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In general, IDA’s are managed by local community organizations, and IDA accounts are usually held at a local financial institutions, for example a banks or a credit unions. Every participant will receive education on budgeting and saving, but also topics like how to clean up credit. The programs’ length or the sort of training that participants receive may vary.
When the time has come to use the IDA fund, the IDA administrator will write a check to the recipient, such as a college, a title company, or a business equipment vendor, and you’re all good to go. It’s not only that your IDA deposits will be matched so your account will grow rapidly, you will also get financially experienced in the process.
While you build up your IDA savings account to reach your goals, you will also be learning how to deal with money, how to set up a financial plan, and how to develop your finance skills.
Later, you will still benefit from and develop these skills even if you have reached your initial goals. All across America, IDA’s are set up to help participants. This way they can build their assets, increase savings rates, and connect to people in the economic mainstream. Because all IDA programs are different, they all have their own different rules and requirements, yet most IDA programs are following similar rules and steps.
First you will need to attend an orientation session where you will be explained how an IDA works, how import asset building is, and you will learn about the importance of continual savings in your life. Following this orientation session, you need to fill out an application form to express your intent to become the holder of an IDA account.
The application form asks you about your income, family members, education, debt position, and so on. Sad to say there are generally lots of people like you who qualify for an IDA and would like to have such an account, but there are just a limited number of available accounts. So if you are not accepted into the IDA program on first try, don’t get disappointed. Just apply again.
In case you do get accepted into the IDA program, you can open an IDA account with the financial partner of the program, usually a credit union or a local bank. You must sign a commitment that states how much you will save each month. For the duration that you are participating in the IDA program, you will receive periodic statements on your savings level, the matching contribution level, and the amount of interest that your account has made.
Upon enrolling in the IDA program IDA staff members will contact you to set up a savings plan. The staff will also help you to deal with your credit, analyze your income and spending habits, and help you to set a monthly saving schedule that is in line with what you (and your family) are able to save. You will also need to attend financial education lessons where you’ll be taught all sorts of things related to investing, saving, banking, as well as money-management skills.
By the time you have saved a certain amount in your IDA account, you may ask for a withdrawal of the funds. You need to come up with suitable a purpose for the money, for example tuition for college, and the program administrators will review your request and decide whether your purpose is legitimate. If your withdrawal request gets approved, a check to the organization, for example a college, is written by the IDA administrator to accompany your check for your part of the account.
Read also part 1