Matched Dreams – Matched Savings
Invest in Tomorrow: match saving is a gateway to Promote Economic Prosperity
Saving shouldn’t just be about setting money aside; it has the power to fuel so much more. When at its full potential, savings can empower dreams, foster growth, and pave the way towards financial stability. "Matched Savings", also known as Individual Development Accounts (IDAs), are a financial game-changer that turns dreams into reality. This innovative approach to saving not only boosts financial means but also unlocks opportunities for a more prosperous future. Here’s how.
Matched Savings programs help low-to-moderate-income families increase assets, build wealth, and achieve upward economic mobility by matching their savings with contributions from state, federal, and philanthropic funders who believe that access to financial wellbeing should be universal.
United Way is one of those funders and advocates. We firmly believe in the tangible benefits of this program, which is why we are championing its broader implementation and impact. In Massachusetts, a higher proportion of households (75%) report having $2,000 in savings compared to the national average of 66%. However, there are stark regional and ethnic/racial disparities within Massachusetts, underscoring the need for United Way to provide targeted financial coaching services to households to help increase the numbers who report having $2,000 or more in savings.
As part of this work, we are actively advocating in partnership with The Midas Collaborative and the Matched Savings Coalition for the bill An Act to Promote Economic Prosperity Through Matched Savings, currently filed and progressing through the legislature.
The bill would establish a statewide matched savings program delivered through a network of non-profits across the state, expanding access and promoting financial security. Participants would enroll into a program where they would be able to save up to $20,000 dollars. Under the programs, contributions would be matched 1:4 for a maximum of a $4,000 personal contribution and a $16,000 state contribution. While some smaller scale programs are offered by a handful of nonprofit organizations, access to these programs depends on where people live and whether they fit the eligibility criteria for the organization offering the program.
Last spring, United Way and The Midas Collaborative hosted a virtual legislative breakfast to educate and advocate for bills S.628 and H.1023, emphasizing wealth building for low- and moderate-income residents across the Commonwealth. Key legislative leaders, including primary bill sponsors Senator Jamie Eldridge and Representative Carmine Gentile, highlighted the event. Senator Pavel Payano and Kambiz Maali, Deputy Director at the Cambridge Housing Authority, also shared insights on this vital legislation.
Matched Savings is a critical strategy for bridging racial and ethnic wealth gaps and driving economic prosperity in our region. Read on for four stories of individuals whose lives were remarkably transformed that showcase the program's power, versatility and real-life impact.
MASS MoCA - Small Business Focus
Cambridge Housing Authority - Secondary Education Focus
Lawrence Community Works - Homeownership Focus
The Midas Collaborative - Administrator's standpoint
Pathway out of the cycle of poverty
The idea is simple: having assets means having the money to pay off debts. This fosters a sense of security and acts as a steppingstone toward financial stability and breaking free from the cycle of poverty.
The legislation would empower participants to make their own financial decisions by emphasizing financial independence. “By expanding matched savings programs across Massachusetts, we can help low-income residents not only increase their incomes, but dedicate more money to receiving more education, supporting their children, and buying their first home. Matched savings programs are proven to not only improve families' financial literacy but ensure greater independence in their lives,” said State Senator Jamie Eldridge (D Marlborough).
According to Senator Eldridge, the importance of this bill in Massachusetts lies in its flexibility, unlike other matched savings programs that exist in other states. Addressing the real financial struggles of many families, this bill allows the use of seed funds for purposes extending beyond conventional categories such as buying a home, starting a business, or financing education, acknowledging the unexpected financial needs often faced by families in distress like building emergency reserves, paying down debt, building credit, renovating a home, paying a medical bill, or overcoming a car accident. “One of the major problems with a lot of anti-poverty programs is that there are so many restrictions, which reduce families' opportunities to achieve financial independence. Eliminating asset limits under the bill would not only offer greater respect for the dignity of low-income residents but also expand their opportunities for self-sufficiency,” said Senator Eldridge.
