Strategies to Build Savings
Our nation’s personal savings rate in 2006 was a negative 1 percent, the lowest since the Great Depression. Though saving is important for individuals and families at all income levels, it is especially critical for low- to moderate-income families, who often have no assets or access to credit and have a harder time remaining financially stable during changes in income due to illness, job loss or other unforeseen events. This step in the framework underscores the importance of saving and provides access to products/services that make it easier to do so.
Accessing the Financial Mainstream
Establishing a relationship with a mainstream financial institution, such as a bank or credit union, is critical to the success of individuals and families at each step along the framework, but it is especially critical for saving. Families with access to basic banking products are more likely to have savings and assets and are less likely to require financial services that charge high fees and interest rates, such as refund anticipation loans, check cashing services, and payday loans.
United Ways are active in helping individuals and families enter the financial mainstream. Many United Ways introduce lower-income families to mainstream financial institutions through free tax preparation sites. Bank or credit union representatives are invited to open accounts at free tax preparation sites to allow clients to receive their tax refund via direct deposit. In addition, United Ways are working with financial institutions in their communities to create products that better meet the needs of the low- to moderate-income population.
To encourage individuals and families to make savings a priority, a growing number of communities are participating in America Savesâ„¢, a national social marketing effort created by the Consumer Federation of America. Through the America Saves campaign, communities offer information and encouragement, as well as tools and resources, to help individuals and families develop savings goals and a plan for achieving those goals. To date, the campaign has engaged more than 50 communities, 1,000 organizations, and 70,000 individual savers.
United Way supports the work of America Saves at both the local and national levels. Locally, United Ways have utilized the educational and marketing strategies developed by America Saves to enhance their financial stability initiatives. Nationally, United Way of America was a key supporter of the first annual America Saves Week, an effort to increase awareness of the importance of saving, reducing debt, and building wealth.
Tax filers are now able to deposit their tax refund into as many as three accounts â€“ including checking, savings, and retirement accounts â€“ representing an innovation in tax procedure that can help individuals and families make more targeted use of their refunds. United Ways are engaging partners from the private, nonprofit and public sectors to promote split refunds at free tax preparation sites.