It is time to Start2Save!
By Gwendy Donaker Brown, Director of Policy and New Initiatives, Opportunity Fund July 30, 2012 01:00 PM
Last year, Opportunity Fund launched our newest savings product - Start2Save. These savings accounts are designed to support low-income people in building up emergency savings through a free Citi savings account coupled with financial training and a matching grant of up to $1,000. Once a saver has earned the grant, how they use the money is completely up to them - no strings attached.
Opportunity Fund is the nation's leading Individual Development Account (IDA) microsavings provider and we've built a long and rich partnership with Citi. We offer an IDA that gives low-income savers complete control of their own savings--a radical departure in the asset-building field. Historically, the microsavings provider (like Opportunity Fund) approved when and where savings were invested. In this case, the asset is simply the dollars saved. The saver maintains full autonomy and control over the money. Empowerment and responsibility are what we teach, after all.
After the first year rolling out these new Start2Save microsavings accounts, here's a look at what we've seen and learned so far and where we are headed:
- Demand is there. In our first year, we opened 82 Start2Save accounts in the San Francisco Bay Area. Total deposits and earnings in these accounts in the first year were: $60,588.
- Flexible saving appeals to all ages. Start2Save has been especially popular with at-risk young adults (18-24) and seniors (65+). These are two groups that have been under-served with traditional matched savings products which don't address someone's most basic savings needs.
- $20 per month makes saving realistic - even for people living under the poverty line. Unlike our other microsavings products that require $80/month deposits to earn the maximum grant amount, Start2Save was specifically designed to be achievable with only $20 per month. Yet we found that most savers managed to deposit $35/month as they got excited about growing their savings. As a result, we are serving people whose average income is $1,073 - less than half of that of our other (also low-income) savings accountholders. This means we've drilled down deeper to reach even more underserved, hard-to-reach, underbanked Californians.
- Emergencies aren't sexy. There is something about the word emergency (somewhat like life insurance) that brings out some people's superstitious side. Even though people know they need to have savings for a rainy day, they want to associate their saving with future success, dreams and ambition, not with flat tires and ambulances. So we'll be rebranding Start2Save to focus more on the flexibility and less on the emergency element. (Ideas are welcomed)
- Savings + Credit = Better Emergency Preparedness. Being financially prepared for the unexpected means including the ability to pay for things quickly - often with a credit card. For the over 40% of our savers without a credit score, our next goal is to connect them with responsible and affordable credit. This coming year, we're hoping to offer our microsavings clients access to credit that supplements the power of their savings - and helps to build their credit scores for the long-term.