Students are one example of individuals who could benefit from a matched savings program. After graduation, participants could utilize their savings for wealth-building activities, such as helping to rent a place to live, investing in higher education, or purchasing a vehicle.
Molly Goodman, MIDAS’ executive director, says this bill aims to bring match savings back to Massachusetts using state funding. It would also broaden the eligible savings goals to twelve different categories. Currently, MIDAS’ legislative focus is on enhancing program accessibility, extending it to all individuals with an income at or below 80% of the area median income (AMI), translating to individuals earning approximately $63,500-$79,350 or a household of four making about $90,650-$113,300.Midas is currently playing a crucial role as the custodian for the funds, overseeing match tracking and managing the essential back-office aspects of Match Savings administration in collaboration with its member organizations: Cambridge Housing Authority, Break Time, Urban Edge, Quaboag Valley, MASS MoCA, and Maha. As of now, they have about 600 participants.
“We really want to meet people where they're at in terms of their asset building and make sure their financial health is in order before they go into the process of purchasing an asset, and that will prepare them to best maintain that asset and going forward continue to build wealth,” said Goodman. “My main motivation is to create wealth building opportunities for low-income communities or low-income individuals.”
Mindsets, and Homeownership in Enhancing Economic Mobility
Growing up in a household of devoted teachers in Lawrence, Pavel Payano always had the unwavering support of caring individuals who helped him navigate life's challenges. When he entered college, the absence of a car meant enduring long commutes of over four hours every day to work and back, sometimes starting before 6:00 AM.
His mother's suggestion to save for a car initially felt daunting, but they managed to save $5000 for his first car. He contributed $2500, and his mother matched it with another $2500. This “homemade match saving project” propelled Payano to a new level. It wasn't just about the car; it was about the doors this vehicle opened for him. “I always think back to that because if it weren’t for my mom supporting me and showing me that possibility, I don't know how long it would have taken for me to have my own vehicle. Having that vehicle allowed me to take on new responsibilities,” said Payano.
He has witnessed firsthand how this program helped individuals achieve economic self-sufficiency, enabling entrepreneurial ventures like food trucks or stores, which might otherwise be challenging due to limited access to loans. These programs provide crucial support and help build the necessary assets for such ventures, empowering individuals to create jobs and become their own bosses.
He emphasized that saving isn't just about stashing money in a bank; it's about financial responsibility. “It's about getting individuals to think about how they can use this money to better improve their situation and ensure there's economic mobility,” said Payano. He is enthusiastic about scaling and expanding such programs to foster growth and stability in communities. Payano's statements mirror the favorable outcomes resulting from Lawrence Community Works' leadership in the Matched Savings Program for Lawrence residents.
Here are the stories of two of those residents: Ashley Tejeda and Johanny Ferreras.
Ashley, a native of the Dominican Republic, came to the United States in 2018 after earning her degree in her home country in Business Administration with a focus on Marketing. She discovered the credit building and Individual Development Accounts (IDA) programs through her volunteer work at Lawrence Community Works (LCW). “A program where you save money, receive financial education, and get help to buy your house with an incentive seemed WOW to me. When coming to the USA, the aspiration of owning a house is a significant mindset,” said Tejeda.
She wasn't brought up learning about budgeting or financial responsibility. The aspiration to have a home of their own, combined with the positive outcomes of the program, inspired both her and her husband to enroll. In the IDA workshops, participants attend seminars for first-time homebuyers, a course for potential landlords to consider future investments, and a Home Safe course to understand available resources. These courses cover a range of topics, including mindset, budgeting, credit management, savings, bankruptcy, and identity theft.
“I had never made a budget in my life. Our first family budget was made at LCW, and from there our lives changed financially, bringing us great benefits,” said Tejeda. They saved $200 monthly for a period of 6 months and LCW matched 3 times the value of their savings. After the program ended, they continued saving voluntarily for another year, and their dream came true in 2020 when they bought their home. It's been almost four years since they moved in, now with a 3-year-old baby. “It was a new home and a new baby!” said Ashely with immense happiness.
