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In an inclusive economy, everyone – including the youngest among us – would have the means to have a lifetime of economic security. Yet this is not the case for many children and families in Washington state. Financial security and stability remain out of reach for many families, especially for families of color. Thirty percent of all households and 50 percent of households headed by people of color do not have enough savings to cover basic expenses for three months in the case of a sudden job loss, medical emergency, or another financial crisis – let alone enough resources to save for their own future and the future of their kids.
Our new brief, “Building Assets for Washington State’s Future” (the second in the Progress in Washington series), focuses on the need to create a statewide child savings account (CSA) program. CSAs are long-term savings accounts established for children early on in life that build until they reach adulthood, and offer incentives that can help accumulate savings along the way. By creating such a program, policymakers have the opportunity to give kids the opportunity for lifelong prosperity. CSA programs structured to advance equity can set kids up for lifelong economic success, particularly for kids of color in families who may face additional barriers to economic opportunity.
Whether they are set up at birth, kindergarten, or middle school, CSAs can have a big impact on a child’s life. Research shows that low- and moderate-income children with college savings are significantly more likely to go to college and graduate than those with no college savings. But the benefits of CSAs are not just limited to children’s post-secondary education opportunities. These accounts demonstrate the potential for parents and caregivers, together with children, to create a shared culture around savings.
Washington’s elected leaders can give kids a strong financial foundation by developing a statewide CSA program. There are certainly logistics to work out to determine how best to establish a CSA program that reaches the needs of every child, but now is the time for big thinkers to come together and strategize about what that could look like in our state.
Our brief highlights the key elements of a CSA program that can advance equity and help build an inclusive economy for Washington state. Features that remove barriers to participation and encourage families to save – such as automatically enrolling every child, providing an initial deposit to kick start savings, and including additional incentives for children from families with low- and moderate-incomes – can help ensure all children from Washington state have the tools for lifelong financial security and stability.
Our state’s well-being is tied to the health and prosperity of kids and families. Policymakers who pursue the creation of CSAs can help our state thrive into the future and invest in our shared economic prosperity.
“Building Assets for Washington State’s Future” is the second publication in our Progress in Washington 2018 series (see the first publication, “Building an Inclusive Economy,” here). This series examines ways our state can reach the goal of an inclusive Washington state economy with shared prosperity for everyone.