- How are we gonna pay for this, exactly?
- Is it even remotely possible for our government to not screw something like this up?
- Tell me again how throwing $500 or $1000 at newborns promotes financial literacy?
- Did I mention: How are we paying for this?
"But wait!" you say. "What the heck is the ASPIRE Act, and why are you writing about it instead of boobs?"
I hadn't heard much about ASPIRE, either — the savings Act, not the credit card — at least not until I perused the November issue of Money magazine. In that particular mag (page 32) is an interview with Michael Sherraden, founder of Washington University's Center for Social Development. He's also a Big Gun behind the proposed U.S. adoption of tax-advantaged savings accounts for kids.
Loosely termed "401(k)s for kids," these accounts pack a punch — although I'm not entirely sure who's giving the punch and who's receiving it.
Here's the gist: If the program becomes law, then every child receives a tax-advantaged account at birth — an account oh-so-lovingly stocked with anywhere from $500 to $1k, courtesy of Uncle Sam. The point? Why, to promote saving, of course. (Which, admittedly, this country sucks at.)
There are lots of knobs and switches to play with here, of course. In theory, the account funds are untouchable until the kid reaches 18 years of age, at which time they can be used for higher education. Sometime after that — age 25, let's say — the account funds could go toward home ownership. From the links below:
More details reside at:
NewAmerica.net: ASPIRE Act Summary
NewAmerica.net: Children's Savings Accounts
You might think that a guy like me — a dude who's all about money and saving and personal finance — would be absolutely gung-ho on something like the ASPIRE Act.
But I'm not.
And here's why: I want to see how exactly it is that Uncle Sam's cutting of $500 checks to babies not long after mom's epidural has worn off ... how exactly does that really promote financial literacy? Because "promoting financial literacy" seems to be a widely-trumpeted reason behind all this.
Whatever. I don't buy it.
We can't be bothered to implement decent personal-finance courses in schools, but handing out restricted-use cash to kids at birth, along with doling out some tax advantages — this is going to win the battle?
Could such accounts turn out to be a useful tool? Sure. In fact, I'd argue that first-person management of actual, in-hand money is infinitely more educational than having someone tell you what to do with something you don't have. But show me where the education is in all this. Show me that first.
But our national savings rate is horrific. Surely ASPIRE would boost that?
I suspect it would ... marginally. It's forced saving, after all. (At the outset, anyway.)
But I'm much less concerned with a country's reported "savings rate" than I am with how that country approaches the idea of savings altogether. In a cultural context, I mean, we Americans pretty much take a wizz on saving. And we do it every chance we get.
I guess that, in the end, I want ASPIRE (or whatever comes of this idea) to be more than just another bureaucratic redistribution of money whose real-world outcome amounts to diddly-squat.
If policymakers can pull that off — and boy, does Cynical Me have his doubts — then I say, Go for it.