BACKGROUND
Money is equally
important to those who have it and those who don’t. It is comparatively easier
to manage money well having more and difficult having less. The second one goes
on behalf of the urban poor. The financial resource transacted by the urban
poor depends on their owned assets (either inherited or self developed), their
economic activities and more specifically the economic activities of the city
they live. If the activities perform well then the poor can also run their
livelihood well.
In the 20th
centaury due to the rapid urbanization resulted migration has increased the
number of urban poor in cities. By migrating in the urban areas/cities their
livelihood has changed/improved very less. With the government, bilaterally a
lot of foreign aid organization or microfinance organizations are working to
improve the practical life of these poor people and to some extent they have
succeeded. But most of the cases they work as a provider rather than
facilitator and don’t wishes to take accountability after the completion of the
project. As a facilitator it is important to identify the money management
behavior pattern of the urban poor. As well management can ensure the better
quality of life. And urban development is also committed to ensure the better
quality of life. But only the adequate income can not ensure the better quality
of life. Concerning issue is the real income of the poor people. With the
natural rate of inflation the wage rate has also increased but is this
increasing wage rate has increased their quality of life. Quality of life is
more specifically dependent on how they spend their money, in what way, their
behavior pattern and finally the implications of real income to livelihood. In
this respect to run their life soundly they should need another financial
services and the best use of these services. With less income by managing the
cash amount in the desired way it is possible to run the better quality of life.
For this reason the money management behavior pattern of the poor people is an
important thing. It is also important to know the relationship between the
economic, social, psychological life and the way of money transaction by the
urban poor and their level of poverty.
Very simply
urban poor are clearly defined by those who have less income, less money, and
an undesirable shelter to reside in an urban area than the better off people.
But the level of poverty is not the same; it varies time to time, locality to
locality and the range of owned assets. There is a common behavior of human
being to save the cash amount whatever left after meeting the necessaries. By
directing this behavior with so many difficulties the poor wishes to save some
desirable amounts of money. To some extent they can and do save a desirable
amount and they have to search other sources beyond income to do this type of
transaction. In this eve managing money well begins with hanging on to what one
have and choice to save rather than consume is the foundation of money
management.
Actually the
Money Management transactions deals various ways in which the households cash
flow manipulates ----- how and where and in what amount and for how long money
was saved or otherwise stored, how and where loans are obtained and repaid and
how debts are deferred along with details of all the institutions and people
and devices involved and accompanied by a running commentary on exactly why the
various members of the households got involved in these transactions and what
they felt about them. (Stuart Rutherford -2002).
Money Management
by the poor people runs into three steps--life-cycle
needs, emergencies (personal & impersonal) and opportunities need. Poor
people run into problems with money management at this very first hurdle. These
are elaborated below:
Life-cycle needs: The needs which occur time to time in ones life-cycle events for which
the poor has to build a desirable amount. Such as dowry system of a marrying
daughter, the need occurs in case of education, child birth, home building,
widowhood, old-age demands, Eid, Christmass, Dewali etc.
Emergencies need: The needs which create in a sudden. These may be personal (sickness or
injury, death of a bread winner, theft, loss of employment, etc.) and
impersonal (war, flood, fire, cyclone, bulldozing of homes, etc.).
Opportunities need: This type of need create to catch opportunities on a sudden. Such as
bribe to get a government job, to expand existing business or to start a new
business, to buy land or other productive assets.
This research
paper is supposed to identify the ways of the money transaction in which the households’
cash flow manipulates. This will draw a conclusion on the affordability pattern
of the urban poor in context of their surrounding economy. Every man is directed by his psychological behavior. Considering
this motto this research paper will investigate the influence of behavior
pattern (influenced by the human psychology) to their real life index and the transition
of money in their daily life.
For this money
management behavior pattern is an important phenomenon for the urban poor as
the practical life will not be improved without the proper use of it.
Statement of the problem:
OBJECTIVES:
- To study the urban livelihood with special reference
to employment and income.
- To identify the ways of money management by the urban
poor and its impact on quality of life.
- To observe the
relationship between the real –life financial preferences and the behavior
of poor people in its economic, social and psychological context.
