Financial factors and saving behavior of salaried class: A case study of Rawalpindi, Pakistan

Abstract

Human economic decisions are based on their preferences and motivations, which maximize their degree of happiness and lead to a better outcome in their lives. The majority of saving decisions are made by households. Different demographic, societal, and economic factors influence these choices. This study uses primary data from 243 salaried class households to investigate the behavioral aspects that influence human decision making. The main factor that affects the decision to save money is financial hardship. Households of the salaried class experience financial stress due to impulsive behavior, consumer debt, consumer financing products, pro-consumptive behavior, family financial support, and domestic externalities. The marginal effects of the agreed upon region, or "agree" and "strongly agree," demonstrate that important factors play a role in determining financial stress. Consumer loans account for 7.5% of financial stress, family financial support for 3.8%, and domestic externalities for 4.3%. The marginal effects of the Ordinary Logit saving model in the accepted region demonstrate that consumer loans have a 3.5% impact on saving behavior, while pro-consumptive behavior has a 3.6% impact and domestic externalities have a 1.9% impact. The consumer loan, pro consumptive behavior, and domestic externalities all have a negative effect on the saving behavior of the salaried class, according to the saving OLOGIT model. Government should give pro saving households special incentives. Government can help consumers by providing expensive goods with 0% interest in the event of hire purchasing.