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Individual Development Accounts: How It Might Be Possible To Save Money In This Economy

As many of us are struggling in this economy to just stay in our homes, saving for the future can seem like an absurd idea. That is why Individual Development Account programs, or IDA’s, exist.

IDA programs are savings and asset building programs that help low- and moderate-income families save for long-term goals such as a down payment for a home, saving for college, or starting a business, or short-term needs, such as emergency medical bills. Financial literacy, debt counseling, and coaching are often a part of these programs. Some IDA programs even match the money saved, dollar for dollar, at the end of the program period of 3-5 years. Your savings (and the matched amount, if applicable) become your money that you choose how to use at the end of the program.

IDA programs are one of many tools being created to offset issues like economic inequality and the racial wealth gap. The racial wealth gap is the gap in assets between white households and Black and Brown households caused by many generations of income inequality, racist housing policies, limited educational opportunities, and a lack of support structures. This gap in assets is far wider than disparities in wages across races and has compounded over generations, impacting Black and Brown communities in a multitude of negative ways today.

So how do you save money if you are already barely scraping by? A great example would be the set of IDA programs for residents in subsidized housing. These help create savings by providing things like job training, financial wellness education, and coaching to help you increase your earnings. When your income increases, normally your subsidized rent would increase. But in an IDA program you would continue to pay the same rent, but the amount that your rent would normally increase is instead diverted into a special savings account. In some instances the program also provides matching funds to help grow your savings up to a particular amount. In 3-5 years, these programs have the ability to really make a difference in someone’s financial stability.

On our Renter Resources page you will find a list that includes the programs described above and IDA programs for first-generation homebuyers and households earning 50% of the area median income or less. Scroll down to the “First-Time Homebuyer Resources” list for more info!