New Savings from Old Innovations: Asset Building for the Less Affluent

In this paper, we review data on U.S. household savings, especially by less-affluent households, discuss theories of savings, and the impediments to savings. These impediments are a combination of factors that influence behavior by households and financial service firms. We discuss a number of innovations, largely adapted from experience with more-affluent financial service consumers, that might increase savings. These innovations either stimulate the demand for savings by providing incentives for families to save or making it easier for them to save; or they stimulate the supply of savings by making it easier or more cost effective for business organizations to serve this population.