Relationship of Saving Motives to Saving Habits
17 Pages Posted: 22 Feb 2013
This study examines how saving motives are related to saving habits using Katona’s (1975) psychological classification of saving, where households save regularly (discretionary), save irregularly (residual), or do not save. Of the 3,822 non-retired households in the 2007 Survey of Consumer Finances, 46% saved regularly, 32% saved irregularly, and 22% did not save. Precautionary and retirement motives increased the likelihood of saving regularly or irregularly as compared with not saving, but only the retirement motive separated the regular savers from irregular savers. A long-term planning horizon and higher income increased the propensity for regular or irregular saving as compared with not saving, and for saving regularly as compared with irregularly, while low risk tolerance had the opposite effect. Financial advisors, educators, and policymakers should facilitate short- to long-term goal seeking with frequent saving by individuals and families.
Keywords: saving habits, saving motives, Survey of Consumer Finances
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