There are many reasons why people struggle to save money and move out of poverty. One is not having any extra money around for college, a house or to start a business.
That’s where one local organization has stepped in with a potential solution.
New Mexico in Focus producer Sarah Gustavus stopped by this week to talk about a special report in this week’s show on New Mexico PBS. She spoke with KUNM's Chris Boros.
KUNM: Your team looked at a savings and financial literacy program offered by the non-profit Prosperity Works. Why that program?
GUSTAVUS: We all know that New Mexico is a poor state. And it’s been that way a long time. We wanted to take the time to look at some potential solutions that are showing promise. And we wanted to hear directly from folks who have used this program to learn how it changed how their perspective on what’s possible. A great example is Francesca Duran-Lopez.
"Growing up, my mother was a single parent of three and our monthly income was about $300 a month, $150 of that was our house payment," Duran-Lopez said. "So $150 extra was for everything else. We never were talked to about, ‘this is your piggy bank, we’re going to save this, it’s for a college fund.’ It was just usually that resources were very limited and my mom trying to gently explain to us why we couldn’t have that.”
KUNM: So how did Duran-Lopez use the program?
GUSTAVUS: It’s called an Individual Development Account, or IDA, and she used it to pay for her bachelor’s degree. But she makes the connection between that experience and how she was later able to advocate for herself when she bought her own home.
KUNM: So how exactly do these IDAs work?
GUSTAVUS: They are savings accounts that are matched. When folks put in a certain amount of money, it’s matched with more money and that builds up over time and opens up more opportunities. There are IDA programs across the country. But we were really interested in how they are being used here in New Mexico because there are so many people like Francesca who want to continue their education or provide a better life for their kids and they just need some money to get that going.
KUNM: But is what people save in an IDA really enough money to go to college or start a business?
GUSTAVUS: It’s not always all of it. We’re not talking about $10’s of $1000’s of dollars, it’s really a small amount of money that has a huge impact. But it’s a start and Prosperity Works partners with other organizations that can help people find additional resources.
A good example is the Prosperity Kids program. Young people are saving money for college, a few dollars at a time. It won’t pay the full tuition, but the program is based on the idea that the whole family gets involved and they all start to see a potential future for that young person that’s worth investing in and making a priority in small ways today.
KUNM: Sounds like this program empowers people.
GUSTAVUS: It does. Duran-Lopez has a really powerful story about how the IDA program changed how she sees her community. We also spoke with the owner of a local business, the BikeSmith, and we followed some kids and moms on their trip to the bank to deposit what the kids saved for their college fund.