For those who already know the joy of saving regularly, a new nonprofit, SaveTogether, makes it easy to spread the message while helping others reach their financial goals. Using an online philanthropy model, SaveTogether helps low-wage individuals triple their savings through the power of matched savings accounts.
Here’s how it works: A saver puts aside $25, a donor makes a secure, tax-deductible $25 donation on the website, which is then matched by $25 from government and participating nonprofits. Prescreened savers are profiled on the website and file reports on their progress saving for college, a new home or a business start-up.
“These stories of people who are at the bottom of society’s pyramid can inspire us all to be better savers,” says Dylan Higgins, CEO and founder of SaveTogether.
SaveTogether.org will soon include a map of local programs that sponsor Individual Development Accounts, matched savings accounts for the working poor.
In her first job, Marylyn Ervin, 73, made 50 cents an hour working for the telephone company. “I saved up and bought my first new winter coat. That was such a big thing, because before I’d always worn hand-me-downs,” says Ervin, who was one of 12 children on a Depression-era farm.
Now co-owner of a successful family grocery store in Morganfield, Ky., Ervin enjoys telling her 23 grandchildren childhood tales of getting only one toy at Christmas or using a kitchen dishpan as a sled. Telling stories to children and grandchildren helps transmit family values about hard work and money, says Nathan Dungan, author of Prodigal Sons and Material Girls: How Not to Be Your Child’s ATM.
“Grandparents can play an important role in passing on values like thrift, saving for a rainy day, deferring gratification and surviving bumps along the road,” says Dungan, who founded Share-Save-Spend, a nonprofit that teaches financial literacy.
Many families have difficulty discussing money, says Dungan, but grandparents can tell children things a parent can’t. “You can’t just tell these stories once,” adds Dungan. “Children hear something different at age 5, age 10, age 20. It’s the repetition of storytelling that reinforces a family’s core values around money.”
Barbara Cornish, 56, of Detroit, struggled to save money every month, but she withdrew $50 to $100 from her small savings account at Communicating Arts Credit Union when tempted by a new purse or a pair of shoes. “I just wasn’t disciplined,” she says.
Now she’s a regular saver, converted by an innovative prize-linked program called Save to Win. Last year, eight Michigan credit unions pooled resources to award a $100,000 grand prize and smaller monthly cash prizes in a savings raffle. For every $25 deposit, participants earn a chance to win, up to 10 times a month. Save to Win has been so successful, with 11,700 account holders putting away $8 million, that the program will continue this year.
Prize-linked savings programs, which blend the thrill of a lottery with a traditional savings account, are popular in more than 20 countries, says Harvard Business School professor Peter Tufano, who helped design Save to Win.
“The average American household already spends $514 a year on lottery tickets, and in poor families lottery tickets are the savings plan,” he says. “If you saved that money—with the power of compound interest—just imagine how much you would have.” In fact, that sum invested annually in a CD yielding 3 percent a year would grow to more than $6,000 after 10 years.
“Saving money can be really fun,” says Cornish, a former customer service worker. “You feel like you’re accomplishing a lot just putting away just $25 to $50 every month. Who knows how much that will be by the end of the year?” Her goal is to save $2,000 as an emergency fund for car or home repairs.