Exploring the Interconnectedness of Changes in Income Level on Savings Habit : A Case of Sample Low-Income Households

Abstract

This paper is based on a primary survey that explored if changes in income have any interconnection with regular and disciplined savings behavior. A review of the existing literature on the subject enables an understanding of the definition of low-income households and the socioeconomic characteristics that decide the savings behavior of low-income households. This research also explored the common reasons for changes in income to understand the impact on the consumption-saving base of a low-income household. For the survey and primary data collection, respondents were selected from one low-GDP per capita state and one high - GDP per capita state. During the survey, the respondents from low-income households filled out a questionnaire on their socioeconomic status and financial behavior. From amongst a variety of other questions and a range of responses, they were asked if they had been regular in their habit of monthly savings. Here, the primary goal was to gauge if the respondents had understood the importance of being regular or consistent in their savings investment behavior. Having segregated the information on income and regularity of savings, a cross-tabulation and a dummy coding regression were conducted to find the magnitude, direction of the regression coefficient, and whether the coefficients’ values were significant. These tests were conducted through the SPSS software, and the findings were recorded and analyzed. Upon finding the values positive and relationship significant, it was inferred that if low-income households would observe the trends of their income falling or rising, they could be more regular in savings, even if the amount they saved was less. This research fills the gap within existing scholarship in the field that focuses on the volume or amount of savings. By highlighting the importance of consciously observing households’ income and emphasizing consistency in savings behavior, this research opens up areas of further inquiry that seek to aid public policy aimed at the target group.