Basics of Asset Building
Helping Michigan’s Working Families Achieve Lasting and Sustainable Financial Security
Asset-building policy – policies that enable families to build wealth for current and future generations like mortgage and tuition income tax deductions – has long been part of the American political and economic landscape. However, these polices have not benefited all families. For example, households that earn over $50,000 a year receive more than 90% of all mortgage interest tax deductions.
Most policies that serve low-income families have focused on income maintenance rather than asset accumulation. As a result, in the last two decades, even as income poverty rates have decreased, asset poverty has become more widespread.
Asset-building policy, as opposed to income-based policies that currently exist as supports for low-income families, strives to more closely align “welfare” policy with economic development policy and better prepare individuals and families to be successful in the New Economy.
Whereas traditional welfare policy has focused on income maintenance for the present, asset-building policy increases opportunities and incentives for low-income households to save for, plan for, and invest for the future, providing a “stake” or sense of ownership in their future and an individual connection to the economy.
Michigan Figures
- In 2009, 23.4% of all Michigan Households were un- or under-banked
- 17.7% of White, Non-Hispanic Households were un- or under-banked
- 59.3% of Black Households were un- or under-banked
- In 2009, 14.0% of Michigan residents were unemployed
- In 2008, 14.4% of the population was living in poverty.
- In 2007, 19.7% of Michigan residents were asset poor
- In 2006, 23.9% of all Michigan Households with children were asset poor
- 14.8% of White Households with children
- 63.3% of Black Households with children
Asset Building Terms
- Poverty Level: Federally defined minimum income needed to support an individual or family at a “minimum” standard of living. For 2008, $ 21,200 is the federal poverty level for a family of four.
- Low-Income: Families earning less than 200% of poverty per year.
- Asset Poverty: The inability to live at the poverty level for more than 3 months without income.
- Self-Sufficiency: The ability of a household to meet and sustain its basic needs without receiving public benefits. The real self-sufficiency level is considerably more than twice the federal poverty level.
- Asset: Refers to everything a person owns (cash, retirement savings, home, business, etc.) that has exchange for value. Human capital in the form of education and training is also considered an asset because it enables people to achieve economic security and mobility.
Updated June 18, 2010.