14 Kirk Street, Lowell MA 01852
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Training and Small Business Development
© 2006 Acre Family Day Care
Updated April 27, 2007
Budgeting to independence: Lowell program helps teens budget with an eye toward reaching goals
by Leslie Anderson, Globe Correspondent
Boston Globe
January 21, 2001
Lowell -- It isn't a taste for fancy cars or expensive clothes that stands between Charleen Negron and college.
It's the little things like snacks and sodas that devour the money that the 16-year-old Lowell High School junior could be saving toward her education.
"I can't believe it!" Negron exclaimed after she tracked her daily expenses in a spiral notebook. "Ten dollars a day on food!"
Keeping a penny-by-penny log of expenditures is a humbling experience for even the savviest consumers who can't resist stopping by the corner cafe for their $3 mug of latte.
For 16 teens who are enrolled in a unique program at Acre Family Day Care, however, it is an eye-opening exercise that could help them attain their educational and life goals.
Acre Family Day Care, a non-profit agency that cultivates economic independence in low-income women and their families throughout Lowell, recently began offering a teenage version of its innovative Individual Development Account program.
If the student can save $25 each month, the agency will match it with $75 through a grant under the federal "Assets for Independence Act." At the end of two years, the students can use the assets solely toward education-related expenses such as tuition, books and computers.
They also meet monthly at Acre Family Day Care to learn the basics of financial planning. Most participants come from Middlesex Community College's Upward Bound program at Lowell High helping low-income and first-generation students prepare for college.
"We stress to be focused. Know your needs, your wants, your goals," IDA coordinator Zelma Khadar explained. "It's hard to tell a group of teenagers that. We had little skits to show how peer pressure influences the way they think."
Certainly, teenagers and low-income families aren't the only people who have trouble saving money. According to the National Endowment for Financial Education's student workbook, US citizens generally save less than 5 percent of their gross income. The average teen spends approximately $3,500 a year.
"No matter what your income background is, you're better off for having some education around savings and spending patterns and budgeting and interest rates," said Anita Moeller, executive director and founder of Acre Family Day Care. "That's a universal."
For people with low incomes, however, learning how to save can be the key to acquiring a house, an education, a business -- all the facets of the American dream.
"There's a misconception out there that poor people can't save money, but that's not true," Moeller said. "They don't have as much to save, but they can save money. That's why IDAs can work."
When Acre Family Day Care began offering an IDA program to adults in 1998, it was the first subsidized savings and financial education program in Massachusetts. More than half of the early participants were women that the agency had trained to become day-care providers.
The savings goals were the same as they are in the teen program: monthly deposits of $25 would be matched by another $75, accumulating to $2,400 at the end of two years. The money could be used toward buying a home, starting or improving a business or enrolling in post-secondary education.
Participants must have a family income not more than twice the federal poverty level, or $33,400 for a family of four. They were also required to attend classes on topics such as budgeting, taxes, banking and how to buy a house.
In November, 20 people graduated from the two-year adult program. Three of them purchased homes, three renovated their houses and six invested in education for themselves or their children.
Today, at least five other IDA programs are in operation in Massachusetts. Through the federal Assets for Independence Act, IDAs are expected to reach an additional 30,000 to 40,000 working-poor Americans by the year 2003.
Meanwhile, the Corporation for Enterprise Development, a nonprofit organization based in Washington, is lobbying for a national program that would provide tax credits to financial institutions that matched IDAs.
In fact, Moeller and other advocates say that with enough government and private support, Individual Development Accounts can be to the poor what Individual Retirement Accounts are to the middle class.
"People with higher incomes have access to matches to their income," Moeller noted. "If you own a home, you get tax write-offs. If you're high enough income to get a job where they offer a 401K, you have a benefit that people in a minimum-wage job never get."
The same saving incentives should be offered to low-income individuals, Moeller argued. "The only way to make money is to have some cushion so you're not one disaster away from having nothing again," Moeller said. "I would like to see IDAs become like IRAs."
If anyone has learned the benefits of savings money, it's Amsi Morales, a 20-year-old student at Middlesex Community College who joined the teen IDA program at Acre Family Day Care last year as one of its original four participants. She is planning to use her IDA toward a business degree.
At 16, Morales began working at a pizza joint. When she learned that 18 was the minimum age for owning property, she took it as a challenge. Before her 19th birthday, she had purchased a condominium for $50,000. She recently sold it to buy a house for her family.
At one point, Morales said, she worked 80 hours a week between her overnight job stocking shelves at a Wal-Mart and her day job as a shift leader at Shop 'N Save. She remained in school, however, and is planning to transfer soon to a four-year college.
How did she manage to acquire her piece of the American dream?
"I took a first-time homebuyers class. I just kept asking questions," Morales said. "I had it in my head I was going to do it."