RESEARCH DESIGN (Methodology)
The first stage
of the research is to focus on the casual relationships between the financial
sector and the real life index of the urban poor. For this reason some related
questions have raised to fulfill the above objectives. These are given below:
Research question:
Satisfying objective-1:
Who are urban poor?
What are their income sources?
What are their expenditure patterns?
Do they engage only one type of work through out
the year?
If not, what other sources of work accessible to
them?
What is the economic activity played into their
catchments area? (Observatory by the researcher).
Is city
economy runs profoundly? (Observatory by the researcher).
Is this has any impact of the income/life style
of the poor people?
(Observatory/questionnaire survey by the
researcher).
What type of assets they own?
Are these inherited by or self developed?
What is their land ownership pattern?
Do all family members engaged in earning?
What is the role played by the female members in
household income?
Do they participate in (CBO) Community Based
Organization?
Do they have any particular vision in future?
If yes, what are they doing to bring it true?
Do they save money in any extent?
If yes, what type of savings and where?
Do they send their children into school?
Did they paid or taken dowry in case of their
female members marriage at any time?
If yes, how they manage this sort of money?
Is this gaining or losing of money changed their
flow of life to any extent?
Are they getting on their life whatever they
earn?
If not, what they do in this situation?
Research question satisfying objective-2:
Do the poor households take help from others?
If yes, then from whom?
Do the poor households participate in
microfinance practices?
Do they take help of financial services from the
microfinance industry or other sources?
Whom they go first in case of emergencies?
Why and how do poor households use financial
services and devices?
How do financial services and devices help poor
households manage their finances?
What is the range of financial services and
devices used by the poor households?
How and why do different households vary in
their use of financial services and devices? Does access to financial services and devices
vary with the degree of poverty of the households?
What is the role played by the financial service
providers in context of money management by the urban poor?
Are the households living hand to mouth?
Do they spend their immediate cash as soon as it
comes in?
How household spends their money at the marginal
point?
Do they sell their household assets to get any
new asset/facility?
Is any of the household members addicted/practice
bad habits now or any time in the past?
If yes, what type of habits they practiced?
Do they expend a great part of their income in
this field?
What’s the condition of the interpersonal
relationship within the household members? (Observatory by the researcher).
What is the social status of the household in
the community?
Do all the relatives live in cluster?
Do they practice social cultures?
Do the households response in their neighbors’
emergencies?
How do they behave with their money in case of
claiming it by the relatives or importunate neighbors?
Do the household head have any impact of the community
they live?
What type of recreation they get or wish to get?
In case of diseases where do they go first?
Do they pay extra money to any muscle man in the
community?
Research question satisfying objective: 3 = (question of objective1+ question
of objective2)
Type of research:
From the research
questions we can conclude that the research work will follow both deductive and inductive type of research. As we find out the answer of some
questions and examine existing situation then providing the concluding remarks,
which will satisfies the required type of research work.
Table-1: Unit of investigation:
|
Objectives
|
Type of
investigation
|
Thematic focus
|
|
1. To study the urban livelihood with special reference to
employment and income.
|
Analysis of
financial diaries, snapshot studies, focus group discussion.
|
Employment pattern, Income, daily necessary expenditures,
savings, type of financial services
used etc.
|
|
2. To identify the ways of money
management by the urban poor and its impact on quality of life.
|
Analysis of financial diaries, snapshot studies, focus
group discussion, institutional studies.
|
Priority of needs in daily life, life-cycle needs,
emergencies and opportunities need.
|
|
3. To observe the relationship between the real –life
financial preferences and the behavior of poor people in its economic, social
and psychological context.
|
Analysis of financial diaries, focus group discussion.
|
Level of poverty, behavior pattern.
Economic status, psychological behavior.
|
To carry out of the
above fact the core issue is the research design. The respective work of the research
is given below:
- Conceptual framework
- Theoretical framework
- Data collection procedure
- Analytical framework
Data collection procedure:
In this stage information
will be collected from the study area.
Most of the information will be collected as primary data by the
conversation with selected households following a set of financial diaries. Financial
diaries are open ended procedure of having a feature of respective households’
particular information.
