Savings goals and wealth allocation in household financial portfolios


Changwony FK, Campbell K & Tabner IT (2021) Savings goals and wealth allocation in household financial portfolios. Journal of Banking and Finance, 124, Art. No.: 106028.

We investigate how savings goals relate to wealth allocation and how this relationship is moderated by financial advice and numerical ability. Using panel data from a large household survey we find that as the number and the time horizon of savings goals increases, portfolios shift from safe assets to both fairly safe assets and risky assets. We also find that households with access to multiple sources of financial advice and independent financial advice hold more fairly safe and risky assets and that independent financial advice enhances the influence of savings goals on wealth allocation to fairly safe and risky assets. Overall we find that the possession of savings goals is associated with long term saving activity, and this is particularly evident for those with low levels of numerical ability. By enabling the formation of savings goals, the financial planning process can facilitate long-term investment in risky assets.

mental accounting; savings goals; wealth allocation; financial advice; numerical ability; self-control; household portfolios

Journal of Banking and Finance: Volume 124

Publication date31/03/2021
Publication date online21/12/2020
Date accepted by journal05/12/2020
PublisherElsevier BV