Individual Asset Building Approaches

Research shows a link between health outcomes and wealth, with both income and wealth contributing to better health outcomes. People with more accumulated wealth often live longer, healthier lives with lower rates of chronic illness. The financial resources available to families can have an impact on long-term educational and employment opportunities, which affect the ability of families to build wealth. Wealthier individuals with higher accumulated assets have increased access to resources that contribute to an improved quality of life, such as access to healthier foods, housing, transportation, jobs, and more. As a result, strategies that help individuals and families accumulate monetary assets can be a way to address many social determinants of health (SDOH).

Individual asset building approaches, also known as wealth building approaches, include strategies for saving up financial assets. In addition to improving financial literacy and promoting individual savings, asset building approaches can also include strategies that help individuals:

• Pay off debt
• Increase credit scores and improve access to financial services
• Learn about the Earned Income Tax Credit (EITC) and child tax credit
• Develop small businesses and engage in entrepreneurial efforts
• Protect their accumulated wealth through health and home insurance coverage

Accruing assets, including monetary assets, land, livestock, and other property, varies across the country and in some rural regions can be challenging for residents due to multiple factors. Assets held by rural residents may differ compared to urban residents, and often income and other monetary earnings are lower for rural residents.

Savings Accounts as an Asset-Building Approach

One promising approach for rural families looking to build monetary assets for their children beginning at an early age is through Child Savings Accounts (CSAs). These savings accounts help prepare families for the financial investment in college and for life costs after college by providing additional economic stability. These accounts can include traditional savings accounts or 529 savings plans. Individual Development Accounts (IDAs) are another asset-building approach that can be effective for rural residents for accumulating monetary assets to help improve their financial outlook. These savings accounts often incentivize investments by providing a monetary match for dollars saved. These accounts can be funded through the government, local organizations and nonprofits, or through other private funders.

Financial Education and Technical Assistance to Build Assets

Another important approach to improve individual wealth is providing financial education and technical assistance to communities. In some rural areas, Rural LISC (Local Initiatives Support Corporations) works with community-based organizations to fund Financial Opportunity Centers (FOCs) which provide education and support to communities related to employment and financial planning, as well as offer guidance for individuals on building wealth and assets.

Community Development Financial Institutions Improving Access to Financial Services

Community Development Financial Institutions (CDFIs) aim to improve community access to financial services and products. CDFIs can be local banks, loan funds, or other organizations that provide capital to communities to help improve the local economy. By providing new and improved financial opportunities for rural communities, CDFIs can work to address rural SDOH. For example, CDFIs can help fund improvements to the local food system, help develop transportation systems, and offer loans to build up local businesses.

Earned Income Tax Credit (EITC)

The EITC has been described as one of the most effective programs at reducing poverty in the U.S. EITC is a refundable tax credit from the government available to low-income workers. There is evidence that the EITC can increase income, reduce poverty levels (especially among single parent households), improve savings, and increase employment. The EITC has the potential to benefit rural communities, but many people are not aware of this benefit. Approximately 25% of people who are eligible for the credit may fail to claim it when filing their taxes each year.

The Volunteer Income Tax Assistance (VITA) program offers free tax preparation services to people with low incomes, disabilities, or limited English proficiency. VITA educates people about claiming specific tax credits, including the EITC. Education about claiming other tax credits, including the child tax credit, has also been recommended as a strategy to reduce poverty.

