Accelerating Savings among Low-Income Households

The conversation around low-income savings habits is historically inspired by the developments in the field of asset building, where existence of long-term assets is believed to lead to changed behavior. In this context, saving, while it is generally viewed as an important vehicle that makes accumulation of financial wealth possible, is treated mostly as a transitory component in a household’s asset-building process. In other words, in the asset-building discourse, savings is a repository of financial resources. When savings reach a critical level, they are used to leverage other forms of assets, because such assets usually offer higher long-term returns and contribute to overall financial well-being more effectively than does cash in a bank account. This view characterizes the resource-oriented approach to saving.