FAI's Jonathan Morduch on "The Hidden Tragedy of the Poor"

Recently Upsides sat down with FAI’s Jonathan Morduch to discuss his views on the current state of microfinance and his current project – US Financial Diaries.  Morduch highlights that whether in the developing world or the US, the poor face many of the same financial struggles, which is why understanding money management strategies at the household level a crucial step to providing more effective financial services to the poor:

A person like myself tends to have a much more regular income pattern than a typical poor person. That makes it easier for me to plan ahead. My insurance, my rent and other expenses are automatically transferred from my account, I can’t even forget to pay them. As a result I never see most of my money. The poor don’t have that advantage. They get all their money in cash and then they have to make complicated financial decisions. Which they do on a regular basis. Our research shows that the poor use a lot of financial instruments to cope – formal, informal, sometimes microcredit. In this sense, they have a surprisingly rich financial life. But the instruments are not always very reliable or flexible. It’s the hidden tragedy of the poor that they lack the right instruments to make the most of what little money they have.

To read the full article, click here.