The Poor and Their Money

ISBN 978-1-85339-667-0

Stuart Rutherford with Sukhwinder Arora


About the editors

Table of contents

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The microfinance revolution is usually considered to have been led by the NGOs, donor agencies, and more recently banks who offer poor people financial services. But what can we learn from the ways that poor people already manage their money? What are the essential elements that they prize so much that they are willing to pay high interest rates to money lenders, or spend time and energy setting up elaborate savings clubs? The Poor and Their Money emphasizes the pivotal role of savings in the lives of the poor, and in so doing overturns the common misconception that they are ‘too poor to save’.

Building on the huge acclaim that followed its first publication, the second edition of The Poor and Their Money brings readers up to date with microfinance developments in the twenty first century, including India’s self-help group movement, village banks, and microfinance on Wall Street. It also describes the most detailed accounts to date of poor people’s day-to-day financial strategies – their financial diaries.

The book’s clarity and avoidance of jargon make it appealing not only to microfinance students and practitioners, but to general readers as well.


“I found this book extremely stimulating and thought provoking. It also helps outline strategies for financial sector reforms which seek to empower the poor.”

Manmohan Singh, Prime Minister of India

“The Poor and Their Money is a primer for all those wanting to resolve poverty with credit. It challenges the myth that people of modest means don’t save. This is a small book with a large punch, a punch that KOs the myth that poor people don’t save. The authors argue that helping poor people save may be an even more effective tool in poverty alleviation than are loans. If you want to work in microfinance you should first read this book; it will surely change your notion of how poor people deal with life.”

Dale Adams, Professor Emeritus, The Ohio State University.

“This elegantly written book genuinely explains how poor people manage their money. Most work on microfinance is about microfinance institutions. By taking the client’s perspective, Stuart Rutherford provides highly original insights that help us understand the financial behaviours and preferences of poor people and more adequately analyse the ways in which external agents might assist poor people. Essential reading for anyone who is serious about making microfinance “work” for poor people.”

David Hulme, Professor in Development Studies, Institute for Development Policy and Management, University of Manchester, UK.

“From the best reporter on finance and the poor that I have ever seen, The Poor and Their Money shines a brilliant light on a world about which people are in the dark.”

Thomas Easton, Asia Business Editor, The Economist


About the editors

Stuart Rutherford is Senior Visiting Fellow, Institute of Development Policy and Management, University of Manchester.

Sukhwinder Arora is Senior Consultant, Financial and Private Sector Development, Oxford Policy Management Ltd, Oxford.

Table of contents

Elizabeth Littlefield


Chapter One
The need to save
Why people who have so little money need to manage it so carefully, and why saving is at the root of their efforts

Chapter Two
Three ways to save
Saving up, saving down, and saving through

Chapter Three
Informal devices: ROSCAs and ASCAs
How the poor run savings clubs

Chapter Four
Informal services: managers and providers
About the services that the poor can buy in the informal market

Chapter Five
Welcoming new partners
About the new organizations that have sprung up recently to help the poor get better financial services

Chapter Six
Financial lives
Another way of looking at how the poor use financial services, and some concluding remarks


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