Sampling technique:
At the very
first stage a reconnaissance survey will be conducted to gather preliminary
idea of the study area (Sonadanga slum) purposing the identification of the type
of socio-economic group. The stratified proportionate
random sampling techniques (the population will be divided in to subgroups-called
strata, then a sample will be selected from each group) will be applied to
select the sample households those who are ready to incorporate with the study
by providing information in time to time. In this research work the study area
(Sonadanga slum) will be divided into three subgroups based on the
socio-economic category.
Table-2: showing
the sampling distribution of the study area
|
Strata
|
HH
|
Percent
of total (%)
|
Number
sampled
|
|
Horizon colony
|
110
|
25
|
6
|
|
KCC 4th class employee
group
|
90
|
20
|
5
|
|
Mixed group
|
240
|
54
|
13
|
|
Total
|
440
|
100
|
25
|
Source:
Urban development project-2005
5% of the total
HH will be surveyed as more emphasis will be given on the qualitative portion
of the research. There are 25(6-from Horizon sweeper colony + 5-from C 4th
class employee group working in KCC + 13-from the other major group in mixed
category) households will be selected as sample to carry out this qualitative
type of research work.
Data collection procedure is divided into three parts.
- Financial
diaries
- Snapshoot
study
- Institutional studies
Financial diaries (primary data
collection): This is the set of
innovative questionnaires which will record the money management behavior of
the respective (25 sample HH) households. Each households will visited twice
monthly within a two months period of time and recorded each money management
transaction along with its value, the type of financial service or device that
was used, and the reasons for the transaction.
These
financial diaries will provide the scope of the justification of the real
information than information collected in the conventional way.
Snapshot studies: This includes site mapping,
wealth-ranking, focus-groups and interviews and triangulation with key
informants. The snapshot studies complemented the financial diaries by
rendering a comprehensive account of all the micro-financial activities of all
the households at one point in time. This will provided additional primary data
and allowed to form individual diaries to be seen in the broader context of a
community.
Institutional studies (secondary data
collection): This method includes
interviews with founders, owners, staff and clients and non-clients of the
institutions providing financial or other services to the community people, collection
of secondary data, literature reviews, and meetings with key informants.
Finalizing of the collected data:
At this stage the
collected information (financial diaries) will be analyze mathematically by
using SPSS(cross tabulation), MS EXCEL to identify the frequency of using
financial services, type of services, the distribution of income-expenditure
pattern etc.
Analytical Framework
LITERATURE REVIEW
LITERATURE REVIEW
Money management
behavior pattern of urban poor
It is important to build related
concepts to carry out the research work. For this purpose to conduct this
research work a lot of theoretical and technical help will be taken from the
various studies done previous time in this field. The related concepts are
given below:
Money management
“Management
(third edition)” by Richard L. Daft, Dryden Press, 1993, - provides some
management theory. These are given below:
Contingency
Theory:
Basically,
contingency theory asserts that when
managers make a decision, they must take into account all aspects of the
current situation and act on those aspects that are key to the situation at
hand. Basically, it’s the approach that “it depends.” For example, the
continuing effort to identify the best leadership or management style might now
conclude that the best style depends on the situation. If one is leading troops
in the Persian Gulf , an autocratic style is
probably best (of course, many might argue here, too). If one is leading a
hospital or university, a more participative and facilitative leadership style
is probably best.
Systems
Theory:
Systems
theory has had a significant effect on management science and understanding
organizations. First, let’s look at “what is a system?” A system is a
collection of part unified to accomplish an overall goal. If one part of the
system is removed, the nature of the system is changed as well. For example, a
pile of sand is not a system. If one removes a sand particle, you’ve still got
a pile of sand. However, a functioning car is a system. Remove the carburetor
and you’ve no longer got a working car. A system can be looked at as having
inputs, processes, outputs and outcomes. Systems share feedback among each of
these four aspects of the systems.
According to Stuart Rutherford (1999) in his research paper, “The Poor and
Their Money” shows how poor people in developing countries
manage their money. It describes how they handle their savings, from keeping
bank notes under the floorboards to running sophisticated savings and loan
clubs. It illustrates the variety of moneylenders and deposit collectors who
serve the poor, including the new breed of ‘microfinance institutions’ (MFIs) -
semi-formal or formal banks that specialize in working with poor clients
In short, the
essay is about how a better understanding of financial services for the poor can
lead to better provision of such services.
