Saving and asset accumulation among low-income families with children in IDAs

Abstract

Research indicates that low-income families with children have many motives to save, however, the costs of raising children, low wage employment, means tested programs, and the need for child care make it difficult for them to save. Using data from the American Dream Demonstration (n=1,801), this study examines saving performances of low-income families with children in a matched savings program -Individual Development Accounts (IDAs). The results indicate that households with children in IDAs can save when they are provided structured opportunities. In addition, this study finds that institutional factors, not merely individual characteristics, are highly associated with IDA saving performance, and are important in explaining saving performances in IDAs. Implications for policy makers and program administrators to better assist lowincome families to save and accumulate assets in IDAs are given.

Poor Families Striving to Save in Matched Children’s Savings Accounts: Findings from a Randomized Experimental Design in Uganda

“…Numerous studies of subsidized matched savings accounts demonstrate that incentivizing savings helps the poor to save (Sherraden et al 2003; Ssewamala and Sherraden 2004; Grinstein-Weiss et al 2006; Han et al 2009). Data from the American Dream Demonstration (ADD), the first and most extensive study of IDAs for 2,377 low-income individuals from across the United States, indicate that participants saved an average of $16.60 per month (Sherraden 2005), making an average of $2,586 in matched withdrawals (total deposits plus matching) between 1997 and 2002 (Han and Sherraden 2009).…”

Socioeconomic and Institutional Factors that Facilitate and Prevent Low-Income African American Parents' Involvement in a Children's Savings Program

“…One participant said, "It's so much easier for me to save money when I don't actually see it or have to handle it." Evaluations of the IDA programs found that direct deposit features, in addition to financial education, were important aspects in participants' ability to save (Grinstein-Weiss, Wagner, & Ssewamala, 2006;Sherraden, McBride et al, 2005).…”

Access to institutional resources as a measure of social exclusion: Relations with family process and cognitive development in the context of immigration

“…Higher household assets, in turn, have been associated with long-term benefits for the life course including higher educational success and attainment among children in the household (Conley, 1999). The benefits of savings behavior for households in poverty are the basis for efforts to increase savings behavior such as Individual Development Account (IDA) programs (Grinstein-Weiss, Wagner, & Ssewamala, 2006;Sherraden, 1991).…”