Report: "No Savings" the Norm for Half of Arkansans
Public News Service (Little Rock, Arkansas)
By: Chris Thomas
January 31, 2013
More than half of Arkansas residents do not have enough savings to keep them afloat for three months in case of a job loss or other costly emergency - and even those at higher incomes are not immune. That's one finding of a new report that makes recommendations about what states can do to improve families' financial stability.
For Arkansas, it suggested raising the minimum wage. Tamika Edwards, director of public policy with Southern Bancorp Community Partners, said her group's wish list also includes raising the asset limits for working families who receive public benefits, like TANF and food stamps, so they are not kicked off the program just when they start to get ahead.
"If we've encouraged people to save, but we've also placed a limit on the amount they can save in order to receive public benefits, that's actually counterproductive," Edwards explained, "because we're not encouraging saving and working."
The report said 64 percent of Arkansans do not have good enough credit to qualify for the lowest-interest loans. Edwards noted it will take multiple approaches to make a dent in these problems, including more financial education in schools.
Rather than gamble on life without an emergency fund, a bill (SB 119) in the legislature would allow Arkansas banks to participate in what would be a new savings plan run by the state lottery commission. Edwards called the concept "prize-linked savings."
"Michigan currently has a program - so do Maryland, Nebraska - a number of states allow prize-linked savings. They enable people to open a savings account, use the interest to go into a pool and, in a sense, earn 'winnings' on their savings account."
The report also said now that Arkansas has a Housing Trust Fund to build affordable housing, it needs to find a source of funding for it - and for expanding the Aspiring Scholars college savings program. Only one in five Arkansans has a four-year degree.
Overall, the Corporation for Enterprise Development (CFED) report ranked the state 46th in the nation for an Arkansan's ability to achieve financial security.
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