Saving, IDA Programs, and Effects of IDAs: A Survey of Participants

Individual Development Accounts (IDAs) are special savings accounts designed to help people build assets to reach life goals and to achieve long-term security. Account-holders receive matching funds as they save for purposes such as buying a first home, attending job training, going to college, or financing a small business. Research has shown that most low-income participants save in IDAs (Sherraden et al., 2000). But what do participants think about the match rates, the withdrawal restrictions, and other institutional attributes of IDAs? How do they manage to set aside money for IDA deposits? And what effects do they perceive from their participation in IDA programs?

This report uses cross-sectional survey data from current (N=298) and former (N=20) IDA participants in the American Dream Demonstration to address these and other questions. Key findings include:

• Current participants were overwhelmingly positive about the institutional attributes of IDA;
• 85% of current participants said that IDA classes helped them to save;
• Participants who said that the economic-education classes helped them to save on average saved about US $9 less per month than those who did not find the classes helpful;
• Responses regarding saving barriers suggest that economic circumstances influence ability to save;
• The most common strategies for setting aside money for IDA deposits were changes in consumption behavior, particularly using existing resources more efficiently and reducing consumption quality or quantity.