This Briefing Note highlights the “borrowing while saving" financial practice observed among diary households, and documented in the book Portfolios of the Poor: How the world’s poor live on $2 a day. It describes factors like simultaneous borrowing and saving, and discusses the difficulty of rebuiding savings as a possible explanation for this behavior. The note further discusses why poor households borrow when they can dis-save, and what lenders can do to provide financial instruments better matched to the irregular and unpredictable cash flow patterns of the poor.

This is the second note in the Portfolios of the Poor Briefing Notes series. You can link to the other notes below.

Briefing Note 1: The "Triple-Whammy" of Poverty
Briefing Note 3: How do the Poor Deal with Risk?
Briefing Note 4: Research Methodologies
Briefing Note 5: Creating Better Portfolios—Core Financial Products for the Poor
Briefing Note 6: Portfolios of Bangladesh’s Poor
Briefing Note 7: Grameen II and Portfolios of the Poor
Briefing Note 8: Understanding Price
Briefing Note 9: Three-Country Analysis

These Briefing Notes were created as part of a toolkit of instructional resources for FAI and MicroSave’s June 8-9 virtual conference Reimagining Microfinance Around the World: Implementing Lessons from Portfolios of the Poor. Co-authors Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven, and MicroSave’s Graham A.N. Wright moderated the event and discussed with conference “attendees” how to turn lessons from the financial diaries into real, on-the-ground solutions for economic development. The collection of suggested readings and videos for the conference can be accessed on this page.