Risk Tolerance and Goals-Based Savings Behavior of Households: The Role of Financial Literacy
Journal of Personal Finance, Forthcoming
28 Pages Posted: 16 Feb 2017
Date Written: January 01, 2017
This study uses a national dataset to examine the association among risk tolerance, financial literacy, and goals-based savings behavior of households. The results indicate that three out of five households do not have any emergency funds set aside, and about half the households have not calculated how much money they will need for retirement. However, both financial literacy and risk tolerance are associated with goals-based savings behavior, such as saving for emergencies, and planning for retirement among households. Implications for policy makers, scholars, and researchers in the area of behavioral economics and household finance are included.
Keywords: Risk tolerance, financial literacy, savings behavior, financial decision making, household finance, financial capability
JEL Classification: B21, B26, D01, D03, D04, D14, G02, H31
Suggested Citation: Suggested Citation