savings

user penywise / morgueFILE

The blogosphere has been abuzz the last week or so about What Poor People Do (Or Don't Do). The topic of savings often comes up in discussions about the poor, and with those conversations come lots of misconceptions.

I interviewed the Blackman family a couple weeks ago for a piece on climbing out of poverty. Tiffany Blackman has been trying to climb out of the poverty she inherited from her parents, grandparents and great grandparents. Together with her husband, Rodrico, and their four kids, they've managed to climb up one rung on the income ladder, thanks to lots of hard work, education and savings.

In our conversation, we talked about savings and kids. Specifically: Does she talk to her kids about how to save money? Her answer was an emphatic yes.

Here how she does it:


Jennifer Guerra / Michigan Radio

Be honest: How many of you made a New Year's resolution to save more money?

Saving money can be especially hard to do in a tough economy, so kudos to you. For families at the bottom of the economic ladder, saving money can make a real difference.

Erin Currier directs the Pew Economic Mobility Project. She says "when low income families can develop their own savings, their own assets, their children are significantly more likely to move up the income ladder."

Currier's team did a 2009 study called "A Penny Saved is Mobility Earned," and they found that savings and upward mobility are linked together, especially for families in the lowest income bracket.

Children of low-saving (i.e., below median), low-income parents are significantly less likely to be upwardly mobile than children of high-saving, low-income parents.

Seventy-one percent of children born to high-saving, low-income parents move up from the bottom income quartile over a generation, compared to only 50 percent of children of low-saving, low-income parents.