining practical knowledge for investments can be a challenge
as it depends on requiring capital for investments. User #1 stated that:
“..Pehle to usko ghar se capital maangna padega, aur kis basis pe
maangege, ki investment karna hai. to pehle hi family rok dei, pehle
knowledge lelo lekin knowledge ke liye pehele lagana padta hai,
tabhi dimag lagta hai na.”
User #1 has stated that to get capital for investments and as he was not
earning at that moment, he would need to ask his family. However, they
would insist on gaining knowledge. User #1, being a believer of practical
knowledge, found it tricky as he said that he would need to try investing
to understand the process. Therefore, it can be difficult for young adults to
gain practical knowledge
CONCLUSION:
A desire for financial stability serves as the root cause.
Following the completion of thematic analysis, a wide spectrum of data
evolved portraying the ambitions, priorities and struggles of the young
individuals. It was found that the fundamental driving force remained to
be achieving financial stability. This motivation was not only seen in the
young individuals(users) but the parents' (stakeholders). Thought the
routes taken to achieve this goal might be different the ultimate
destination remains the same. This attainment of financial stability
resulted in behaviours among the individuals which were shaped by their
priorities and the state of their income.
The aspiration to attain financial equilibrium is tied to the status of their
income, playing a key role in shaping their attitude and behaviour in terms
of financial matters. In addition, it was observed that a connection exists
between the utilization of resources and the availability of resources.
Flexibility in spending resources has greater flexibility when there's an
abundance of resources and restrictive when there's a scarcity in the
available resources. Often the ease of spending is linked to the ease of
recovery of resources. Thus, reflecting relationship between spending
pattens and resource availability to maintain equilibrium.
Resources are allocated with what the individuals prioritise the most.
Furthermore, the surroundings of the individual significantly molds the
nature of their expenditure. Individuals allocate a larger portion of
resources to their highest priorities while carefully managing expenses by
minimizing unnecessary utilization to stay financially stable.
The priorities and income status serve as crucial factors where the
primary objective remains to attain financial stability.
