Financial Capability Month: The Importance of Savings
April is one of our favorite months here at Prosperity Now because we get to celebrate National Financial Capability Month! Financial capability—the knowledge, skills and access to manage financial resources effectively—is a key component of Prosperity Now’s mission to ensure everyone in our country has a clear path financial stability, wealth and prosperity.
In past Financial Capability Months, we’ve discussed how to integrate financial capability services into existing programs, what financial capability means at every age and how to improve financial capability programs by talking to clients. To start off this Financial Capability Month, we’d like to focus on savings.
The importance of savings has long been established: having an emergency savings cushion can help families weather emergencies and unexpected expenses and even a small amount of savings can help households manage stress and get ahead. However, data from the 2019 Prosperity Now Scorecard shows that 40% of Americans are liquid asset poor—meaning those families don’t have enough in savings to make ends meet at the poverty level for three months ($6,275 for a family of four in 2018) if their income was interrupted. This problem is even more stark when disaggregated by race. 31.7% of White households are liquid asset poor compared to over 62% of Latino and Black households.
To support practitioners and advocates trying to advance policies and programs that support families’ savings needs, we’d like to highlight some past and upcoming resources:
Resources to Revisit
- Spurring Savings Innovations: Human Insight Methods for Savings Programs. This brief explores human insights research and design methods, and provides examples from organizations across the country to inform more effective savings programs.
- Start the Savings Conversation: A Toolkit for VITA Volunteers. This toolkit provides tools and resources for VITA volunteers to have savings conversations with their clients at tax time.
- How Congress Can Help Families Save for Emergencies. This blog post provides an overview of the actions Congress can take to help more people save for unexpected financial emergencies.
- To Help Families Get Ahead, Eliminate Savings Penalties. This blog post details how asset limits for federal benefits (“savings penalties”) hurt low-income families and what Congress can do to impact families’ ability to save.
- Saving for Now & Saving Later: Rainy Day Savings Accounts to Boost Low-Wage Workers’ Financial Security. This report explores a promising way to enable workers to meet both short- and long-term needs.
Prosperity Now, together with our partners, has been exploring how to better design and deliver savings products, services and programs to support families in meeting their savings needs. We’re excited to share with you the first findings of our research into the savings ecosystem in a series of briefs being shared throughout Financial Capability Month. The series will offer a framework for understanding the different types of savings needs families have and will explore:
- The different types of products, features and services that are being used to support savings for low-income families
- The experience that consumers have in engaging with these solutions
- How the solutions are being delivered to consumers
- Gaps and promising trends in the current design and delivery of savings solutions
Be on the lookout for the first brief in this series on April 9!
Join the Savings Network and listserv! The Savings Network brings together practitioners from around the country to generate ideas and share strategies, tools and resources for building, sustaining, innovating and advocating for savings programs so that all families can thrive. And the listserv digs even deeper!
The Savings Network will be holding a webinar on May 7 to explore current and future state and federal policies that support matched savings programs, emergency savings programs and other savings initiatives. Sign up above or follow Prosperity Now below to receive registration information when available.