ARTICLES · Volume 4, Issue 5 · 909-919 · October 2024 · Open Access

Assessing Household Financial Behavior During COVID-19: A Focus on Expenditure and Savings

Efriyani Sumastuti
https://doi.org/10.35877/454RI.daengku3021
Download PDF Set Alert Previous article

Abstract

This study aims to investigate the effects of the COVID-19 pandemic on household expenditure, savings, and financial behavior in low- to middle-income households in Indonesia. The research analyzes how the pandemic influenced household financial management, particularly in terms of spending reductions and shifts in saving behaviors. Data were collected from 100 households through structured surveys, and the analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). The methodology allowed for both direct and indirect relationships between household expenditure, savings, and the economic shock of COVID-19 to be explored. The results indicate a positive correlation between household expenditure and savings, where higher-income households were able to save more despite greater spending. However, the pandemic negatively impacted both expenditure and savings, with households reducing non-essential spending and relying on their savings due to income uncertainty. Additionally, the pandemic indirectly influenced savings by affecting household expenditure. These findings highlight the financial vulnerability of lower-income households during economic disruptions and underscore the importance of enhancing financial resilience. Policy recommendations include promoting financial literacy, expanding access to financial resources, and providing targeted support to help households navigate future economic crises.

References

  1. Amari, M. (2020). Evaluating the effects of sociodemographic characteristics and financial education on saving behavior. https://doi.org/10.1108/IJSSP-03-2020-0048
    Béné, C. (2020). Resilience of local food systems and links to food security – A review of some important concepts in the context of COVID-19 and other shocks. Food Security, 12(4), 805–822. https://doi.org/10.1007/s12571-020-01076-1
    Bollinger, C., Ding, X., & Lugauer, S. (2022). The expansion of higher education and household saving in China. China Economic Review, 71, 101736. https://doi.org/https://doi.org/10.1016/j.chieco.2021.101736
    Chakrabarty, M., & Mukherjee, S. (2022). Financial Inclusion and Household Welfare?: An Entropy ? Based Consumption Diversification Approach. The European Journal of Development Research, 34(3), 1486–1521. https://doi.org/10.1057/s41287-021-00431-y
    Chiwona-Karltun, L., Amuakwa-Mensah, F., Wamala-Larsson, C., Amuakwa-Mensah, S., Abu Hatab, A., Made, N., Taremwa, N. K., Melyoki, L., Rutashobya, L. K., Madonsela, T., Lourens, M., Stone, W., & Bizoza, A. R. (2021). COVID-19: From health crises to food security anxiety and policy implications. Ambio, 50(4), 794–811. https://doi.org/10.1007/s13280-020-01481-y
    Despard, M. R., Friedline, T., & Martin-West, S. (2020). Why Do Households Lack Emergency Savings? The Role of Financial Capability. Journal of Family and Economic Issues, 41(3), 542–557. https://doi.org/10.1007/s10834-020-09679-8
    Devereux, S., Béné, C., & Hoddinott, J. (2020). Conceptualising COVID-19’s impacts on household food security. Food Security, 12(4), 769–772. https://doi.org/10.1007/s12571-020-01085-0
    Elsahoryi, N., Al-Sayyed, H., Odeh, M., McGrattan, A., & Hammad, F. (2020). Effect of Covid-19 on food security: A cross-sectional survey. Clinical Nutrition ESPEN, 40, 171–178. https://doi.org/10.1016/j.clnesp.2020.09.026
    Fox, J., & Bartholomae, S. (2021). Household finances , financial planning , and COVID-19. December 2020, 1–9. https://doi.org/10.1002/cfp2.1103
