A STUDY ON INCOME AND EXPENSES

OF STUDENTS

-Yashika Damodar
PES1202101810

INTRODUCTION
The main focus of this research is to generally analyze students' income and expense patterns. Let's look at what
‘Income’ and ‘Expenses’ are in an income-expense analysis and compute them all at the same time.

Income:
"Income is the sum of all wages, profits, interest payments, rentals, and other types of earnings obtained in the
previous twelve months period" for a person or household. Income is defined as an entity's ability to consume and
save within a given time frame, which is usually stated in terms of money.
Concerning a student’s life, income can be explained as the funding they receive for consumption during college
hours, or during the period they stay in the college. Students can procure their earnings in two ways:
1) Pocket money from parents
2) Self-earned individuals who fund their expenses.

Expenses:
“An outflow of money to another person or firm to pay for any goods or service is a cost for an individual or
household is called as Expenses”
Concerning a college student, Expenses can be stated as all the expenditure he/she bears for regular consumption of
various requirements such as:
1) Food
2) Fuel/Transportation
3) Miscellaneous expenses like Streaming services, parties, etc.

Statistical Analysis
The collecting and evaluation of data to find patterns and trends is known as statistical analysis. It's a part of the
data analytics process. Statistical analysis is useful for obtaining research interpretations, statistical modeling, and
survey and study design, among other things. It can also be beneficial to business intelligence businesses that deal
with enormous amounts of data.

We need to do statistical analysis to:

  investigate topics;
 explain actions or attitudes;
 describe what is occurring;
 provide information;
 make comparisons to identify similarities and differences;
 draw inferences about populations based simply on sample findings

Following is a list of statistical techniques that are involved in data analysis.

 Data Sampling
 Central Tendency
 Random Variables
 Probability Distributions
 Statistical Inference
 Confidence Intervals
 Hypothesis Testing

This research paper gives an insight into both the main topics of concern and quantitative analysis on this. I have
chosen to do Karl Pearson Skewness methodology to understand the level of skewness or the level of departure
from the symmetry. We need to find the ideal income and expense level a college student can cope up to and how
much other students extend their habits from ideal levels.

REVIEW OF LITERATURE
 Brougham et al. (2011)
Another key component that represents college students' financial status is financial awareness, which is a side
consequence of financial literacy. According to " Brougham et al. (2011) ", students can provide numbers such as
their credit card balances, which is counter to expectations. They have more difficulty reporting wider economic
information, such as the current interest rate. Financial optimism for the future is also a result of awareness.
Students frequently have a positive attitude toward their future earning potential and the ability to pay off their
loans. However, evidence demonstrates that these beliefs are false. 

 Graves & Savage (2015)

Another key aspect influencing college students' financial situations is their history, especially their parents'
financial situation. Family income is a starting point for each student, and regardless of present financial
dependence on parents, this background influences college students' financial attitudes and behaviors
Some students may experience scarcity for the first time; they have left their parents' homes to attend school and
are attempting to maintain themselves on a limited budget. Other pupils come from underprivileged families and
have experienced a long time of shortage. Financially disadvantaged people are frequently agitated and
emotionally exhausted, which experts have connected to a lack of financial capacities and negative attitudes about
money.
  DeVaney et al. (1996)
He looked at how a financial education program affected workshop participants' knowledge, attitudes, and actions.
A pre-assessment was given at the start of the Women's Financial Information Program, and a post-assessment was
sent three months after the program was completed.
Participants were questioned about how their financial habits have changed as a result of their financial education.
They were asked if they had created or revised a budget, set up and used a bill-paying system, started or added to a
rainy day fund, identified and/or reduced expense leaks, obtained credit in their name, limited use and/or reduced
credit card balances, and started or increased savings regularly. Financial contentment comprised the amount of
money accessible for emergencies, the amount due, and the amount of money saved.

 Koposko, Hershey, Bojórquez, and Pérez (2016)

In general, pupils appear to understand the importance of financial knowledge. In research comparing students in
the United States with students in Mexico discovered that young adults in both nations were only somewhat
confident in their financial knowledge and education. These students were all well aware of the need to actively
manage their financial futures and, eventually, retirement. Their spending practices are influenced by their
financial knowledge as well. 

 Chetty and Szeidl (2007)

Because they believe that the majority of people spend a considerable percentage of their income on consumption,
Chetty and Szeidl (2007) investigated risk preferences in the utility theory dealing with consumption commitments.
They come up with the best design for an unanticipated emergency fund using statistical analysis, which is
effective for differentiating between high and moderate risk aversion.

RESEARCH METHODOLOGIES
Objectives:
 To understand the income and expense habits of students
 To analyze the spending behavior and where they allocate their income
 To find ideal levels of income and expenses that can be borne by an individual student on a general basis

Need for this research:

This research is mainly done to get details about every student in general and find their monthly income and
expenses. Of course, it varies from student to student depending upon various factors like:
1) The location they stay in influences the mode of transport they choose.
2) The family they come from has an impact on the spending behavior
3) If the student is from another state, then accommodation expenses like rent, food, etc., and much more.
The income also depends on if they are self-earned, or they are funded by their parents. They will have various
expenses like:
1) Food
2) Books, stationery, and academics related item
3) Transportation expenses
4) Fuel and parking charges if they travel via own vehicles
 5) Parties, Restaurants and get-togethers
The main purpose of doing this study in a detailed manner is to understand the monetary practices of students and
how they allocate the funds they make/receive. We can find the ideal quantity of money required by a student and
understand the extent to which a student can go, considering both positive and negative possible skews.

