Saving in lower-income households: an evidence review for the Financial Inclusion Taskforce

Authors: Professor Elaine Kempson, Andrea Finney
Funded by: Financial Inclusion Taskforce
Published by: HM Treasury
Publication date: June 2009

In 2008, the HM Treasury Financial Inclusion Taskforce was re-appointed for a second three-year period and its terms of reference were extended to cover savings. Formally, its role is 'to monitor and influence progress towards the Government's goal that people should be able to plan for the future and cope with financial pressure'. Within this the Taskforce also advises 'on access to saving opportunities for those on low incomes, including the Saving Gateway and demand-side initiatives – OFT's "Save Xmas" and DWP's "now let's talk money" campaign'.

In order to inform this strand of the Financial Inclusion Taskforce's role, this study was commissioned to improve our understanding of the barriers to saving in lower-income households. The aims of the research were to:

• identify the key 'supply-side' barriers to saving and assess their relative importance in preventing low-income households saving in regulated products;
• identify the key 'demand-side' factors that limit saving in general and the use of formal savings products in particular;
• assess the relative importance of supply and demand-side barriers and their inter-relationships;
• describe the nature and characteristics of key sub-groups identified in the literature as having distinct attitudes and behaviours towards saving and understand how the key supply-side barriers might differentially impact on these subgroups;
• identify any supply-side responses (including products and marketing strategies in both regulated and unregulated markets) to the specific barriers and/or sub-groups for which there is promising evidence of take-up, and
• help the Taskforce identify priority knowledge gaps in the savings research literature.

The study was carried out in two phases:

1. A scoping exercise reviewing the extent and nature of the existing body of literature on saving among people on lower incomes.
2. A full critical analysis of the studies identified during the scoping exercise. This included a critique of the findings of the research, including the robustness of the methods used and conclusions drawn. New analysis of survey data and qualitative interviews from the Baseline Survey of Saving for and by Children and the first pilot of the Saving Gateway was also undertaken.

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Saving in lower-income households: a review of the evidence  [ Full report (PDF, 1,340kB) | Research summary (PDF, 330kB) ]

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