THE INFLUENCE OF INCOME ON BANKING HABIT

By Clement Ndiok

There are various income level classifications in the world today, from the lower, middle and high-income levels which all have significant impact on banking habits. Income level which simply is the amount of monetary or other returns, either earned or unearned, accruing over a given period of time. Banking on the other hand consists of activities of accepting and safeguarding money or assets owned by other individuals and entities, and then lending out this money in order to conduct economic activities such as making profit or simply covering operating expenses. Prayers of banks, financial institutions and other financial custodians today are for clients to keep safeguarding money or assets with them for as long as possible without having an immediate use for it perhaps a great number of people who have developed a savings culture with theses banks without taking any advantage of some financial investment opportunities within the financial institutions itself have rendered such prayers answered. There are various income levels classification that can influence banking habits which includes:

Lower income level.
The lower income level classification include People with low income from work or business, about 61 percent of people in the world fall into the lower income level according to pew research. Typical jobs that fall into lower income include domestic servant, gardener, doorkeeper, janitor, scavenger etc. people classified into the lower income level term to be mindful of rigid savings because of little or less income to accommodate the ability to invest in financial instruments. Financial institutions term to benefit off the lower income level classification a lot, majority of people in this classification of income level are less risk takers and love safety nets, they will rather have an annual savings without return that is relatively safe at a banking institution than invest with return simply because of their income bracket. Equitably many have a very low knowledge of opportunities and a relatively low net worth, however some within the low-income level invest but are often interested in short term financial investments.

Middle income Level
In 2020, according to Pew Research 32 percent of the global population could be considered middle income, The middle-income level classification can be further divided into the higher and lower level, professions that generally fall into this level include: lawyers, engineers, pilots, doctors, lecturers, college teachers, middle level managers etc.… . The category of people at this level are average financial risk takers due to the comfortable income bracket, some or most people in this classification often look beyond savings as they hope to excel into having a higher income, some are equally open to loans, investment opportunities like treasury bills, bonds, shares, stocks and are basically looking for return on their funds kept or housed in a financial or banking institution. More often the higher middle-income level are always comfortably investing in their finances and have significant information on investment opportunities, here both the financial institutions and those that fall into this category have a balance on returns. Generally, classification of people in this income level are looking for medium term return on investment opportunities unlike the lower income level.

High income level
Lastly the high-income level classification have great financial freedom and have significant information that influences their banking habit, about 7 percent of people the world fall into the high-income level. People on this level include: top CEOs, wealthy businessmen, renowned investors etc.…., people in this level are constantly looking for further returns on their income and are more open to long-term investing like buying shares, engagement in foreign direct investment (FDI), investing in startups, investment in top real estate projects, long term fixed deposit, and other viable investments etc....This category of people are not just looking to save but to have returns with any reputable financial institutions they come across, this is because of their high net worth, financial freedom and application of the significant knowledge of useful information the find at their disposal.

Regardless of the level of income classification, there is always room for making right financial decisions that could lead to growth in one’s financial class. Banking goes beyond savings and withdrawal, information they say is power with little or big application of such information, an overhaul of the old way of banking can be changed. Banking could be done with many other certified financial institutions aside the popular commercial banks and having a return on long term savings by investing in financial instruments, loan facilitation (with little interest). There are countless financial investment opportunities that could pave way for developing a healthy long term banking habit.