Rachel Strohm

There’s been a seeming lot of discussion lately about the non-traditional savings habits of the poor, what with Portfolios of the Poor coming out, and I recently saw another interesting document on product-specific savings plans in India.  Women (usually) may sign up with a store to save towards the purchase of a specific product, and may be rewarded with an extra several percentage discount at the end – the original installment plan (although they don’t get to take the product home first!).  The shortcomings of this plan are that the money is non-fungible (i.e. can’t be later withdrawn to pay for a different product), and that there’s no guarantee that the price of the product won’t rise over the course of the saving period, forcing the client to save more than originally expected.  However, a number of clients also identified the social pressure to complete their savings and make the purchase as a valuable incentive to continue saving, which they wouldn’t have had with a formal savings account.  This echoes the findings of other studies of non-monetary rewards for savings, and could be an interesting concept around which to design new savings schemes.