Living life on credit is the mantra of the city’s youth, shows a new study, which concludes that while 75 per cent of those surveyed owned a credit card, 63 per cent used it at least once a month. The three-year research, which surveyed 2,135 in the age group of 17-30 years, however, says that respondents have low financial literacy scores on basic money management (47.96 per cent) and savings and investment know-how (48.1 per cent).
“The youth in Mumbai appear less confident when it comes to managing money, reflecting their relative lack of experience. They, however, appear to be reasonably well informed about plastic money. What is shocking is that 80 per cent do not monitor their expenditure. The advent of mall culture, obsession with brands, peer pressure and gadgets have a strong influence on their spending pattern. About 23 per cent said as long as their expenditure did not exceed their income, there was no need to track spending. Further, 11 per cent gave the excuse of lack of time and 14 per cent said there were too many uncertainties and therefore, there was no point monitoring their expenditure,” said Dr Jehangir Bharucha, director of postgraduate studies at H R College and author of the study.
The overall financial literacy score for Mumbai was 60.33 per cent. Students residing in south Mumbai achieved a score of 64.9 per cent, those residing in western Mumbai scored 59.16 percent, while respondents from central Mumbai achieved a financial literacy score of 56.9 per cent.
Among the respondents, 90 per cent owned a debit card and 75 per cent owned credit cards, which the study said was an indication that a majority displayed a tendency to make rash, impulsive financial decisions.
“Of those who do not possess a credit card, some use credit cards of family members to affect any purchase of their own choice. Around 25 per cent possessed a single credit card, and of the remaining 75 per cent, 41 per cent possessed two cards. Around 12 per cent had over three cards. This means that 35 per cent had over one card and six per cent possess more than three credit cards. Nineteen per cent use it at least thrice monthly. In case of debit cards, a different picture has emerged with 65 per cent possessing one debit card,” says the paper.
In terms of the most important factor influencing choice of credit cards,