Type of research:
 Quantitative analysis approach is taken. Data is collected and segregated to find the intensity of skewness
 Primary data is collected via surveys i.e. Google forms.
 Karl Pearson’s Skewness method is utilized to measure the skewness

DATA ANALYSIS AND INTERPRETATION

Here I have collected data of 68 classmates via a survey to analyze their income and expense behavior. Data about
their income, sources of income, expense levels, money spent on food, transportation, and miscellaneous expenses
were collected.

SOURCES OF INCOME
Starting with the source of income,51 out of 65 students, i.e. 72% of them take pocket money every month whole,
11 of them i.e. 16% of them are self-earned, 5 of them earn i.e. 7% of them earn from other sources and 1 of them
i.e. 2% of the sources their income from other sources

SOUCES OF INCOME

7%
16%
1% stocks
Other sources
Pocket Money

75% Self earned

INCOMES

INCOME
1000-3000
3000-5000
24% 29% 5000-7000

10 7000-9000
%
3% 9000-11000
25
9% % 11000-13000
On analyzing the incomes further, out of 68 students, every month, 20 of them (29%) get Rs. 1000- Rs. 3000, 17 of
them (25%) get Rs. 3000- Rs. 5000, 6 of them (9%) get Rs. 5000- Rs.7000, 2 of them (3%) get Rs. 7000 - Rs.9000,
7 of them (10%) get Rs. 9000 – Rs 11000, and lastly 16 of them (24%) get more than Rs. 11000.

EXPENSES
On analyzing the incomes further, out of 68 students, every month, 21 of them (31%) spend Rs. 1000- Rs. 3000, 18
of them (26%) spend Rs. 3000- Rs. 5000, 13 of them (19%) spend Rs. 5000- Rs.7000, 6 of them (9%) spend Rs.
7000 - Rs.9000, 1 of them (2%) spend Rs. 9000 – Rs 11000, and lastly 9 of them (13%) spend more than Rs.
11000.

EXPENSES
1000-3000
3000-5000
13%
1% 5000-7000
9% 31% 7000-9000
19% 9000-11000
26% 11000-13000

EXPENSES COMPRISES OF:

4% 6% 3%
7% 7%
1000-2000 1000-2000
16% 2000-3000 2000-3000
46% 3000-4000
3000-4000
4000-5000 26% 57% 4000-5000
5000-6000 5000-6000
26%

FOOD TRANSPORT

15%
1000-2000
13% 2000-3000
3000-4000
72%

MISCELLANEOUS EXPENSES
 KARL PEARSONS COEFFICIENT OF SKEWNESS
Skp = (Mean-Mode)/Standard deviation
Where,
Mean= ∑fx/∑f
Mode= L1 + (f1 – f0)/ (2f1-f0-f2) x i
Standard deviation =√ (∑fi (x-M)2)/N
For incomes:
Let the amount earned by the student be the class intervals, and the number of students earning them by the
frequency(f) of the class

Class Frequency Midpoint fx x- Mean (x-Mean)2 f (x-Mean)2

intervals (f) (x)

1000-3000 20 2000 40000 -4205.88 17689090.104 353781802.08

3000-5000 17 4000 68000 -2205.88 4865906.57 82720411.69
5000-7000 6 6000 36000 -205.88 42386.574 254319.44
7000-9000 2 8000 16000 1794.12 3218866.57 6437733.14
9000-11000 7 10000 70000 3794.12 14395346.574 100767424.99
11000- 16 12000 192000 5794.12 33571826.57 537149225.12
13000
SUM (∑) 68 1081110916

MEAN
Mean= ∑fx/∑f
Mean= 422000/68
= 6205.88

Mean = Rs. 6205.88

MODE
Mode= L1 + (f1 – f0)/ (2f1-f0-f2) x i
Mode= 1000 + (20-0)/ (2*20-0-17) x 2000
= 2739.13

Mode = Rs. 2739.13

 STANDARD DEVIATION
Standard deviation =√ (∑fi (x-M)2)/N
Standard deviation =√ (∑fi (x-M)2)/N
= √1081110916/68
= 3987.31

Standard deviation = Rs. 3987.31

Thus, Karl Pearson’s Coefficient of skewness can be calculated

Skp = (Mean-Mode)/Standard deviation
Skp = (6205.88-2739.13)/ 3987.31
Skp = 3488.75/3987.31
Skp = 0.87
Thus, KARL PEARSONS COEFFICIENT OF SKEWNESS for income ;

Skp = 0.87

For Expenses:
Let the amount spent by the student be the class intervals, and the number of students spending them by the
frequency(f) of the class

