A Framework of Asset-Accumulation Stages and Strategies

The authors propose that asset accumulation occurs in three stages. In the first stage (reallocation), current resource inflows must exceed current outflows. To do this, people reallocate resources from current consumption or leisure or from future consumption or leisure. In the second stage (conversion), people may convert resources from liquid to illiquid forms. In the third stage (maintenance), people resist temptations to dissave.

The authors theorize that people adopt psychological and behavioral strategies to achieve each of these objectives. Putting psychological and behavioral strategies together with the stages of reallocation, conversion, and maintenance results in six strategy groups. They provide real-world examples of each strategy group and discuss implications for encouraging account ownership among the unbanked, improving asset accumulation programs, and improving financial-education curricula.