Helping the Poor Save More

Highlighting the importance of marketing in getting poor people to save
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This paper highlights the need to develop and effectively market savings products for the poor. It documents how different marketing strategies can help microfinance clients overcome their focus on the present, and save more money for the future. The paper urges MFIs to draw on economic and psychological research in designing and marketing their savings products.

Poor people do have surplus money to save. But, saving money requires people to override a natural tendency to prioritize the present over the future. Psychologists and economists have identified four different reasons why people find it difficult to save for the future, namely, loss aversion, status quo bias, the so-called dual self, and attention constraints. The paper discusses these obstacles and suggests marketing strategies to overcome them. They include:

  • Working around people’s natural psychological tendency to shortchange the future in favor of the present;
  • Making the gains that savings accounts will bring vivid, concrete, and tangible;
  • Changing the language that employees and marketing materials use to easily and inexpensively increase clients’ savings;
  • Getting clients to make binding commitments to save;
  • Using peer savings groups.