Woody Widrow with the RAISE Texas organization explains what families on a tight budget can do to carve out room to save.
On how tightly budgeted families can start saving: “They should just ignore the amount; just start with a little bit. It could be change around the house, or anything, but initially it’s every month just trying to put aside a small amount. What research has shown is that as little as $500 in a savings account, you are three times more likely to go to college and four times more likely to succeed.”
On where to put college savings: “There’s a thing called the 529 program, which is basically a federal program that’s designed to save mostly for college, or trade schools or community college. Texas has a Texas 529, there’s another thing called the Texas Tuition Promise Fund. For people who know about retirement programs, there’s the Roth IRA, you don’t have penalties if that money goes for post-secondary education. A lot of low-income people who have never saved… start by opening up a savings account.”
On creative ways to save: “For people who need motivation, there are a lot more social media or other types of software systems that remind you when to put money in; they can send text messages. There are apps that’s called, like, ‘rounding your money up’ that if you had money in a checking account and a bill came and it was for $12.44, you pay $13 and that 56 cents goes into a savings account.
"A number of nonprofits have financial coaches, which sort of are like cheerleaders and help you reach the goals that you want to. Everybody’s going to have an unanticipated financial situation, whether it’s a loss of job, an unexpected expense, and so you almost need somebody with you to cheer you on and to help you figure out how to weather the crisis and continue going. All of these situations are helping you reach the goal that you say you want to do and making it more likely that you can be successful.”