August 2013
By FAI
Big Questions in Savings
It would appear self-evident that poor families are unable to save. If these households are barely making ends meet, they must be so preoccupied with covering immediate needs that thinking about the future is a luxury. However, this proves not to be the case. Most poor households, even those earning less than $2 a day per person, have disposable income (Banerjee and Duflo, 2007).1 And yet, demand for and use of formal and informal savings products falls far below what theory would predict.
In this briefing note, we explore the benefits and risks for saving, the issue of profitability for making savings products available to the poor, how people are saving, and new innovations that can facilitate great access to savings tools.