Savings and low-income households

Author: Elaine Kempson
Funded by: Personal Investment Authority
Published by: Personal Investment Authority
Publication date: 1998

Qualitative research suggests that many of the low-income households who have no formal savings products may have had them in the past and do, in fact, save by other means. This research examined the extent and circumstances under which low-income households save; the purposes for which they save; the mechanisms (both formal and informal) they use to save; and the potential for developing formal savings products to replace some of the informal channels for saving.

Of the 126 low-income households interviewed, about one third did not save any money at all, nor did they put money aside for bills. One in six saved using formal savings products; a half used informal ones and a small number (around one in ten) used both formal and informal ways of saving.

The evidence suggests that people on low incomes:

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