Individual Asset Building

Individual asset building approaches, also known as wealth building approaches, include strategies for saving up financial assets. Asset building approaches may include strategies for improving financial literacy, promoting individual savings, and helping people to:

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

Accumulating assets, including monetary assets, land, livestock, and other property, presents varying challenges across the country, particularly in rural areas. In addition, the assets held by rural residents may differ compared to those held by urban residents. Income and other monetary earnings are often lower for rural residents, which directly impacts their capacity to build wealth.

Strategies focused on asset building can serve to address multiple social determinants of health (SDOH). Research shows a strong link between wealth and health outcomes, with both income and wealth contributing to better health, such as lower rates of chronic illness. Financial resources also contribute to long-term educational and employment opportunities, which in turn affect the ability of individuals and families to build wealth. People with greater accumulated assets often have increased access to healthier foods, stable housing, reliable transportation, and better job prospects.

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). CSAs help families prepare for the financial investment in college and for life costs after college. CSAs include traditional savings accounts and 529 savings plans.

Individual Development Accounts (IDAs) are another asset-building approach that can be effective for rural residents to accumulate monetary assets to help improve their financial outlook. IDAs are designed specifically for people with low incomes, to help them with specific goals, such as enrolling in post-secondary education, starting a business, or purchasing a home. IDAs 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

Financial education and technical assistance can also help improve the individual wealth of people living in rural areas. 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 for employment and financial planning, as well as offer guidance for individuals on building wealth and assets.

Earned Income Tax Credit (EITC)

The EITC has effectively reduced 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, is also 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 described above.
CASA of Oregon is improving the quality of life for rural Oregonians through programs that increase 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. 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 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. The Funds can help people in need of support for housing, child care, transportation, health expenses, family emergencies or other factors that can improve health and well-being.
WealthWorks is an initiative to improve regional economic development and individual financial security. The initiative identifies sustainable opportunities that can build up the economy in different areas, including the housing, food, and transportation sectors. For example, one effort in Appalachia involves collaborative marketing efforts to connect food producers with buyers. The program builds infrastructure to support food systems, supports the rural agricultural economy, and increases access to local, healthy foods.
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. CDFIs are providing financial education to rural, low-income communities. CDFIs are also helping invest in areas with historically low levels of investment and high levels of poverty.

Implementation Considerations

Rural wealth may look different from wealth accrued by urban residents. For example, rural individuals are more likely than urban individuals to have assets connected to their businesses, while people living in urban areas hold more assets in homes, retirement accounts, and stocks and mutual funds. While rural individuals often concentrate more of their assets in their businesses out of necessity, having assets in various forms offers greater security should the business close.

Rural residents in some areas continue to face high unemployment and poverty rates. 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 it may be a challenge for rural programs to find the right staff, with experience to run programs focused on asset building, or have enough volunteers to help implement a program. Organizations implementing programs that offer financial education, like Volunteer Income Tax Assistance (VITA), should also consider the needs of participants, such as transportation, to ensure sustainability. Programs have found success partnering with other community-based organizations, local banks, Community Development Financial Institutions (CDFIs), or other funding agencies to help find the right staff, expertise, and resources to run and sustain these programs.