Examples of Rural Programs that Focus on Individual Asset Building

• Prosperity Works is a New Mexico program that offers families the opportunity to open a CSA to contribute to their child's college education and accrued expenses after graduating. The program provides families with financial training and education and offers a matched savings account that parents can open when a child is born. Prosperity Works also incentivizes parents to open additional savings accounts. By contributing to it, Prosperity Works promotes families' investments in securing healthy outcomes for children. The program also offers New Mexico residents Individual Development Accounts (IDAs) which are matched savings accounts to help save for their future.
• CASA of Oregon is improving the quality of life for rural, underserved Oregonians through programs that increase a families' capacity for financial well-being. CASA of Oregon partnered with other nonprofit organizations to develop the Valley Independent Development Account (VIDA) program, which offers IDAs to individuals and families investing in their first home, small business, or to be used towards post-secondary education. They also administer the Matched College Savings Program (MCSP) and E3 (Earn, Educate, Empower), IDA programs for students pursuing a post-secondary education. These savings programs help families and individuals accrue assets and increase long-term financial stability.
• The Community Caring Collaborative (CCC) is committed to removing barriers and building family assets in an effort to increase opportunities for people in the community. CCC agency partners working with children and families have access to flexible CCC funds to help reduce barriers for clients. The Hope Fund and the Dream Fund are both CCC initiatives that provide financial assistance to individuals or families. These funds can help people in need of support for housing, child care, transportation, health expenses, a family emergency, or to address other factors that can improve health and well-being.
• WealthWorks is an initiative aimed at improving regional economic development and individual financial security in Appalachia. The initiative identifies sustainable opportunities in different areas that can build up the economy. One example is happening in Appalachia. Multiple sectors are working together in rural parts of Kentucky to make investments in clean energy that have helped to increase individual financial assets. This program has helped the local economy in several ways, including helping homeowners save money by making their homes more energy efficient.
• The Building the Capacity of CDFIs in Georgia program is focusing their efforts in rural areas. The program provides money and technical assistance to support the work of CDFIs in improving health and well-being. These CDFIs are providing financial education to rural, low-income communities. In addition, they are helping invest in areas which historically have had low levels of investment and where there are high levels of poverty.

Implementation Considerations

Rural wealth may look different than wealth accrued by urban residents, and can include non-monetary assets such as land, farm equipment, and livestock. While these are important assets, they can be challenging to sell or liquidate.

Rural residents in some areas continue to face higher unemployment and poverty rates compared with their urban counterparts. Challenges in finding employment can make it extremely difficult to accumulate wealth and to save for the future. For this reason, workforce development strategies are important to consider when implementing asset building approaches. For more information, see Workforce Development and Human Capital.

Educational opportunities may also be more limited in rural areas, and finding the right staff with experience to run programs focused on asset building may be a challenge. Organizations trying to implement programs that offer financial education, like Volunteer Income Tax Assistance (VITA), should consider transportation and other needs of participants to ensure sustainability. It may be difficult to find enough volunteers in an area to implement some of these programs. For this reason, programs that have been successful in helping families improve their financial stability often partner with other community-based organizations, local banks, CDFIs, or other funding agencies to help find the right expertise and resources to run these programs.

Program Clearinghouse Examples

• CASA of Oregon
• The Community Caring Collaborative

Resources to Learn More

Economic Opportunity
Website
Financial planning resources and strategies for parents and families to help with asset building. Describes how the Annie E. Casey Foundation is working to address and improve financial stability to improve well-being.
Organization(s): The Annie E. Casey Foundation

Growing and Retaining Wealth in Rural America: Connecting Individual Asset-Building Strategies with Entrepreneur-Focused Economic Development to Create Rooted Wealth in Rural Communities
Document
Report focused on asset building and economic development strategies in rural communities that aim to create and sustain local wealth. Presents a systems approach to wealth creation with a focus on the importance of place and local context.
Organization(s): CFED, Ford Foundation
Date: 5/2011

The Health and Wealth Connection: Opportunities for Investment across the Life Course
Document
Describes how health and wealth are interconnected and discusses how funders are becoming aware of the connection between individual financial assets and health outcomes.
Author(s): Purnell, J.Q. & Hajat, A.
Organization(s): The Asset Funders Network
Date: 2017

Rural Wealth Creation: Concepts, Strategies, and Measures
Document
Discusses strategies and a framework for wealth creation in rural areas and describes how a variety of asset types are important to community economic development. Also describes how the impact of wealth can be measured.
Author(s): Pender, J., Marre, A., & Reeder, R.
Organization(s): USDA Economic Research Service
Date: 3/2012

Wealth Creation
Website
Resources related to economic development and wealth creation geared towards rural audiences. The resources include tools and information about asset building and ways to build sustainable livelihoods.
Organization(s): Yellow Wood Associates, Inc.