Risk Tolerance and Goals-Based Savings Behavior of Households: The Role of Financial Literacy

Journal of Personal Finance, Forthcoming

28 Pages Posted: 16 Feb 2017

See all articles by Swarn Chatterjee

Swarn Chatterjee

University of Georgia

Lu Fan

University of Missouri

Ben Jacobs

University of Georgia - Department of Housing & Consumer Economics

Robin Haas

University of Georgia

Date Written: January 01, 2017

Abstract

This study uses a national dataset to examine the association among risk tolerance, financial literacy, and goals-based savings behavior of households. The results indicate that three out of five households do not have any emergency funds set aside, and about half the households have not calculated how much money they will need for retirement. However, both financial literacy and risk tolerance are associated with goals-based savings behavior, such as saving for emergencies, and planning for retirement among households. Implications for policy makers, scholars, and researchers in the area of behavioral economics and household finance are included.

Keywords: Risk tolerance, financial literacy, savings behavior, financial decision making, household finance, financial capability

JEL Classification: B21, B26, D01, D03, D04, D14, G02, H31

Suggested Citation

Chatterjee, Swarn and Fan, Lu and Jacobs, Ben and Haas, Robin, Risk Tolerance and Goals-Based Savings Behavior of Households: The Role of Financial Literacy (January 01, 2017). Journal of Personal Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2918014

Swarn Chatterjee (Contact Author)

University of Georgia ( email )

Athens, GA 30602-3622
United States

Lu Fan

University of Missouri ( email )

239 Stanley Hall
Columbia, MO Columbia 65211
United States
573-884-9188 (Phone)

HOME PAGE: http://pfp.missouri.edu

Ben Jacobs

University of Georgia - Department of Housing & Consumer Economics ( email )

Athens, GA 30602-3622
United States

Robin Haas

University of Georgia

Athens, GA 30602-6254
United States

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