Savings and Asset Accumulation in Individual Development Accounts

Long-term improvement in well-being requires asset accumulation. While saving is not easy for anyone, it is more difficult for the poor because they have few resources relative to subsistence requirements, because they lack access to some public-policy mechanisms that subsidize saving, and because scarce resources and restricted access may push saving out of their world view. Individual Development Accounts (IDAs) are a new policy proposal designed to address these constraints and to improve access to savings institutions for the poor. Withdrawals of deposits by the poor in IDAs are matched if used for home ownership, post-secondary education, or microenterprise. Participants also receive financial education and support from IDA staff.