Encouraging savings plansTo someone struggling every day to make ends meet, saving may be considered a luxury enjoyed by those living in the rarefied air of relative wealth.
But there’s no hope for a life where earnings don’t last a day.
Seoul City has been running a savings matching program called “Hope Plus Account” since last year with the aim of aiding working-poor families break the poverty cycle.
The program matches savings deposited by a person on the program with the same amount, which is contributed by a sponsoring institution with added interest.
The purpose is to help lower-income earners to get a head start in life by making a habit of saving.
There have been success stories. A taxi driver on the program whose world was turned upside down after his business went belly up says he is now planning to buy his own cab.
A man with physical disabilities living in extreme poverty says he had never felt so energetic and enthusiastic about work until now, because he now has the hope of shifting rent to a yearly lease from current monthly payments.
Each account has sowed hope and determination in the minds of the poor, empowering them to stand up and fight the odds.
The program now touches the lives of 1,000 households as of March, from an initial 100. And city authorities expect to increase the number to 10,000 by the end of the year.
Experts say saving is better than charity handouts or loans in helping people find financial stability.
Government spending can help the poor a day at a time, but it falls short creating a sustainable model for someone to get out of the poverty trap.
More than 40 states in the United States have offered Individual Development Accounts for years, enabling lower-income facilities to build assets from self-building matching funds to fulfill their dreams, which includes education for their children.
Seoul City’s Hope Account was benchmarked after the IDA program in the U.S., but the latter has suggested joint research and development on a matching program after seeing the success of the Korean product.
More people are suffering financial hardship in Korea due to the economic downturn. Helping them return to the economic mainstream is one of society’s most important tasks.
Initiatives to encourage and aid people in need to help than build assets should be emphasized as much as handing out living allowances, that, while welcome on a temporary basis, cannot bring about lasting prosperity.