March 25, 2013 | Read Time: 1 minute
Matched-savings programs, which have grown in popularity in recent years, help people save for big-ticket items like a house by matching at least some portion of the money they set aside. But for such programs to work well, participants need to be financially stable and reliably covering day-to-day expenses like food and shelter.
Opportunity Fund, a charity in San Jose, Calif., is putting a new twist on matched savings: trying to help people with shaky finances put money aside for emergencies. The group hopes what it learns will help other charities expand their vision of what’s possible with matched savings—and what low-income clients need to improve their economic well-being.
“Before you begin to save for larger assets, you really need some kind of financial cushion,” says Eric Weaver, chief executive of Opportunity Fund.
So far more than 100 people have signed up for the Start2Save program, which matches each dollar participants save, up to $500, with $2. Participants make monthly deposits of $20 to $40.
Account Stays Open
With traditional matched-savings programs, after the participant spends the money—either for a down payment on a home, to pay for tuition, or to start a business—the savings account is closed.
For Start2Save, Opportunity Fund worked with Citibank to create a savings account that would stay open after participants finished the program so they could continue to make deposits.
With clients’ permission, Opportunity Fund will continue to monitor their use of the accounts.
Says Mr. Weaver: “Our goal is to develop really high-quality data to show how having some money in the bank can help you both weather financial downturns and take advantage of unforeseen opportunities.”
