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New report solves the savings puzzle for low-income households

Published: 22 Mar 2017


A new report published today by the Financial Health Exchange, within Toynbee Hall, supported by J.P. Morgan, finds that informal savings techniques help low income households to be financially resilient.

Savings for the Future; Solving the savings puzzle for low-income households, finds evidence for a variety of personal motivations that help low income households to put away small amounts of money, including for rewards like family treats and holidays. Also for less obvious reasons such as having pride in being able to have a savings fund at all, particularly for people who have not always been able to save.

This research helps to dispel the myth that low income households do not have savings methods or personal techniques for financial resilience, but find that these methods are often overpowered by other external pressures like low wages or the rising cost of living.

The research shows that there are six types of saver:

  • The Spend-Saver: Saving through careful spending
  • The reward-treat saver: Short term savers who hold money back to spend on a treat.
  • Safety net saver: Short-medium term savers who are saving to avoid unexpected expenses
  • Life goal saver: Savers, medium to long term, whose goal is a stress-free pension age, or big purchases like a house or car.
  • ‘Saving just to save’ saver: Savers who are simply rewarded and proud to be able to save, typically those who have previously found it difficult to save money.
  • Passive saver: Those people – rare among low income households – who have savings but are not actively taking steps to save money. This can often be where an income more than meets the needs of an individual’s expenditure, or after a windfall like a lottery win.

This report has created a brand new typology of low income savers, calls for the development of new partnerships between debt advice agencies, financial service providers and FinTech start-ups, and the design of a brand new financial support programme

This report clearly shows the importance of even small amounts of cash savings to people on low incomes. Our own research has shown that millions across the UK lack a sufficient savings buffer to protect them from financial shocks – a total of 16.8 million working-age adults have less than £100 in savings accounts. We also know that successful saving is all about finding the right approach for you.

Toynbee Hall’s report shows the variety of savings goals and behaviours that exist across the income spectrum. This research highlights the need to open up a variety of options to allow people to save, particularly for those on low incomes, in ways that work for them.”

Jake Eliot, Senior Policy Manager at the Money Advice Service


Informal savings techniques do not show up on official statistics, and very often go hidden. Many low income households don’t even recognise their methods as ‘savings’ per se, more like money they are just not spending or putting aside for a rainy day.

When we spoke to people about their methods, we found that making informal savings made people think about how far they could make their money go, even if they were struggling. It also allowed them to prepare for unforeseen events and expenses."

Carl Packman, Toynbee Hall’s Research and Good Practice Manager and the author of the report

You can read this report in full here