Does a Matched Savings Program Work?

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There are many programs targeted to low-income families and individuals. Skills-based training programs, resume workshops and help with finances are becoming more accessible than before. Momentum is an organization out of Calgary, which runs many programs for those at and below the poverty line, including a matched-savings program. The Program’s app called ‘Quber’ seeks to help along financial literacy as well.

But do these programs work? What does success and changed behaviour look like? I chat with Carolyn Davis, Director of Community Engagement to learn more about the organization’s work and whether or not the matched savings program leads to a change in behaviour.

Low-Income Families and Individuals Face Significant Challenges. 

Those born into poverty may not always have access to financial education. There is no one to teach you how to save whatever extra you earn or invest it in a way to amplify it. The same might also be true for the middle class or those who gain unexpected wealth. 

Carolyn explains it stems from a lack of connections which would influence a person to start saving. 

In other words, they may not have:

  • Family connections with responsible role models
  • A robust network of friends and families to help bridge connections to obtain higher-paying jobs. 
  • A sense of purpose from role models (e.g., parents). 
  • Health and wellness to attack each day.
  • Affordable housing. 

Momentum inspects what these people do have, at individual and community levels. 

They sit down with each and help form a plan, which includes:

  • An understanding of an asset and how to build one out.
  • Understand the challenges they will face while forming it due to their socioeconomic position. 

Momentum finds a reason for people to save and tries to help build a deeper understanding of financial health for successive generations. When goals are established, financial behaviour tends to change. 

Momentum matches three times each dollar saved. It is different from receiving regular interest from your bank because it would never match up. 

There is a point to saving because people know they can work toward housing, education and for their children. 

Why a Matched Savings Program?

Matched savings is an interesting take on addressing financial barriers. It presumes the person is willing to save in the first place – and, with rising costs of living, a savings account becomes harder than before. 

To reach people in need, Momentum works with other non-profit organizations, who send along referrals – in a way, creating a network of civil society organizations.

Advertising financial services for low-income families and individuals is nearly impossible. Most platforms do not allow targeting ads based on income level. As a result, ads are prevented from being seen on the social media feeds of those who need it the most. 

As well, a Matched Savings program can come across as free money, which people cannot trust.

Despite this, changed behaviour arises when people find a financial goal and make realistic steps to making progress based on their current level of income. 

These courses allow people to learn about budgeting, managing debt and building credit. As well, clients are surrounded by peers who are also into saving for the future.

And the program starts by asking a person to save $50 per month. Rates of eviction dramatically decrease when people – particularly young people-  start saving this money. Most end up start saving approximately $400/month. 

Even without receiving financial education, bank accounts are created including savings accounts too. This alone can help propel people into the future 

Momentum has noticed that a person who shows up to class is more likely to check their credit scores and open a bank account. 

All these steps turn them into being more financially empowered. These people eventually sign up for larger-scale programs, until they have a flourishing business. 

Participants have saved $6000 of their personal money since they took part in Momentum’s free courses.

Stable Housing is Key to Social Mobility

The majority of Momentum’s customers are people with stable housing. 

People without proper housing will typically not save. For these individuals, government support and programs are the only means to help them into regular housing. Having a safe space to sleep, eat and shower are especially critical to moving out of destitute levels of poverty.  

The next step is to direct them to resources, including:

  • Grocery gift cards
  • Helping them find jobs
  • Invest in a small business that they can sustain through inflation. 

If they are hesitant about asking for help despite suffering from food scarcity, the organization gets them out of the mindset.

Final Thoughts on Matched Savings Programs for Low-Income Families

Based on our chat, Momentum has seen changed behaviour from its clients starting with saving as little as $50/month. While it may seem small, this important step does lend itself to lower eviction rates and increased credit scores.

The key however, is that matched savings seems to work with those with existing benefits like stable housing. For those without, it is less clear a matched-savings program could be beneficial as their immediate needs are just too large.

For these reasons, a matched savings program that Momentum operates can work in very specific circumstances. Beyond these, a dependency on government programs and services will remain.

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