Portfolio of Poor

Topics: Household income in the United States, Cash flow, Money Pages: 2 (523 words) Published: February 18, 2013
Portfolio of the poor
1.1.1The most basic objective
The most basic objective for households of the poor is to make sure that there’s food on the table every day, and not just on days when income flows in. And when it comes to managing money, they put a premium on the flexibility and convenience of their financial tools, even though those tools were not always reliable. Diary households in both the urban and rural areas of all three countries are often characterized by frequent small-scale transactions. The primary goal is managing cash flow. Richer people’s objectives, like maximizing the returns on assets or minimizing the cost of debt are secondary. 1.2Triple whammy

Multiple occupations lead to low incomes, patched from uncertain parts, result in a “triple whammy of income. Triple whammy means incomes are not just small but irregular, and that have to be managed with financial instruments that do not always fit the household’s cash-flow patterns. 1.2.1Small balance, large cash flow

The diary households have relatively few financial assets. Even adjusting for differences in purchasing power in different countries, these assets are not large, and might lead us to assume that they could sustain little financial activity. The balance could tell us little story about what happened in the last year. However, the story was revealed when we look at cash flows rather than balance sheet. The level of financial cash flow , called “cash flow intensity of income” is high in diary households. This attests to our general notion that lower incomes require more rather than less active financial management. 1.2.2Multiple and Uncertain Occupations

Jobs that appear permanent may turn out not to be. These permanent jobs provide only part of the total household income, the rest coming from self-employment, casual employment, or petty businesses. The social welfare pays out monthly grant. The monthly payments certainly make income more regular, but households are left...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Investment & portfolio management Essay
  • Essay on Portfolios of the Poor: How the World’s Poor Live on $2 a Day
  • Portfolio Essay
  • Portfolio Essay
  • Portfolio Essay
  • Essay on portfolio
  • Portfolio Essay
  • Portfolio Essay

Become a StudyMode Member

Sign Up - It's Free