Mexico Financial Diaries

Mexican Financial Diaries set out to obtain granular, long-term, provider-side data about the financial lives of low-income Mexicans. This data was used by BANSEFI to better understand and serve this market segment. Detailed information gained from these households would impact the way BANSEFI decided to administer the distribution of social transfer payments such as Oportunidades, and offered insight into new features of products that low-income customers demand.

Problem Statement

What is the financial behavior of low-income Mexican families who receive the government conditional cash transfer Prospera, previously known as Oportunidades? What are their needs? The Mexico Financial Diaries project aimed to shed light on how low-income Mexican families manage their money and the unique constraints they face.

The Solution

The Mexico Financial Diaries followed 185 families in three locations (Mexico City, Puebla, and rural Oaxaca) representing three very different examples of Mexican life. Our research team visited these households approximately every two weeks over the course of a year, from early 2014 through January 2015 to interview families about all financial activity and events in their lives.

Findings and Key Takeaways

  • Mexico Financial Diaries households operated on tightly constrained budgets.
  • Mexico Financial Diaries households earned income from over seven different sources but still struggled to smooth income.
  • Respondents made over 85 percent of all purchases and financial transactions within a distance of thirty minutes walking from home.
  • Households used seven financial instruments on average during the study and relied more heavily on informal financial mechanisms.
  • Credit allowed families to cover daily expenses, to acquire assets that make their lives better and to start and run small businesses.
  • Due to a reliance on credit, some families channeled short-term savings to credit repayments.
  • Some households used informal savings, like savings groups, to help them comply with rigid structures of formal financial products.
  • Preparing for emergencies and achieving key aspirations such as building a home, buying land and financing education were the primary motivations for saving.
  • Transactions in saving at home were of a meaningful size, suggesting a potential opportunity.
  • Diaries respondents value certainty and predictability.
  • At the same time, respondents appreciate and need flexibility in financial products.