Most Americans have difficulty saving money. Each year, GoBank conducts a survey of 5,000 people asking them how much they have in their savings. They also ask about the obstacles preventing them from saving. The results say it all and give rise to the reason why D.C. Mayor Muriel Bowser established the D.C. Opportunity Accounts.
In GoBank’s most recent report, the majority of adults — 58 percent — don’t even have $1,000 in savings. Sadly, the percentage of adults with less than $1,000 in savings increased slightly from 2017 to 2018, according to the study. Meanwhile, the percentage of Americans with zero in savings dropped to 32 percent from 39 percent over the same period. Clearly, most Americans are living paycheck to paycheck, and are helpless in case of a financial emergency.
The numbers are better or worse depending on gender, age, race, employment, families with children, and options to save for retirement. Location matters, too.
Mayor Bowser is consistently under fire for her leadership over a city that is becoming increasingly unaffordable for low income and poor people. And, to her credit, she continues to roll out programs and initiatives that may only be a drop in the bucket for those who are struggling to remain here, but collectively, the drops are adding up.
We are encouraged by this most recent initiative that will allow District residents to save up to $7,500 to help pay for a variety of expenses, including education, first-time home purchases, small business development and retirement. They must save $1,500 over 18 months, and their savings will be matched 2:1 by participating private funders. The only qualifiers are that one must be a District resident, have a maximum annual household income of $54,250, for households with one adult, and $62,000 for two adults living in the same house. They must have earned income, and have less than $10,000 in net assets (excluding a primary home and one vehicle). Money management classes are also offered. That captures a significant number of District residents as we see it, particularly young millennials and GenXers.
The D.C. Department of Insurance, Securities and Banking (DISB) will manage the fund administered by Capital Area Asset Builders, which deserves kudos for various initiatives its established supporting the upward economic mobility of D.C. residents. Contributions for matching funds are provided by the Clark Foundation and Wells Fargo.
Similar programs often result in low participation making the old adage applicable: “You can lead a horse to the water, but you can’t make him drink.” We encourage qualified D.C. residents to “drink up!”