Times are tougher than ever in our country. Despite all the good President Trump is doing to heal the economy and create opportunity, many of us still struggle to get by. If you can relate to this, you might be missing out on an important opportunity: investing in an Individual Development Account (IDA).
- The IDA program helps qualifying individuals save money by having several entities match your deposit payments at between a 1:1 and 8:1 ratio. For example, at the lower end of that spectrum, you could deposit $100 and have them match your investment by $100. At the higher end, you would deposit $100 and have them match it with $800. This program is designated specifically to Americans who are low-income, especially those on social assistance.
- If eligible (Most people receiving Temporary Assistance to Needy Families [TANF] benefits will be, but it isn’t limited to them.), the process begins. The government redirects a small portion of incoming TANF benefits into a savings account for you each month. This money grows over time.
- To aid you in growing your funds, the Treasury Department or other state and local departments cross-match your funds at somewhere within the aforementioned ratios (1:1 up to 1:8). Having your deposit octupled, however, is extremely rare; it’s far more common for matches to sit around two or three times what you put in.
- You can use your IDA-associated funds to improve your financial situation in a variety of ways. Some Americans invest in entrepreneurship, while others use it as a down payment on a home. Still others choose something else entirely. The main goal is to help you make your money grow faster than you otherwise could with your current buying power.
- The IDA program won’t just multiply or match your funds; there are special requirements even if you qualify. For example, most IDAs require that you build your credit, attend credit repair workshops, or even attend financial literacy classes and training programs.
- This, too, is also to your benefit financially. You’ll become better able to manage your money, knowledgeable enough to start your own business, or even better equipped to buy and own your own home eventually. The bank providing your IDA will also help you identify and set goals that work for your budget.
IDA’s don’t count as an asset when determining government benefit eligibility. If you choose this route, you can grow assets and build savings without losing your monthly benefit. This fact makes the IDA a great investment program for people who lack buying power.