Because many working families aren’t saving for the long term, it is widely assumed that they are not saving at all. That’s not necessarily true. Research from the US Financial Diaries project shows that many working families do save. But they save for the short term — not the long term.
Each of the U.S. Financial Diaries' Household Profiles presents the financial life of one family in the USFD study. While these families are not necessarily representative of the total sample, they illustrate recurring themes: households struggling with income volatility, unplanned expenses, and finding ways to save and invest, but also using creative–and sometimes counter intuitive–budget and money management strategies to help make ends meet...
Earlier this week, The New York Times published a feature on new initiatives aimed at bringing informal savings groups into the formal financial sector:
While informal lending circles among families, acquaintances, co-workers and neighbors are familiar to hundreds of millions of people all over the globe, they are rarely recognized by mainstream financial institutions.
Boston College's Center for Retirement Research, one of the nation’s leading center on retirement studies, recently reported on the findings of USFD's work on informal finance. CRR highlighted the various types of informal financial arrangements (money guards, savings groups, saving at home, and interpersonal loans) and dug deeper into the inner workings of savings groups in particular:
As a field researcher collecting data for the US Financial Diaries project in Cincinnati, I interviewed 30 low-income families about the details of their household finances over 16 months. One question was always in my mind: What’s the difference between their financial lives and mine? And how might this comparison help design financial products for people who are struggling to make ends meet?