The Effect of Family Life Cycle and Financial Management Practices on Household Saving Patterns

Using the 1995 Survey of Consumer Finances, this study investigates how family life-cycle stages and financial management practices affect household saving. First findings are that household income and householders education, race and ethnicity have significant effects on saving. Second, regarding the effect of the family life-cycle stages, younger married couples without children, middle pre-retired households without dependent children, and older households without dependent children are more likely to save than other similar households in the life-cycle stage of younger single households. Third, households with longer financial planning horizons, saving goals for retirement, purchase of durable goods and emergency goods, and low credit card debt are more likely to save. Based on the results, implications for financial management education and public policy are suggested.