Filling the Gap: Innovative and Interactive Ways to Increase the Savings of Rural Women in India

Filling the Gap: Innovative and Interactive Ways to Increase the Savings of Rural Women in India

7 July, 2020    

The gender gap in financial literacy (knowledge and capability) shows many women are not informed to make decisions on which products and services to take up as well as how to manage their long-term finances. Development experts argue that what women truly need is education and counselling on how to maximize the minimal funds they are investing and saving. At the same time, financial education is not enough if women do not have access to saving products. Experts argue that due to self-control or spousal control issues, women need specific mechanisms that help them commit to save. As liquidity is the main concern that women face, women need highly liquid savings products, at the same time, these savings products should help them commit to a savings plan. Lately, economists and researchers have experimented with commitment savings instruments beyond basic banking access, such as, a secure lockbox to store money, saving with the group, and others. We conducted an experiment in Bihar, eastern state of India, with 203 women, many of whom were a part of Self Help Groups (SHGs). We tested context-specific Financial Education (FE) to understand whether these modules help women become more aware of their savings habits. We also provided an alternate savings tool–a lock box with a key–to see if the highly flexible savings products could improve their savings capability. Findings suggest that providing a low-cost tool such as a lock box, along with the relatable FE modules, improved the savings behaviour of women. For example, savings of women in our study group increased by 42-50% within a 3-month period. A mere placement of the concept of daily savings in the minds of women brought about a shift in their perception of their own income. Placing small change in a lock box with a key provided a safe space to protect from unnecessary daily expenditure and simultaneously promoted dialogue within the household itself on future-oriented spending.

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