This week, Texas is one of many states celebrating America Saves Week, a

national week to promote personal savings and encourage individuals to

take financial action. American Saves Week couldn't come at a better

time, with so many Texan families struggling. To strengthen our

communities, Texas needs to adopt a new blueprint for helping families

save.

 

As noted in Why Thrift Matters: 20 Propositions, a report recently

released by the Institute for American Values, Americans are

rediscovering the  thrift of our forefathers and mothers, who worked

hard, saved their money and shared their wealth with those in need. The

recipe for building financially strong families and communities remains

the same today. Texas Saves Week reminds us that we need only look back

to find a wiser way forward. We need to work together, not just for

individual change, but to create a culture that values hard work,

planning ahead and the importance of community.

 

Creating a college-going culture is widely acknowledged as the best way

to secure a better future by increasing the earning potential of

tomorrow's labor force. In Texas, we need to direct similar energy to

creating a savings culture. Like a good education, household savings -

regardless of family income - is a sound predictor of whether a child

who grows up poor will become part of the middle class. The association

between savings and future financial security is even more pronounced

when savings are targeted toward college. Academic research has found

that a child with a dedicated savings account is seven times more likely

to attend college than a similar child without such an account, even

when controlling for race or income. In essence, savings represent hope

and opportunity.

 

Texans want to become better savers. In the 2010 Survey of Texas Savers,

over three-fourths of all Texans said they want to save more in the

future; nearly 90 percent of the poorest said they want to save more.

But Texas families need more than discipline and desire to be able to

save. They need opportunities and incentives. They need a culture that

makes savings the default choice, not the exception or choice reserved

for wealthier families.  This is why both public and private sectors are

working together to help households build financial security. For

example, in some Texas communities, financial institutions, community

tax centers and local United Ways now provide incentives and

opportunities for working Texans to save a portion of their tax refunds.

Throughout February, Texas Saves -a campaign to promote savings to low-

and moderate-income Texans lead by the Center for Public Policy

Priorities in partnership with our Opportunity Texas partners -- is

distributing savings tips and resources to families and raising

awareness about the importance of savings.

 

Another partnership, Bank On Brazos Valley, is having excellent results

in getting more Brazos Valley residents connected to the financial

mainstream and on the pathway to savings. The Austin Savings Bond

Project, run by Foundation Communities and supported by Opportunity

Texas and the City of Austin, provides small incentives for tax filers

to save a portion of their refund with a U.S. Savings Bond. More

partnerships among banks, credit unions, schools and nonprofits are

needed to promote savings for all Texans.

 

Texas policymakers have a role to play in promoting savings. In 2011,

the Legislature adopted several policies to promote savings, requiring

K-8 math-based financial education and establishing both the Texas Save

& Match, which helps families save for college by matching their

contributions to pre-paid tuition accounts, and the Texas Financial

Education Endowment as public-private initiatives to enable household

savings.

 

Despite these steps, the Corporation for Enterprise Development's 2012

Assets & Opportunity Scorecard ranked Texas in the bottom 10 states in

overall measures of household financial security. One in two Texans

lacks enough "rainy day" savings to weather a loss of income. We also

rank at the bottom in terms of average credit score.

 

We can do better.  In order to move ahead, the Legislature should remove

policies that punish or discourage household savings. For example, one

pro-savings legislative step would be to limit the number of times a

payday lender can raid Texas bank accounts for the same loan.

Legislators also should abolish the social services policy that counts a

family's savings when determining whether working families qualify for

health insurance coverage for their kids. The message to these families

is clear: give up your dream of owning a home or educating your children

-- you have to choose between saving or caring for your children.

 

Texas Saves Week is an excellent time to encourage Texas Legislators,

along with key stakeholders in business, education, and philanthropy to

support strategies that strengthen household financial security. Helping

Texas families save should be seen as an economic development strategy

to create a stronger middle class and a brighter future.

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Don Baylor is economic opportunity senior policy analyst at the Center

for Public Policy Priorities in Austin. Chuck Stokes is a Fellow at the

Institute for American Values' John Templeton Center for Thrift and

Generosity and Scholar-in-Residence at Samford University.

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(c) Texas Lone Star Forum. 2/12