Authors: Aditi Patel – 021331025579
Sejal Jain – 021331205406
Tarun Khatri – 021331025682
Introduction:
In today’s digital and consumer-driven environment, individuals are exposed to multiple spending options through easy access to goods, services, and digital payment platforms. While spending on necessities and personal interests is unavoidable, unplanned purchases and poor expense tracking can lead to financial imbalance. Understanding individuals’ spending behaviour is essential to evaluate how effectively they manage their monthly expenses and whether they are satisfied with their financial decisions.
Objective: To understand the spending patterns and expense management behaviour of individuals in their monthly financial activities.
Literature Review:
The Economic Importance of Financial Literacy (Lusardi, A., & Mitchell, O. S., 2014)
This study explains that financial literacy is an essential life skill that influences how individuals make decisions related to saving, borrowing, and long-term financial planning. It highlights that people with higher financial knowledge tend to make better economic decisions, leading to improved financial well-being. The authors emphasize that financial education should be viewed as an investment in human capital, as it reduces poor financial choices and enhances overall economic outcomes.
Digital Payments and Consumer Spending Behaviour (Agarwal, S., & Chua, B., 2020)
This study focuses on how the increasing use of digital and cashless payment systems influences consumer spending behaviour. It finds that convenient payment methods such as mobile wallets and digital payment apps encourage faster transactions and may lead to more frequent and impulsive purchases. The research suggests that while digital payments improve ease of spending, they also require greater financial awareness to manage expenses effectively.
Data Collection:
For the above problem, five questions were framed using the Likert Scale. A Google Form was created to collect responses from respondents. The data collected was used to analyze individuals’ spending behaviour and satisfaction with their monthly expense management.
The questions were answered using a 5-point Likert scale, where:
1 – Strongly Disagree
2 – Disagree
3 – Neutral
4 – Agree
5 – Strongly Agree
The following questions were included in the survey:
- Q1. I spend most of my money on food, travel, or personal expenses.
- Q2. I track my monthly expenses to manage my spending better.
- Q3. I often make unplanned purchases during the month.
- Q4. I use digital payment apps for most of my daily expenses.
- Q5. I am satisfied with the way I manage my monthly spending.
For each question, Mean, Standard Deviation, Standard Error, and t-Statistic were calculated.
Data Analysis:
Mean, Standard Deviation, Standard Error and T-Statistic for each question are as follows:
|
Questions/ Functions |
Q1 |
Q2 |
Q3 |
Q4 |
Q5 |
|
Mean |
4.08 |
3.92 |
3.55 |
3.65 |
4.10 |
|
Standard Deviation |
1.01 |
1.00 |
0.96 |
0.92 |
1.07 |
|
Standard Error |
0.13 |
0.13 |
0.12 |
0.12 |
0.14 |
|
t-Stat |
8.28 |
7.13 |
4.42 |
5.49 |
7.97 |
- t > +1.96 → Accept Positive Alternate Hypothesis (μ > 3) People Agree.
- −1.96 ≤ t ≤ +1.96 → Accept Null Hypothesis (μ = 3) People are Neutral.
- t < −1.96 → Accept Negative Alternate Hypothesis (μ < 3) People Disagree.
Conclusion:
Following can be concluded based on responses collected on each of the five questions:
Q1. Since T-Statistic is > 1.96, people accept that they spend most of their money on food, travel, or personal expenses.
Q2. Since T-Statistic is > 1.96, people accept that they track their monthly expenses to manage their spending better.
Q3. Since T-Statistic is > 1.96, people accept that they often make unplanned purchases during the month.
Q4. Since T-Statistic is > 1.96, people accept that they use digital payment apps for most of their daily expenses.
Q5. Since T-Statistic is > 1.96, people accept that they are satisfied with the way they manage their monthly spending.
Reference:
1. Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44. https://doi.org/10.1257/jel.52.1.5
2. Agarwal, S., & Chua, B. (2020). Digital payments and consumer spending behaviour. International Journal of Consumer Studies. https://pdfs.semanticscholar.org/a91e/ab3eb51eb3581f075272be4fa2bf69f13d74.pdf