Successful Savers Provide Window Into the Programs That Helped Them

FAYETTEVILLE, Ark. — Low-income individuals can and do pull themselves out of poverty with help from programs such as Individual Development Accounts (IDAs). A University of Arkansas professor and her colleague examined the experiences and suggestions of one group of IDA participants to understand their savings experiences and identify ways in which development accounts could be enhanced.

Kameri Christy-McMullin, a professor in the UA School of Social Work, worked with Marcia A. Shobe of the University of North Carolina at Charlotte on the project. Their resulting article, “Savings Experiences Past and Present: Narratives from Low-Income African American Women,” appears in the current issue of Affilia, Journal of Women and Social Work.

Christy-McMullin and Shobe interviewed nine low-income African-American women who were participating in an Individual Development Account savings program in a city in North Carolina. Christy-McMullin and Shobe asked the women about their past and current asset-building knowledge, experiences and behaviors. They compiled the interviews into a collection of narratives that describes what these women learned about savings from their parents and from their experiences growing up, and how their past has helped them reach their goals in building assets.

“Over half of the women reported having difficulty making ends meet, and three-quarters said they have expenses they cannot afford; yet all were able to save regularly in their IDAs,” Christy-McMullin said. “Their success makes them expert in helping us understand how these programs could be even more effective.”

Individual Development Accounts encourage savings efforts among the poor by offering participants matches for their own deposits. The programs also offer education in basic economics and finance. The programs are implemented by community-based organizations in partnership with financial institutions that hold the deposits, and are funded by both public and private sources.

While most of the women interviewed reported that finances were not openly discussed in their families during their childhood, they also remembered their parents encouraging them to open savings accounts, and set rules for saving paychecks or birthday money. In view of this contradiction, Shobe and Christy-McMullin suggest IDA programs could incorporate content in their economic education materials that would teach parents how to help their children learn to develop assets.

One barrier the women cited was the conflict between their need to save money and their desire to spend it on activities related to their children, such as recreation or buying toys. Shobe and Christy-McMullin’s article recommends that IDA programs support the need for families to have fun while saving money by providing information about free or inexpensive activities in the community, or even by putting together such activities on a regular basis.

An IDA program Christy-McMullin worked with in Kansas City held quarterly activities, which families could attend free or by bringing a potluck dish. She found that communication with participants went a long way toward helping the program develop activities the families would enjoy.

“One thing they can do is ask the participants what they would like to do,” Christy-McMullin pointed out. “That way they at least know what the participants want. They can get all kinds of good ideas just by asking.”

The women interviewed in the study also reported difficulty managing the cost of auto maintenance and transportation. The participants often had to forgo paying their monthly bills in order to have their vehicles repaired. IDA programs could help participants overcome this barrier by having resources and referrals within the community to assist these needs, or implementing policies that would allow savings goals to include purchasing cars.

The researchers advocate more flexible rules for savings and withdrawal options that would better suit individual families’ circumstances and unexpected expenses. Examples of this include decreasing early withdrawal penalties, offering additional economic education classes, decreasing the age limit from 18 to include youths, and increasing the match rate for the working poor.

Shobe and Christy-McMullin’ urged social workers to advocate for increased funding in asset-building policies, such as Assets for Independence Act and increased political support for more universal IDA policies.

The researchers hope some of the more striking findings revealed by the interviews can help debunk myths about low-income individuals.

“People think poor people are different than other people, but the big lesson is that these stories were similar,” Christy-McMullin said. “It’s not about them being inadequate, as much as it is about a lack of support and resources in the community.”

She pointed out that the women were not necessarily poor as children.

“More often, it was through some other circumstance, such as domestic violence or teen pregnancy, that they became poor,” she said.

While most research into IDA programs has been done on the amount of savings, characteristics of the programs and the types of assets purchased, future research should examine the relationship among matching funds, savings patterns and purchases of assets. Given the small sample studied in Shobe and Christy-McMullin’s research, they also recommend that further research incorporate larger, random samples and examine whether the programs and policies work better for one population than for another.