Saving For Sooner: How and Why Short-Term Savings Matter

Because many working families aren’t saving for the long term, it is widely assumed that they are not saving at all. That’s not necessarily true.
Research from the US Financial Diaries project shows that many working families do save. But they save for the short term — not the long term.

Take for example, Brandi and Frank.

By observing household finances over long periods of time and at frequent intervals, the US Financial Diaries gained unique insight into household money management. Click here to learn more.

But Brandi and Frank don’t actually earn $3,000 each month. Like many working families, Brandi and Frank do not have predictable monthly incomes.

Click here for details on income volatility in the USFD sample.

Brandi and Frank can’t predict their monthly income, so budgeting and saving for the long-term isn’t easy. But that doesn’t mean they aren’t saving.

For more on how families use informal financial tools to meet their needs, click here. To see how families use income tax witholding as a savings vehicle, click here.

So even though they are saving, Brandi and Frank’s end-of-year balances are very low. Total flows into savings accounts for USFD households were four times larger than end-of-year balances.

The U.S. Financial Diaries Project collected detailed cash flow and financial data from more than 200 families over the course of a year. The data provide an unprecedented look at how low- and moderate-income families — in four regions and 10 distinct demographic profiles — manage their financial lives. USFD was designed and implemented by Jonathan Morduch of NYU Wagner’s Financial Access Initiative, Rachel Schneider of the Center for Financial Services Innovation, and Daryl Collins of Bankable Frontier Associates. Morduch and Schneider are the Principal Investigators for the ongoing analysis of the data. USFD received leadership support from the Ford Foundation and Citi Foundation, with additional support and guidance from the Omidyar Network. For more information, please visit