Getting a 20% ROI sounds too good to be true.
But for low-income Calgarians looking to set aside $500 in savings for an emergency fund, getting $100 in bonuses for doing so gives precisely that return.
To save as little as $20 every two weeks, the Momentum Savings Challenge offers participants bonuses to their savings account in increments. Starting at $5 for signup, then a series of savings builds up to $50, three consecutive deposit bonuses totaling $30, then a completion bonus of $15.
“Small amounts can really add up,” said Liz Wong, Financial Empowerment Facilitator for Momentum.
“Even a few dollars in an emergency fund is better than having nothing, and it can prevent you from getting into that cycle of debt later on, which would be much worse than not setting aside your debts at all. savings.”
The challenge is organized in collaboration with Momentum and the Calgary Housing Company. Savings are collected through the QUBER financial savings app, which are then held in digital savings accounts by Alterna Savings and Credit Union.
Challenges completed on QUBER, not just Momentum, also receive an additional 2% bonus.
Momentum holds a free online event on May 3 about their savings challenge and how low-income Calgarians can manage the rising cost of living.
The real deal
Challenge participant Adam Windsor was initially skeptical when it was sent to him via a Calgary Housing Company newsletter. He said the vetting process the City of Calgary goes through before providing resources to nonprofits has alleviated some of his concerns.
The additional financial literacy resources offered by Momentum, as well as the credible information provided on QUBER helped him overcome his remaining skepticism.
“After [Wong] reached out to me, it wasn’t like a faceless organization,” Windsor said.
As a single father who is also currently on long-term disability, he qualified to receive Momentum’s bonuses.
Currently, the program is limited to people who live in Calgary or surrounding communities, who are 17 years of age or older and who are currently living on a low income. For a single person, this would be someone earning less than $37,268 per year.
Windsor, who worked at a major bank before going on long-term disability, said getting that 20% return on investment was a no-brainer.
Emergency fund changes the dynamics of prosperity
According to Wong, it’s hard to underestimate the benefits of setting aside small amounts of money for the long term.
“What we’ve discovered through our savings programs is that small amounts add up over time, and yes, it saves you from having to take out high-interest loans later. “, she said.
One of the cyclical causes of poverty in Calgary is the continued reliance on high-interest payday loans. In an analysis done by LiveWire Calgary in December last year, it was found that payday lenders congregate in areas of Calgary that have the lowest income rates.
One of the arguments made by the high interest short term loan industry is that they provide an essential service to people facing immediate financial emergencies.
Still, Wong said, low-income families with small savings fare better in an emergency than high-income families without.
“Studies have shown that low-income families who have even $500 in an emergency fund are better off in a financial emergency than middle-income families who have no savings,” he said. she stated.
“It saves you the inconvenience, stress and worry, there are so many benefits to building up those emergency funds.”
The best time to save is always now
As an emergency savings fund, the amounts placed in QUBER are not blocked. Challenge participants can withdraw their funds at any time without penalty.
Windsor likened the Challenge Savings Account to a financial vehicle like a GIC. He said it wouldn’t even be possible to come close to the same rate of return and that the GIC would lock up a person’s money for 18 months to earn 2% interest.
Wong said it can sometimes seem difficult to find money to deposit into a savings account. And it can often be easy to find reasons not to save.
“You know, if it wasn’t for the rising prices, then it would be the oil and gas crash. If it wasn’t the oil and gas crash, it would be the pandemic. What if it wasn’t a pandemic? It would be, you know what I mean? There is always an excuse not to save,” she said.
“But what we really want to instill in people is that it’s always a good time to save and think about your future and think about achieving your goals.”
For more information on the Momentum Savings Challenge, program eligibility and how to get started see the Momentum website at momentum.org.