You don’t have to be rich to save money: On the relationship between objective versus subjective financial situation and having savings

Saving is an important financial behavior that provides an individual with psychological security and boosts his/her overall sense of well-being. For this reason, scientists and practitioners have attempted to understand why some people save when others do not. One of the most common explanations for this phenomenon is that those individuals who earn more should be more willing to save their money. In line with this logic, people who have more money should be more likely to have savings. Considering the results of prior research, we expected objective financial situation (income) to be positively linked to having savings (i.e., propensity to have savings and the exact amount of savings). At the same time, however, we assumed that subjective financial situation (perception) should also be positively related to these variables. To test our assumptions, we conducted a nationwide representative survey (N = 1048) among Polish respondents, asking them about their objective and subjective financial situation. The results of a regression analysis showed that objective financial situation was indeed significantly positively related to having savings. However, subjective financial situation was also positively correlated with having savings (even when we controlled for objective financial situation and demographic variables). We discuss the implications of the links between objective versus subjective financial situations and having savings.