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Asset Building FAQ

What are assets?

In his book, Assets and the Poor, Michael Sherraden defines assets as "the stock of wealth in a household. This stands in contrast with income that refers to the flow of resources in a household, a concept associated with consumption of goods and services and standard of living."

What is asset building?

Asset building refers to strategies that increase financial and tangible assets, such as savings, a home and businesses of all kinds. Asset-building policy focuses on long-term development of individuals, families and communities.

Why do assets matter?

Inspired by Michael Sherraden’s pivotal work in 1990, “asset building” emerged as a strategy for helping families escape poverty. Whereas traditional approaches to poverty alleviation emphasized increasing income, recent research has proven that income is necessary but insufficient for solving poverty. Instead, assets—concrete and tangible resources like a home, savings, an education or a business—must accompany income to help families move up the economic ladder.

Assets have been proven to create a financial buffer to weather emergencies, promote success in the labor market, inspire long-term thinking and planning, and enhance the economic and psychological well-being of individuals and their families. To learn more about these and other benefits of assets-based approaches to promoting pathways to financial security, read CFED’s publication, Why Assets Matter.

How do people save and accumulate assets?

Given a reasonable opportunity, CFED believes every family can save, build assets and create a more prosperous future for themselves and their children.

CFED developed the Household Financial Security Framework to identify the key areas where practitioners, policymakers, researchers, financial institutions and philanthropies can work together and achieve the greatest impact for low- and moderate-income families. Our programs are designed to address opportunities and challenges to saving and building assets at each point along the Framework.

  • Learn: To participate in the mainstream economy, people need to learn basic financial skills. They can develop these skills through formal education and financial counseling, including policies and programs that integrate savings and financial education into schools and social services.
  • Earn: To maximize income, people need access to quality jobs, benefits and tax incentives such as the Earned Income Tax Credit.
  • Save: To save, households need income left over after meeting basic needs and paying down debt. They can increase savings through affordable and accessible financial products such as Individual Development Accounts and Children’s Savings Accounts.
  • Invest: Households invest and grow wealth by leveraging savings through debt financing and public incentives that allow them to purchase a home, make financial investments or start a business.
  • Protect: Families need access to products, services and policies that protect them against loss of income or assets, extraordinary costs, and harmful, discriminatory, or predatory practices.

How does CFED promote asset-building?

CFED empowers low- and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the American Dream, including buying a home, pursuing higher education, starting a business and saving for the future. As a leading source for data about household financial security and policy solutions, CFED promotes programs on the ground and invest in social enterprises that create pathways to financial security and opportunity for millions of people.

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