Forex

Putting together the money for everything from a short-term emergency to retirement is hard enough, a challenge that low- and moderate-income families endure every day. Yet as HBS professor Peter Tufano describes, new and old products targeted at people who haven't saved in the past and who don't have much money to begin with can make savings more feasible or more fun, or both.

Given the diversity of financial conditions, social settings, and personal circumstances of families, and against the backdrop of consumerism in the United States, there is no one-size-fits-all savings solution to support every low- to moderate-income family, says Tufano. Beyond valuable programs like Social Security, tax breaks for savers, or auto-enrollment initiatives, there are more innovative and exciting projects: Prize-linked savings accounts like the United Kingdom's Premium Bond program, for example, award prizes as part of the savings product's return. Rotating Savings and Credit Associations, known as ROSCAs, draw impetus from the spirit of communities and social networks.

The varied solutions that Tufano and colleagues have set out in a stream of coauthored papers alter the conditions that make savings difficult by changing the savings decision-making process, the time and place for savings, or the cost-benefit of savings itself. Such ideas could help low- to moderate-income households, and anyone else, build assets and put aside more money for their needs and desires.