Self-efficacy and Savings Among Middle and Low Income Households

Abstract

Based on Social Cognitive Theory, this exploratory study examined the relationship between self-efficacy and saving among a sample of middle and low income households. Logistic regression was used to test the hypothesis that higher levels of self-efficacy are associated with greater likelihood of saving when controlling for age and income levels. The results show that higher self-efficacy, older age, and middle incomes are associated with a higher likelihood of savings. When controlling for age and income, respondents with low self-efficacy were only 60% as likely to save as those with high self-efficacy scores. The results confirm that saving behavior is associated with general self-efficacy. Enhancing self-efficacy for middle and low income individuals may encourage saving. Implications of this research suggest a need for additional research to further explore this relationship and how it might be used to enhance outreach aimed at improving savings behavior.