Class Frequency Midpoint fx x- Mean (x – Mean)2 f (x –

intervals (f) (m) Mean)2

1000-3000 21 2000 42000 -3264.7 10658266.09 223823587.9

3000-5000 18 4000 72000 -1264.7 1599466.09 28780389.62
5000-7000 13 6000 78000 735.3 540666.09 70208659.17
7000-9000 6 8000 48000 2735.3 7481866.09 44891196.54
9000-11000 1 10000 10000 4735.3 22423066.09 22423066.09
11000-13000 9 12000 108000 6735.3 45364266.09 408278394.8

SUM (∑) 68 798415294.1

MEAN
Mean= ∑fx/∑f
Mean= 358000/68
= 5264.70

Mean = Rs. 5264.70

 MODE
Mode= L1 + (f1 – f0)/ (2f1-f0-f2) x i
Mode= 1000 + (21-0)/ (2*21-0-18) x 2000
= 2750

Mode = Rs. 2750

STANDARD DEVIATION
Standard deviation =√ (∑fi (x-M)2)/N
= √ 798415294.1/68
= √11741401.38
= 3426.57

Standard deviation = Rs. 3426.57

Thus, Karl Pearson’s Coefficient of skewness can be calculated

Skp = (Mean-Mode)/Standard deviation
Skp = (5264.70-2750)/ 3426.57
Skp = 2514.7/3426.57
Skp = 0.73
Thus, KARL PEARSONS COEFFICIENT OF SKEWNESS for expenditure;

Skp = 0.73

FINDINGS AND SUGGESTIONS

FINDINGS:
FOR INCOME:

 Majority of the students are dependent individuals, who source their fundings from their parents or
guardians. It is seen that approximately students procure at least Rs. 6205.88 as their income (interpreted by
the mean) for their monthly expenses.
 It is seen that the majority of the students receive Rs. 2739.13 as their income (Mode). This can be said as
the highest frequency is 20 for the income range 1000-3000.
 The standard deviation of the income range is Rs. 3987.31. This shows how one group departs from the
group's or data set's mean value.
FOR EXPENSES:

 On average, students tend to spend around Rs. 5264.70 every month for their usual needs. (Mean)
  It is seen that most numbers of people spend Rs. 2750 every month, since the most frequency is seen in the
range 1000-3000, so the expense value lies within this range only.
 The standard deviation of expenses of students is Rs. 3426.57.

The given data from the income as well as expenses show a positive skew. A positively skewed distribution is one
in which the tail is on the right side and the body is pushed to the left. The right-skewed distribution is another
name for it. The tapering of the curve differently from the sample points on the opposite end is referred to as a Tai.
A positively skewed distribution has a skewness value greater than zero, as the name implies. The mean value is
bigger than the median and goes towards the right because the skewness of the given distribution is on the right,
and the mode occurs at the maximum frequency of the distribution.
It is seen that the standard deviation of income is 0.87 and that of expenses is 0.73. Both being on the positive side,
it is said to have;
Mean > Median >Mode
This is seen in both cases.

SUGGESTIONS:

 On considering the averages in both cases, the incomes as well as expenses,

Income – Expenses = Savings
So, savings, in this case, is: 6411.76 - 5264.70 = 1147.06
So, on average, every student manages to save around Rs. 1147 which is good concerning students who get around
4000-5000 every month. Others who get around Rs. 11000 must learn to plan their expenses and save more.

 It is seen that the majority of students receive at least Rs. 2739 every month, and a majority of them spend
Rs. 2750 every month. This means their expenses are Rs 11 more than what they receive which is not
appropriate. They should minimize their expenditure.
 Students who spend a lot on traveling means that they either spend their money on cabs or fuel. To save
money, they can consider the idea of vehicle pooling with their friends. Or even consider using public
transport, since it is cheaper than both fuel and taxis.
 In suggestions collected from the students I have noticed how some students exaggerate on the importance
of savings and how they need to inculcate the habit of spending wisely.

CONCLUSION
The study gives details about every student, how they procure their monetary funds, and once the income is
received, how they consume it. It is seen that students have low access to adequate income, and so the allocation of
such money is to be done efficiently.
Karl Pearson’s coefficient of skewness determines the variability of the deviation from the median. In this case, it
is positive in both income and expenses, depicting how the mean value is bigger than the median and goes towards
the right because the skewness of the given distribution is on the right, and the mode occurs at the maximum
frequency of the distribution.
Students should however practice efficient spending practices to save more.
Students should be taught the importance of saving money and also be taught where to invest their savings so as
increase the returns on it. This gives them exposure and insight into financial knowledge.

REFERENCE

 https://alevelmaths.co.uk/statistics/skewness/#:~:text=If%20the%20mean%20%3E%20median%20it
%20indicates%20that,The%20first%20method%20uses%20mode%20and%20it%E2%80%99s%20formula
%3A
 https://taptoprosperity.com/income-expense-analysis-understanding-your-monthly-income-and-expenses/
 https://corporatefinanceinstitute.com/resources/knowledge/other/skewness/

The primary data collected: