COLUMBUS – As in many other states, there is a wide gap in savings between white families in Ohio and families of color. The Annie E. Casey Foundation has just released a brief recommending federal policy changes to help narrow that gap.
The brief states a modest federal investment in universal children’s savings accounts could have a huge positive impact on families. Beadsie Woo, senior associate with the Casey Foundation, says every family needs a financial cushion.
“Saving both for short-term emergencies such as a car repair, but it’s also saving for long-term aspirations, like post-secondary education or chances that will change their kids’ lives,” says Woo.
The brief points out that a family’s assets strongly correlate with indicators of child well-being, from academic performance to self-esteem. It suggests that by creating universal savings accounts when children are born, a young person could use the funds for education, starting a business, or buying a home – giving a boost to the individual and their community.
The Casey Foundation recommends families receiving public benefits should be allowed and encouraged to save money. It says when asset limits are raised for eligibility, those who are most in need of a financial cushion can work to increase their stability and end their reliance on public aid. Ohio removed limits for benefits, and Woo says TANF (Temporary Assistance for Needy Families) cases fell.
“We see that those families are more self-sufficient because they have their own savings to draw on,” says Woo. “Over time, the number of people enrolled in benefits decline.”
The Casey Foundation says if families don’t have a financial cushion to handle everyday emergencies, dreams of sending kids to college or owning a home become nearly impossible.