Financial instruments of the poor: Initial findings from the financial diaries study

Abstract

A new data set called the Financial Diaries has been produced, based on a sample of 166 households, drawn from three different areas (Langa, Lugangeni and Diepsloot), from a range of dwelling types and wealth categories. A unique methodology was used to create a year-long daily data set of every income, expense and financial transaction used by these households. Within this sample, households used, on average, 17 different financial instruments over the course of the study year. A composite household portfolio, based on all 166 households, has an average of 4 savings instruments, 2 insurance instruments and 11 credit instruments. Of these financial instruments, for the same composite household portfolio, 30% are formal and 70% are informal. Interestingly, it was found that rural households use as many financial instruments as urban households.