What are assets?
Assets are the building blocks of long-term financial stability and success for people at all income levels. Having a savings account, a college education, a home, or a small business can help individuals and families live securely today, weather difficult financial times, plan for the future, and pass assets on to the next generation. Individuals’ assets can be leveraged to strengthen communities. In turn, the entire state benefits when individuals, families, and communities are financially stable.
Assets make the difference between getting by and getting ahead. Nearly one in five American households owe more than they own. Predatory lending drains billions of dollars from middle and low-income families and communities. High drop out rates and the rising cost of tuition make college unattainable for many students. Low-income people are less likely to own assets than are people with higher incomes. Tax policies generally favor those who already have the most assets. It is important to have public policies that support asset building so that all Illinoisans may participate in and benefit from our economy.
Research findings on asset building programs find individuals with assets save more, invest in their community, aspire towards educational goals, and strive towards personal advancement.
Assets positively influence behavior
- Asset ownership leads to positive attitudes and behaviors, and positive attitudes and behaviors lead to greater participation in wealth generating activities.
- Adult participants in an IDA program said they actually worked more and increased their earnings because of their asset account.
- As accountholders bought homes and started new businesses, they reported new incentive
- to care for their property and become involved in the community.
- The poorest participants saved a higher proportion of their income and saved about as much as those who were not as poor.
- After universal children’s accounts were initiated in the United Kingdom, studies have found that approximately 40% of parents have entered into other savings plans after setting up their child’s account.
- Holding assets at age 23 is associated with later positive outcomes such as better labor market experience, marriages, health, and political participation
Assets positively influence aspirations
- The presence of an asset, such as a savings account, appears to matter more than the monetary value of the asset itself.
- Among adult participants in an IDA program, 93% reported they were more confident in the future, 59% reported they are more likely to make educational plans, 59% reported they are more likely to work or stay employed, and 57% reported they are more likely to plan for retirement, because of their savings account.
- A parent’s Individual Development Account changes the expectations, attitudes, and aspirations of children.
- Youth SEED account holders see their accounts as enhancing their hopefulness about the future, particularly as it pertains to college.