Barriers and Facilitators to Saving Behavior in Low- to Moderate-Income Households

Abstract

The purpose of this study was to identify barriers and facilitators of saving behavior in low- to moderate-income households within a framework of predisposing, enabling, and reinforcing factors. Data used were from a U.S. Department of Agriculture/National Institute for Food and Agriculture–sponsored multistate project. With a sample of 757 low- to moderate-income households and hierarchical logistic regression, results indicated that enabling factors and reinforcing factors reduced the significance of predisposing factors such as household income and financial knowledge on the likelihood to save. In the full model, significant predisposing factors included net worth, attitude toward saving, learned about saving from formal sources, marital status, gender, and race. Among the enabling factors, constraints on resources and lack of comfort with financial institutions were perceived as barriers to saving as well as unemployment. Of the reinforcing factors, concern for loss of benefits increased the odds of saving.

Financial Knowledge and Household Saving: Evidence from the Survey of Consumer Finances

“…Generally, as household income or lifetime earnings increases, the likelihood of saving increases (Avery & Kennickell, 1991;Chang, 1994;Henager & Mauldin, 2015;Rha et al, 2006;Yuh & Hanna, 2010). A similar relationship exists between household wealth and saving (Avery & Kennickell, 1991;Gutter et al, 2012;Mauldin et al, 2016;Yuh & Hanna, 2010). Homeowners were more likely to save than renters were (Fisher & Montalto, 2010;Rha et al, 2006;Yuh & Hanna, 2010).…”

“…On the other hand, some studies have found no relationship between financial knowledge and behavior or a limited effect of financial knowledge on saving behavior (Heckman & Hanna, 2015;Hilgert et al, 2003;Mandell & Klein, 2009;Mauldin et al, 2016). Heckman and Hanna (2015) studied factors related to low-income households' saving behavior and found that a higher level of financial literacy was not significantly associated with the likelihood of saving.…”

“…Heckman and Hanna (2015) studied factors related to low-income households' saving behavior and found that a higher level of financial literacy was not significantly associated with the likelihood of saving. Mauldin et al (2016) investigated barriers and facilitators to saving behavior in low-to moderate-income households and found that households' financial knowledge scores were not significantly associated with saving behavior. Mandell and Klein (2009) studied the influence of financial literacy education on 79 high school students' financial behaviors and found that those who took a course in personal financial management were not more financially literate than those who had not taken a course.…”

Coping with Economic Stress: A Test of Deterioration and Stress-Suppressing Models

“…Previous studies have found savings to primarily be a function of income, wealth, and education (Turnham, 2010;Mauldin, Henager, Bowen, & Cheang, 2016). Latinos in this sample had lower levels of education and income, as well as a larger household size and number of children compared to white and black respondents.…”

Effects of financial education on sound personal finance in Korea: Conceptualization of mediation effects of financial literacy across income classes

“…Thus, policymakers must consider initiatives specifically targeting low‐income consumers, besides providing financial education. Studies conducted in the United States suggest that institutional factors, such as unemployment, lack of employer‐sponsored retirement plan, lack of comfort with financial institutions, lack of access to credit, and lack of motivation due to the present‐oriented time perspective are major factors that discourage the saving behavior of low‐income consumers, rather than a gap in financial knowledge (Heckman & Hanna, ; Mauldin, Henager, Bowen, & Cheang, ; Payne, ; Zimbardo & Boyd, ). To establish a new policy direction, future research comparing the impacts of financial literacy with institutional variables would be essential.…”