Karissa Coltman, SaveUSA Research Coordinator and Tax Program Operations Specialist, is our May guest blogger.
In a tough economy where so many hard working families are barely making ends meet, it might seem strange to ask “What are you saving for?”. Yet this is exactly the question asked of and answered by 702 families this year in Tulsa who enrolled in SaveUSA. They have been given the opportunity to have 50 cents of each dollar they saved matched in a special savings incentive research study. This savings incentive opportunity was offered at tax time to income eligible families in four cities across the country, including Tulsa, Oklahoma.
The program which is also offered in New York City, Newark, NJ, and San Antonio, TX, just completed its second tax time enrollment period where tax payers with dependants making $50,000 or less and tax payers with no dependents making $25,000 or less were given an opportunity to set aside a portion of their refund (a minimum of $200) into a special savings account with an opportunity to receive a 50 cent deposit matching each dollar they saved at tax time, up to $500, on February 1,2013.
Community Action Project of Tulsa County is one of the research sites tracking two randomly assigned sets of participants, a program group that had the opportunity to open the matched savings account, and a regular filers group that did not. Researchers hope to determine over a 3 to 5 year period whether there is any significant difference between the program group with an incentive to save part of their refund and the regular filers group. The study is in its second of three programmatic years, and will follow participants for a total of five years to determine long term impact of an incentive to save.
Out of the 702 participants who enrolled in 2012 at Community Action Project tax sites, 351 were randomly assigned to the program group and of these, 322 opened accounts pledging to save $143,633 until February 1, 2012. But they are not alone.
During its first year in 2011, 712 people enrolled in SaveUSA, 351 were regular filers and 361 were program participants pledging to save $179,773. Out of the program group of 361, 333 were able to open a savings account and pledge a deposit. On February 1, 2012, 186 matching deposits were made into accounts of those Year 1 program group members who successfully saved their initial deposits. Out of those 186 who received a matching deposit in their savings accounts, 93 of them came back in 2012 and made additional deposits. On top of that, 33 families who had either withdrawn below their initial deposit or closed the account early returned to Community Action Project SaveUSA tax sites for a second year opportunity to save even more money. In total, 126 returning participants pledged an additional $72,369 to their accounts in 2012.In 2012, the total number of families who made tax time deposits into SaveUSA accounts was 448 and this group is pledging to save $216,002 until February 1, 2013.
With so many families in Tulsa pledging to save part of their tax refund money, you might find yourself wondering, “What are they saving for”? Many are building a financial foundation so that they or their children can go to college. Some are pre-planning for future expenses. But most are just trying to create a rainy day fund so that they have a financial cushion to deal with the unexpected. While it is still too early to determine the long term impact of savings on these families, the hope is that the data being collected in Tulsa and around the country will provide compelling evidence about whether or not families with an incentive to save money do save more and are better off because of their savings.