Press Release

THE 'FRIEND EFFECT' THREATENING YOUNG BRITS' FINANCIAL HEALTH

13 December 2006

• Half (44%) of 16 to 24 year-olds say friends influence excessive spending, finds NS&I Quarterly Savings Survey
• A quarter (24%) of young Brits think friends should influence spending behaviour
• Amount put aside by each regular saver per month has fallen since summer 2006

Nearly half (44%) of young Britons aged 16 to 24 say their friends put pressure on them to keep spending even when they have run out of money, according to the latest Quarterly Savings Survey (QSS) published today by National Savings and Investments (NS&I).  Overspending by this generation has damaging implications both for consumer debt and future savings habits and threatens their long term financial health, warns NS&I.

Do friends influence you to overspend?

Age	16-24	25-34	35-44	45-54	55-64	65+
Yes answer	44%	23%	13%	5%	5%	4%

The influence of friends on overspending among young people is in stark contrast to other age groups who appear more resistant to their peers' persuasion.  More than one in 10 (15%) of those surveyed across all age groups said they felt under pressure from friends to keep spending when they had no money.  It is a learning curve with age, however, as nearly a quarter (23%) of 25 to 34 year-olds still felt under some compulsion to do this.

The cost of over-spending

Dax Harkins, senior savings strategist for NS&I, said: "Friends influence all of us in what we like to do, but it is a grave concern if young people are being persuaded by their peers to spend money they simply don't have.  If they build up debt from overspending when they are young they will have nothing left to put away in savings for their future.  At this young age, when they are just beginning to earn a salary, manage finances and pay off student debts, it is vital to start good savings habits, rather than going into the red just to be part of the in-crowd."

The power of the 'friend effect'

Nearly a quarter (24%) of impressionable 16 to 24 year-olds think friends should have an influence on whether people spend, compared to just 16% of all those surveyed.

But when it comes to savings habits, just one in 10 (11%) of 16 to 24 year-olds say they are influenced by their friends as to whether they have a savings account.

Who should influence savings?

The NS&I Quarterly Savings Survey also shows the biggest influencers on savings behaviour should be:

Parents; according to over half (56%) of those surveyed, although under-25s are more resistant with 48% of 16-24s agreeing, while 60% of over 65s believe parents should be the primary influence.
The media and advertising; according to 14% (just over one in 10) of those surveyed.  This rises to a fifth (20%) among 16 to 24 year-olds, showing the potential influence of the media on young people. 

Despite the threat peer pressure poses to the young and their financial habits, the survey does hold a note of encouragement.  Even though they are under pressure from friends to overspend, a quarter (25%) of 16 to 24 year-olds said they save even if their friends don't, compared to just over one in 10 (13%) of all those surveyed.

QUARTERLY SAVINGS SURVEY: OTHER FINDINGS

Regular savings and aspirations fall

Average amount saved regularly fell from £174.50 per month in the summer 2006 quarter to £170.06 per month in autumn 2006 (autumn 2005: £174.43 per month) for regular savers.
The amount people would ideally save fell from £186.30 per month last quarter to £181.86 per month this autumn (autumn 2005: £183.62).  This is the biggest fall, quarter on quarter, since the survey began.
 

Improvements in saving since 2005

Increase in number of regular savers from 55% in autumn 2005 to 58% in autumn 2006
Average of £91.82 per month saved in autumn 2006 compared to £89.11 in autumn 2005.  This indicates that the population saved approximately £4.2 billion1 each month in September, October and November. 
 

Trends 'a cause for concern'

Dax Harkins, continues: "The positive news is that the number of regular savers has risen quite significantly since last year.  And even though those who save regularly are not able to put aside as much per month, the overall total amount going into savings has increased.  But what is worrying is that non-savers are finding increased demands on their finances are stopping them from putting money away and younger people are succumbing to peer pressure to overspend.  Even if the purse strings are being tightened it is always sensible to put a little aside, not only for the future but for any unexpected financial shocks that may occur."