Savings and Investment Skills


Individuals and families that practice positive financial management behaviors to increase income, savings and assets are more likely to achieve financial stability and have good financial health.

Regularly setting aside a portion of income before paying expenses is a good financial practice (O’Neill, 2002). Research shows that financial education programs can help clients establish savings accounts and increase their savings account balances by establishing a pattern of regular saving. Investing money to earn a profit can help maximize the value of an individual or family’s earned income and help realize long-term goals including homeownership, a college education, and retirement. Building savings and assets can help low-income households avoid financial setbacks caused by emergencies or unexpected changes in income.

Programs can assess savings and investment behaviors as follows (Welch, 2010):

• Strong (saving 20 percent-plus of income)
• Stable (saving 10-19 percent of income)
• Weak (saving under 10 percent of income)

Programs should track the number and percentage of individuals/families with a checking or savings account that contains a minimum of three months of their current living expenses. Compare data annually. Client data could be collected at intake/enrollment; at 3, 6, or 12 months after point of enrollment; and at termination/exit.).

Surveys/Assessments

Sources Cited

O’Neill, B. (2002). Twelve key components of financial wellness. Journal of Family and Consumer Sciences, 94(4), 53-58.

Welch, Evan, P. Building a Personal Cash Flow Statement, Posted on May 24, 2010. Financial Planning Association, Accessed on 1/3/2014 at http://www.fpanet.org/ToolsResources/TipoftheWeek/PastTips/Other/BuildingaPersonalCashFlowStatement/

 

Additional Sources


Financial Planning Association, http://www.fpanet.org/

United Way Worldwide, http://www.unitedway.org/our-work/income/

NeighborWorks’ Success Measures Tools for Practitioners