Did you know there is a savings account that can help low-to-moderate income families save money by matching dollar for dollar (or more)?!
Introducing The Individual Development Account (Also known as an IDA)
Chances are you haven’t heard of an Individual Development Account, and that’s a shame because it’s a powerful tool that encourages families to save their money in order to gain assets like a first-time home, a small business startup or to get a higher education!
So what exactly is an IDA? An Individual Development Account is an adult savings program that is meant to work as an asset-building tool for low-to-moderate income families that otherwise would have a hard time saving a sizable amount. The programs are run by state and are usually a partnership between state agencies, nonprofit organizations and financial institutions. While IDA Program details will vary, there are things that are similar. For example, there is usually a target amount set (the goal of how much you want to save). There will be a deposit schedule created (how much and how often you will deposit money), and a timeframe (minimum and maximum) in which you can participate in the program. You are also restricted on how you can use the saved money. Usually, the money is allotted for assets such as a first-time home, starting a business, or a higher education. It cannot be used to pay off existing debts.
How does an IDA encourage you to save? An Individual Development Account encourages you to save in multiple ways. First, through education; most IDA programs require you to take some form of financial education classes. The IDA programs do this because knowledge and financial literacy help break the cycle of poverty by teaching you to better understand money management and thus make better choices. With sound financial training, you will build a skill set that will last a lifetime. Even more exciting than the education you will get, is the price match you will earn. That’s right, for every $1 you save, the IDA program will match it! Although the match amount will vary across IDA programs, most of them will match from 1:1 to 4:1! That’s right! Some IDA programs will allow you to triple or even quadruple the money you save!
How do I get an IDA? Well, first you have to apply. Although qualification will vary by program, you must live in the state the program is based and have earned income (through work), but not make more than 200% of the Federal Poverty level and have no more than $10,000 in net assets (this excludes one house and one car). Additional qualifying factors may apply depending on your particular IDA program. Prosperitynow.org has a great resource map where you can look up IDA programs available by state https://prosperitynow.org/map/idas. Furthermore, searching your state and community websites for IDA programs is suggested.
Will this affect my benefits? If you receive SSI benefits and you participate in an IDA, your benefits will not go down because the earnings and matched money that goes into your IDA account does not count as income when your benefits are being calculated.
What are you waiting for? Get online and find out if there is an IDA that’s right for you. Your savings goals could be right around the corner!