    Grossmann, V., Larin, B., Löfflad, H. T., & Steger, T. (2021). Distributional consequences of surging housing rents. Journal of Economic Theory, 196, 105275. https://doi.org/https://doi.org/10.1016/j.jet.2021.105275
    Harding, M., & Klein, M. (2022). Monetary policy and household net worth. Review of Economic Dynamics, 44, 125–151. https://doi.org/https://doi.org/10.1016/j.red.2021.02.013
    Hirvonen, K., de Brauw, A., & Abate, G. T. (2021). Food Consumption and Food Security during the COVID-19 Pandemic in Addis Ababa. American Journal of Agricultural Economics, 103(3), 772–789. https://doi.org/10.1111/ajae.12206
    Inegbedion, H. E. (2021). COVID-19 lockdown: implication for food security. Journal of Agribusiness in Developing and Emerging Economies, 11(5), 437–451. https://doi.org/10.1108/JADEE-06-2020-0130
    Joseph F. Hair, J., Ringle, G. T. M. H. C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (L. Fargotstein (ed.); Third Edit). SAGE Publishing.
    Kovacs, A., Rondinelli, C., & Trucchi, S. (2021). Permanent versus transitory income shocks over the business cycle. European Economic Review, 139, 103873. https://doi.org/https://doi.org/10.1016/j.euroecorev.2021.103873
    Lal, R. (2020). Home gardening and urban agriculture for advancing food and nutritional security in response to the COVID-19 pandemic. Food Security, 12(4), 871–876. https://doi.org/10.1007/s12571-020-01058-3
    Loaba, S. (2022). The impact of mobile banking services on saving behavior in West Africa. Global Finance Journal, 53, 100620. https://doi.org/https://doi.org/10.1016/j.gfj.2021.100620
    Lugauer, S., Ni, J., & Yin, Z. (2019). Chinese household saving and dependent children: Theory and evidence. China Economic Review, 57, 101091. https://doi.org/https://doi.org/10.1016/j.chieco.2017.08.005
    Nicola Fuchs?SchÜndeln, Paolo Masella, H. P. (2020). Cultural Determinants of Household Saving Behavior. Journal of Money, Credit and Banking, 52(5), 1035–1070. https://doi.org/10.1111/jmcb.12659
    Ortigueira, S., & Siassi, N. (2021). Review of Economic Dynamics The U . S . tax-transfer system and low-income households?: Savings , labor supply , and household formation ?. Review of Economic Dynamics, 1, 1–27. https://doi.org/10.1016/j.red.2021.02.010
    Reddi, E. L. F., & Høgersen, Ø. Y. T. (2019). Saving and Bequest in China?: An Analysis of Intergenerational Exchange. https://doi.org/10.1111/ecca.12303
    Rozaki, Z. (2020). COVID-19, agriculture, and food security in Indonesia. In Reviews in Agricultural Science (Vol. 8, pp. 243–261). https://doi.org/10.7831/ras.8.0_243
    Sarstedt, M., Ringle, C. M., Cheah, J. H., Ting, H., Moisescu, O. I., & Radomir, L. (2020). Structural model robustness checks in PLS-SEM. Tourism Economics, 26(4), 531–554. https://doi.org/10.1177/1354816618823921
    Shabor Rameli, R., & Marimuthu, M. (2018). A Conceptual Review on the Effect of Attitudes towards Retirement on Saving Intentions and Retirement Planning Behavior. SHS Web of Conferences, 56, 02005. https://doi.org/10.1051/shsconf/20185602005
    Wang, X., & Wang, X. (2022). Digital financial inclusion and household risk sharing: Evidence from China’s digital finance revolution. China Economic Quarterly International, 2(4), 334–348. https://doi.org/https://doi.org/10.1016/j.ceqi.2022.11.006
    Wegerif, M. C. A. (2020). “Informal” food traders and food security: experiences from the Covid-19 response in South Africa. Food Security, 12(4), 797–800. https://doi.org/10.1007/s12571-020-01078-z

Keywords

financial behavior, expenditure, saving, covid 19, SEM

Citation

Efriyani Sumastuti. (2024). Assessing Household Financial Behavior During COVID-19: A Focus on Expenditure and Savings. Daengku: Journal of Humanities and Social Sciences Innovation, 4(5), 909–919. https://doi.org/10.35877/454RI.daengku3021
PublishedOctober 31, 2024
Volume4 - 2024
Pages909-919