Asset Building Reduces Poverty and Spurs Economic Growth

Across the political spectrum, there is a growing recognition that the alleviation of poverty depends on individuals and families having assets, both human (i.e. productive knowledge and skills) and financial. More so than income, ownership of assets distinguishes self-sufficient individuals and families from those who find it hard to provide for basic day-to-day needs.

Ownership of assets like a college degree, a savings account, or equity in a home:

• provides opportunities to increase income.

• offers resilience to weather economic setbacks.

• imparts personal financial responsibility and skills.

• builds a personal stake in the community and its progress.

As a result, asset building contributes to overall economic growth.

Low- to Moderate-Income Families Can Build Assets

Fortunately, with a little assistance, low-income individuals and families can build and retain assets. Programs like the CFED Downpayments on the American Dream Policy Demonstration (ADD) demonstrate that incentives in the form of matching contributions to individual development accounts (IDAs) transform low-income households so that they save and invest in education, entrepreneurship, and home ownership. Saving easily becomes habitual once initiated, and gains from higher education confer long-term earning power. The act of investing in home ownership, a business, or an education builds the hope and aspirations needed to break free from poverty.