Too Poor to Save?
Tuesday, January 31, 2006
Stuart Rutherford reveals the results of the Financial Diaries project and his experiences in the field.
Q: Aren’t poor people too poor to save?
Stuart Rutherford: Too poor to save, too poor not to save, that?s the paradox that faces many poor and very poor people. If you?re poor, your income is not just small, it?s probably irregular and unreliable as well. Most of it is quickly spent on essentials. The result is that when you need to buy anything other than essentials (and sometimes even essentials), you just don?t have the cash to do so. If you can’t buy a course of antibiotics or clothes from current income, you must find a way to buy it from past income or future income ? that means using financial services and devices. The best way to access past income is withdrawing savings; and the best way of accessing future income is by taking a loan ? and loans are nothing more than advances against future savings.?
To read the rest of the interview click here.