Broadly defined, assets are investments that appreciate over time. Assets can take various forms. They include cash investments (e.g., savings, equities, 401(k) accounts, and individual retirement accounts), material possessions that hold monetary value (e.g., a house, an automobile, or a small business) and investments in nontangible property such as education.

To be economically secure, families need both income and assets. Regular income helps families pay for their daily living expenses. In contrast, families need assets to weather financial hardships and get ahead. Assets provide a safety net for coping with unanticipated expenses and emergencies that could otherwise cause significant financial hardship. Assets also help families build wealth and plan for the future by, for example, saving for retirement or investing in their children’s education.

Despite the importance of assets, many families live without any type of financial safety net. More than 25 percent of U.S. households have insufficient resources to subsist—even at the poverty level—for three months without other support if their incomes were to end. The lack of assets among low-income families is especially pronounced. Wealth inequality in the United States is greater now than it has been at any time during the past 75 years.

Efforts to encourage asset building in the United States date back to the Homestead Act (1862) and the GI Bill (1944), but contemporary policies and programs have not benefited low-income families. In many cases, these policies operate through the tax system in the form of tax credits, deferments, or exemptions for investments, homeownership, and retirement accounts. Because many low-income individuals do not have tax liabilities, they are excluded from, or have low participation rates in, current asset-building policies and programs.

This web page has resources to help practitioners, policymakers, and program developers understand how to expand asset-building opportunities for low-income families. 

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