Research & Analysis

How the Poor Manage Their Money

Like everyone, poor people want financial predictability. They want more regular income and more predictable expenses. But it is a struggle when you are poor, and not just because your income is low. Income is never guaranteed, and health, weather, crop, and other risks can easily overwhelm your means.

So how do people cope? How are they able to invest in growing their income while also creating some stability? Poor people seem to rely heavily on rules of thumb, conventional wisdoms, and habitual practices to manage their money. In the context of decision fatigue, relying on rules of thumb makes sense and can produce more discipline. These behaviors, more than deliberate, seem to be automated decision-making.

This brochure highlights four money management practices of low-income people - and why it matters to financial service providers.

Related Resources


In this animated video, CGAP explores 4 rules of thumb poor people use to manage their money.