Holding a savings vehicle with mainstream financial institutions carries several benefits including asset building opportunities, secure storage of income, a cushion against unforeseen financial events and the ability to establish or maintain a positive credit history. To better understand the demand for savings products among low- and moderate-income (LMI) people, the Federal Reserve Bank of Chicago sponsored a series of savings behavior questions in the 2001-2002 Metro Chicago Information Center’s annual household survey. Our findings offer evidence that lower-resource consumers accumulate savings, identify specific savings goals and add to their savings on a regular basis. As such, they demonstrate demand for savings products. We also observe that relative to moderate-income respondents, the lowest-income respondents are less likely to hold savings accounts and to identify a savings goal.

The Second Annual Illinois Asset-Building Conference sponsored by the Federal Reserve Bank of Chicago and the Sargent Shriver National Center on Poverty Law (NCPL) was held on September 25 and 26, 2003. Approximately 100 individuals from various financial institutions, non-profit organizations, community groups, local and state policymakers, and institutions of higher learning attended the conference. Dory Rand, supervising attorney for community investment at Chicago-based NCPL, and coordinator of the statewide Financial Links for Low- Income People coalition, moderated the conference.

This article is one in a series of PNV articles regarding a portfolio of applied research projects pertaining to financial training. The ultimate goal of these projects is to develop an approach to financial education that will better inform consumers and lead to measurable changes in personal and household financial management. The research portfolio’s focus is on designing new approaches that move beyond traditional financial literacy training, drawing on the fields of cognitive psychology, anthropology and behavioral economics. This article provides background on the financial literacy field, along with a discussion of the role of expanded knowledge in changing behavior.

The Earned Income Tax Credit (EITC) continues to be a controversial public benefit tool. The EITC was last highlighted in the Profitwise Winter 2003 edition, available at: