Household financial strategies in Sweden: An exploratory study

Abstract

The paper presents and discusses some results from an exploratory study of Swedish households' portfolio behaviour. The results show that groups of households exhibit different patterns of financial assets and debts. These patterns have been called financial strategies. The study was based on a survey with 1,000 randomly sampled Swedish households. The response rate was 50.3%. K-means cluster analysis of 35 standardised dichotomous variables measuring different forms of savings and debts was used to examine the existence of different types of financial strategies. The strategies were labelled the residual saving strategy (45.5% of the analysed households), the contractual saving strategy (22.0%), the security saving strategy (14.0%), the risk hedging strategy (9.3%), the prudent investing strategy (3.2%) and ‘divergent’ strategies (6.0%). Among the factors differing between the different types of financial strategies were time preferences, degree of financial planning and control, interest in financial matters, activity and innovativeness, attitudes towards financial risk taking, propensity to save, life-cycle categories, financial wealth and home ownership.