Ashley shares valuable advice with individuals striving for financial objectives: "Allow yourself to be guided by individuals with expertise because education is crucial. With financial education, you attain peace of mind. This program steers you towards a path that offers both financial stability and peace, enabling you to provide the best for your family. Thanks to the program, I learned the importance of aligning expenses with what you can afford and not exceeding your means."
Ashley was so impressed by the program and its mission that she decided to apply to work with LCW. She started as a financial coach, then became a pre-purchase counselor, and now she is a foreclosure prevention counselor. Approximately 300 individuals have received guidance from her throughout her involvement in the program. “LCW gave me a home and now I am educating and helping people to not lose their homes,” said Tejeda.
A compatriot of Ashley, Johanny Ferrera, shares her journey with LCW and homeownership. Johanny is an active volunteer at LCW. She arrived in Lawrence from New York in 2018 while pregnant with her second daughter, with two other kids in tow. LCW became her second home and opened its doors for her to start volunteering in community events and projects. It was through this work that she discovered the IDA program and became a participant in January of this year, purchasing her house in July. She set a record by purchasing her house before completing the program. LCW matched her savings in a 1:5 ratio, and this higher match was made possible due to the availability of additional funds.
"I particularly liked the aspect of the program that focused on budgeting, as it taught me how to allocate expenses for buying the house and financing, including having an emergency fund,” said Ferrera. “The program assisted me in organizing my finances, reducing daily life expenses, purchasing only what is truly needed, and setting spending limits to reach my goal.”
Enhancing Education and Financial Security
Sudbury State Representative Carmine Gentile, another supporter of the bill, emphasized how matched savings programs are crucial in aiding young individuals and students who encounter challenges, ultimately enhancing their opportunities. “These programs allow people that otherwise can't get up to that next step of the ladder to move on,” said Gentile.
In Cambridge, the 11-year Work Force Youth Program run by the Cambridge Housing Authority supports students and families from 6th grade through the first four years of post-secondary education, integrating an essential aspect of matched savings. “We are helping them transition successfully from middle school to high school, from high school to post-secondary attaining a degree or certificate," said Gentile.
Savings start in sophomore year for post-secondary expenses like tuition or computers. The savings are accumulated through exploratory jobs, internships, stipends for workshop participation, summer employment, and small monetary incentives. Students are encouraged to save up to $1,500 during high school. The program matches each dollar saved, up to $3,000 in the last three years of high school.
Jaymie Montout is a current junior nursing student who praises the significant financial support she received from the matched savings program. Beginning in 8th grade, she became a participant in the Matched Savings program offered through the Cambridge Housing Authority’s Work Force Youth Program and participated until her high school graduation. “The Work Force provided me with professional development classes, equipping me for the workforce and adult responsibilities in ways that school did not. I learned about taxes, distinctions between blue-collar and white-collar jobs, effective networking, and crucially, how to save money,” said Montout.
Throughout her high school years, Jaymie strategically managed her earnings from the workforce and her part-time job. Rather than spending all her money, she made a conscious effort to set aside a portion directly into her matched savings account. The outcome? A substantial sum accumulated over time, which she continues to rely on even after her graduation in 2021. “I currently have around $740 in my matched savings account, and as I enter my junior year of college, this amount will soon cover my first month's rent for my apartment,” said Montout.
“This has really helped me in so many ways. It has covered my tuition, two entrance exams fees for nursing school applications, my study materials such as books and access codes every semester. On average, these unplanned expenses add up to $300. So, it definitively took off a lot of the financial stress of college because my family didn't have a lot of money to put directly into my account,” said Montout. “It’s a safety net for me. It always keeps me reassured. If at the end of the day I can't get this money together, I know that I can use my matched savings account.”
The two aspects she appreciates the most about the program are the sense of security and its versatility. “It's not strict. It’s not just about the tuition; it's those additional expenses that aren't directly outlined in your bill that can hit the hardest. This program has been a lifesaver for expenses that can't be covered through financial aid or loans. If the expense is related to your education and you can demonstrate its relevance, the matched savings can assist,” said Montout.
