Saving Practices of Rural Households in Ethiopia: Case of East Gojjam Zone, Amhara Regional State

Abstract

Saving is an economic practice of keeping portion of income earned today from various sources of earning for future consumptions. The main aim of this study was to assess saving practice of rural households in East Gojjam Zone, Ethiopia. Respondents were selected through two stage-sampling techniques, and 250 rural households were participated in the study. Primary data was collected from household heads by implementing household survey with in similar time interval. The collected data was analyzed using simple descriptive statistics. Findings of the study revealed that most households save their income, however, most rural households do not have long-run saving motives, and socio-cultural activities are harming the saving practices of rural households. Lack of willingness, less access to financial institutions, high income tax rate and less interest rate were not the main reasons for low household saving practices. The major reasons for not saving earnings were lack of adequate annual earnings, high living expenses and lack of good and adequate saving awareness. To improve saving practice of rural households more work should be performed on improving their saving motives, creating saving awareness, establishing accessibility to financial institutions and improve annual income of the households, and each household should overcome wasteful socio-cultural events.

Keywords: Saving practice, rural households, motives, Ethiopia