Empirical studies on household savings typically use a dichotomous variable to measure saving, i.e. savers vs non-savers. Using the 2019 SCF, we were interested in examining the nuances between households who spend equal to, more or less than, their income, i.e., households who are living within their means, vis-à-vis households who are living beyond or below their means. We investigated the relationships between perceived expected longevity, financial literacy, psychological factors, and household savings using multinomial regression analysis and found that Hispanic (42%) households represented the highest proportion of non-low income households who reported living within their means. Among low-income households, it was the Asian or other (65%) households. Self-control and perceived expected longevity were found to be significant predictors in all three categories. Households who reported self-control were 40% more likely to report household savings among households who spend equal to, compared to spend more than their income.  Households who answered the objective financial knowledge question correctly were also 40% more likely to report household savings when comparing households who are living within their means than those living above their means. These findings have important consequences for household savings among low income families who are currently living within their means.

Accepted Oral Presentation