One of her other favorite aspects of the program is how it empowers students to take charge of their learnings. Looking back, she wishes she had invested much more in that account if given the chance. In high school, the thought of maximizing this opportunity might not cross one’s mind. She advises active engagement and considering its potential to make a significant difference in one's education.
The goal is to break the cycle of poverty, acknowledging that a degree is a significant asset for students to start building their wealth. Many of these students lack generational wealth and the familial support that could help them during their educational journey. “Ultimately the statistic that really speaks to our work is that about two-thirds of our students are no longer living in public housing six years out of high school,” said Gentile.
This is truly about people's lives and journeys. We want to shed light on the everyday challenges numerous low-income families who aspire and work hard, face when they lack the resources needed to make decisions and pursue opportunities.
Dreams on a Dime: The Power of Micro Savings
"Matched savings would be a game-changer for thousands of people throughout the Commonwealth, this would allow them to move beyond being stuck, to move ahead, get a college education, start a small business, and take that courageous step towards owning a home," said Kamiz Maali, Deputy Director of Resident Services at Cambridge Housing Authority.
This sentiment rings true in the story of Maria Finkelmeier, a talented composer, percussionist, and new media artist based in Boston for the past decade. Maria embodies the entrepreneurial spirit that the matched savings program encourages, leveraging her creativity and dedication to run her own business, MF Dynamics.
Maria has a degree in contemporary classical percussion playing, which serves as the foundation for her artistic journey. Her work beautifully bridges the fields of performing and public art, she has taken her musical skills out of the concert hall and into public spaces. “I have infused a lot of technology and contemporary tools to advance the music that I like to produce, perform, and compose. Everything that I do in my artistic life runs through my studio.” said Finkelmeier.
Maria leads a team of skilled professionals, ranging from project managers to technicians and collaborative partners. The team's structure adjusts dynamically to meet the specific demands of projects she undertakes or receives commissions for. In addition to her artistic endeavors, Maria's dedication extends to educating and empowering the next generation. She teaches creative entrepreneurship at Berkeley College of Music, a newer venture that she finds incredibly exciting. “I am trying to empower the next generation to think creatively about their career and how to use their artistic minds and unique ways to not only just establish a career for them, but also hopefully to do good in the world,” said Finkelmeier.
Maria discovered the matched savings program through the MASS MOCA and its Assets for Artists (A4A) program and decided to join. She began the program when she moved to Massachusetts. By 2013, she had successfully saved $2K in a year, which was then matched with an additional $2K grant. “The program empowered me to set meaningful financial goals aligned with my vision. I was really motivated by not only the financial support, but also the educational resource that came along with the program,” Finkelmeier said.
“The program's workshops on financial management, budgeting, and business planning set me up for success by providing me with long-term tools, extending beyond the program's duration. I am proud to say that I've been able to sustain my creative space since going through the program with those skills,” said Finkelmeier. The program not only helped with savings but also provided a network of connections through the workshops, fostering collaboration and shared learning. “It was a nice network to be a part of to have other people that are going through the same thing and to learn from one another regardless of your career path,” said Finkelmeier.
This program offers aspiring entrepreneurs like Maria the crucial financial foundation needed to ignite their business dreams, fostering growth and opportunity in the community. Maria's journey showcases the potential for budding business owners to turn their aspirations into reality, contributing to a more prosperous and vibrant Commonwealth.
In the diverse landscape of Massachusetts, families grappling with multi-generational poverty or immigrants new to the state are finding hope through matched savings programs. These programs enable families to save for their children's education or invest in assets like a home, paving the way for generational progress and improved opportunities. As racial and economic inequality continue to widen, exacerbated by the recent pandemic, this bill's potential impact is crucial.
It is essential to embrace this new model to provide better support and economic stability to families in need, creating a more equitable and prosperous future for all communities across the state. “It’s time for Massachusetts to step up and invest in our residents with these kinds of programs. Be a model with the Match Saving Program,” Molly Goodman.