Factors Affecting Savings for Low-Income Households in the Northern States of Malaysia

Abstract

Low-income households are those with lower incomes than most households in the region. In Malaysia, a low-income household earns less than RM 4,500 per month. Savings issues for low-income households are rarely discussed. This is because, logically, how can these low-income households save when their money is barely enough to cover their basic needs? Nonetheless, despite limited research, there is evidence that low-income households save. This study aims to identify the type of savings of low-income households. According to this study, low-income households do save. The methodology used in this study is multinomial logistic regression. The result of the study shows that strata, household size, number of income earners, the ability of households to save, and perception of households in access to higher education are the factors influencing low-income households’ savings. This study implies that low-income households face numerous obstacles that make saving difficult, including low-income levels, limited access to financial products and services, and a lack of financial literac