The author shows that poor people can save and want to save, and
when they do not save it is because of lack of opportunity
rather than lack of capacity. During their lives there are many occasions when
they need sums of cash greater than they have to hand,
and the only reliable way of getting hold of such sums is
by finding some way to build them from their savings. They need these lump sums
to meet life- cycle needs, to cope with emergencies,
and to grasp opportunities to acquire assets or develop businesses.
According to Imran Matin, David Hulme and
Stuart Rutherford (1999), in their working paper, “Financial Services for the Poor and
Poorest” shows that financial services for the poor are
essentially a matter of helping the poor turn their
savings into sums large enough to satisfy a wide range of
business, consumption, personal, social and asset-building needs. The range of
such ‘swaps’ needs to be wide enough to cater for
short, medium and long-term needs, and they need to be delivered in ways which
are convenient, appropriate, safe and affordable. Providing
poor people with effective financial services helps them deal with
vulnerability and can thereby help reduce poverty
However, the relationship is driven by complex livelihood
imperatives and is not simple.
According to Stuart Rutherford (2002) in his research paper “conversation
with poor households about managing money” said that, management
transactions deals various ways in which the households cash flow manipulates
----- how and where and in what amount and for how long money was saved or
otherwise stored, how and where loans are obtained and repaid and how debts are
deferred along with details of all the institutions and people and devices
involved and accompanied by a running commentary on exactly why the various
members of the households got involved in these transactions and what they felt
about them.
He also said that, Money
management is a necessary evil that causes considerable stress and absorbs much
time and energy.
So we can see that the money
management analysis of urban poor will give us the impression of their life
style, how they are getting on with the existing country situation (in economic
and social context). This analysis will draw a picture of the real life
financial index of the urban poor.
According to John P. Caskey
(2002), in his book “Bringing Unbanked Households into the Banking System” the author said that, banks can
use to help “unbanked” households – those who do not
have accounts at deposit institutions - to join the mainstream financial
system. The primary purpose of the strategy is to help
these households build savings and improve their credit- risk profiles in order to lower their cost of payment services,
eliminate a common source of personal stress, and gain
access to lower-cost sources of credit. The strategy calls on participating
banks to open special branch offices, called "outlets," that are
conveniently located for lower-income households. In
addition to traditional consumer banking products, the outlets should offer
five non-traditional services. From the above book we can build our concept how
to finance the poor people or bring them in the adaptation of the moderate
money management system.
According to Professor David Hulme, in his
book (2002) “Impact Assessment Methodologies for Microfinance: Theory,
Experience and Better Practice” the author said that, Microfinance programs
and institutions are increasingly important in development strategies but
knowledge about their impacts is partial and contested. This paper reviews the methodological options
for the impact assessment (IA) of microfinance.
Following a discussion of the varying objectives of IA it examines the
choice of conceptual frameworks and presents three paradigms of impact
assessment: the scientific method, the humanities tradition and participatory
learning and action (PLA). Key issues
and lessons in the practice of microfinance IAs are then explored and it is
argued that the central issue in IA design is how to combine different
methodological approaches so that a ‘fit’ is achieved between IA objectives,
program context and the constraints of IA costs, human resources and timing. The conclusion argues for a greater focus on
internal impact monitoring by microfinance institutions.
According to Stuart Rutherford Speaking notes - Fin Mark
Forum (2004), the author said that, – the
services and devices run for or by poor
people that still dominate the world of money-management for the poor. To this day many more poor people save and borrow
through informal systems than through
MFIs or banks. Deposit collection services, urban moneylenders and all these depend
on frequent local reliable collection as their key mechanism. The basic job of
all three is to bundle a series of small savings into a single usefully large
lump sum. The deposit collection example shows, in the negative interest rate
on their savings that users gladly accept, that poor people value the
collection service: without it, many slum-dwelling India women would not be able to ensure
that the school fees get paid on time. Note that when these devices are used in
repeated cycles, as they often are, the distinction between saving up and borrowing
(‘saving down’ as I call it) virtually disappears: the user simply gets into a
rhythm of frequent small payins matched by occasional bigger pay-outs.
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