EXPLORING THE ROLE OF SAVING IN ENHANCING FINANCIAL WELL-BEING AND RESILIENCE AMONG RESIDENTS OF ADDIS ABABA

Abstract

In today’s rapidly changing economic landscape, particularly within developing countries, financial vulnerability is a growing concern. Addis Ababa, like many urban centers in emerging economies, is experiencing increasing financial pressure due to inflation, job insecurity, and limited access to financial services. In this context, personal saving is not just a financial choice but a necessity for survival and long-term security. Although saving behavior has been extensively explored in developed economies, limited empirical research exists on how saving contributes to financial well-being and resilience in Ethiopian urban settings. According to Jumena, B. B., Siaila, S., & Widokarti, J. R. (2022) Internal Factors Influencing Saving Behavior were Personal Wealth (Higher wealth levels can lead to increased savings due to precautionary motives and investment opportunities). This study seeks to address that gap by focusing on the lived experiences and saving behaviors of residents in Addis Ababa.

The primary aim of this research is to examine how regular saving practices influence financial well-being and resilience among individuals and households in Addis Ababa. According to Adam, E., Panjaitan, R., Sumarlin, T., & Andriana, M. (2021) both financial literacy and inclusion positively influence financial well-being resilience, mediated by financial attitudes. Specifically, the study investigates how saving habits affect people’s ability to manage financial shocks, pursue long-term financial goals, and maintain psychological stability and a sense of economic control. The research also aims to identify key challenges that hinder saving behavior across different socioeconomic groups.

A mixed-methods approach was utilized, combining quantitative and qualitative techniques. The study surveyed 200 residents selected using stratified random sampling to ensure diversity in gender, income, and employment sectors. Structured questionnaires were used to collect quantitative data on saving frequency, saving purposes, financial literacy, and financial stress. Additionally, in-depth interviews provided qualitative insights into personal experiences and attitudes toward saving. The data were analyzed using descriptive statistics and thematic analysis to draw meaningful connections between saving behavior and indicators of financial resilience.

The findings reveal a strong positive relationship between consistent saving and higher financial resilience. Individuals who saved regularly reported lower levels of financial stress, greater confidence in managing emergencies, and more success in achieving financial goals. However, key barriers such as low income, limited financial knowledge, and insufficient access to formal financial institutions identified particularly among formal sector workers and low-income households. These results highlight the urgent need for inclusive financial policies, expanded financial literacy programs, and accessible saving platforms. Promoting a culture of saving is essential not only for individual economic empowerment but also for building resilient urban communities.