Asset Building among Low Income Adults: An Exploratory Study with Participants in an Emergency Savings Program

Abstract

Some of the most severe burdens of the Great Recession were shouldered by low income people who lacked emergency savings. The absence of assets in the form of emergency savings makes low income families particularly vulnerable in times of economic distress. Without savings to cushion unexpected financial emergencies, many families who were financially fragile before the recession fell into, or deeper into, poverty. In this article, we provide an overview of assets theory, review empirical evidence on saving, and discuss institutional arrangements in society that often aggravate poverty but that may offer opportunities to narrow the large and growing asset gap. Some innovative community-based organizations have recently developed programs to help people in low income communities build assets in the form of emergency savings. Unlike the now familiar Individual Development Account (IDA) programs that most often require earned income and offer dedicated savings accounts for long-term developmental purposes, emergency savings programs focus on the need for very low-income adults to build assets for future household emergencies. Such savings can be seen as a first step in asset building and toward increased economic sustainability. We describe one emergency savings program serving a diverse group of very low-income adults, and present findings from an exploratory qualitative study based on in-depth interviews with program participants. We end the article with implications for community practice, asset building policy, and future research.

KEYWORDS:

• assets
• emergency savings
• poverty
• community practice