The "Triple-Whammy" of Poverty: Lessons from Portfolio of the Poor – How the World's Poor Live on $2 a Day

This briefing note examines year-long financial diaries of poor villagers and slum dwellers in India, Bangladesh and South Africa. It emphasizes the three-fold poverty trap characterized by convergence of small incomes, unpredictable cash flows and unreliable financial instruments.

The note studies three households to discuss reasons for the pattern in the poverty trap, and ways to help households cope with their most basic daily challenges. Key findings include:

• Highest priority for families with small incomes is to feed its members every day;
• Poor families have microfinance savings, loans, and home savings despite their meager incomes;
• Irregular incomes force households to turn to informal clubs and moneylenders;
• Lack of flexible financial instruments affects the poor during financial emergencies.

The concept note observes that access to alternative sources of reliable, convenient and affordable financial tools better suited to unpredictable cash flows will make a positive difference to poor households.