X-factor for getting ahead

What’s the X-factor for hardworking but poor Americans to move up the economic ladder?

A lot goes into the recipe for success, and there’s no single predictor. Hard work through a steady job, getting a collegiate degree or credential, and waiting until marriage to have kids are all X-factors correlated with getting ahead. Luck is more of an X-factor than it should be these days.

{mosads}Financial Capability Month, going on now, brings to mind one additional X-factor that helps people get ahead: savings. According to the Pew Charitable Trusts, individuals who ascend from the bottom 20 percent have six times as much in the bank than those who remained stuck at the bottom.

That makes intuitive sense. After all, life is full of unexpected setbacks, and savings provide a buffer for the expenses that come with a job loss, a child’s injury, or a car accident. Savings help those on the ascent not to slip back down the ladder.

But even more important than the buffer is what savings indicate about the saver. If you save, that means you can prioritize needs versus wants and set goals for yourself. That basic financial literacy is the foundation for financial capability—which is in turn the foundation for getting ahead.

Savings is the first step toward the financial milestones associated with building wealth: getting a home mortgage, applying for a small business loan, putting money in a college fund, and saving for retirement. Abraham Lincoln recognized this in 1865, when he chartered the Freedmen’s Saving and Trust Company to serve freed slaves—and, more importantly, teach them about money for the first time in their lives. He knew that they would need not just their freedom but the economic independence that makes freedom mean something.

Unfortunately, there’s no shortcut to saving. Savings is just plain hard. Even if the government gave everyone a $10,000 savings account, it wouldn’t build the habits and discipline of saving. But like any habit, saving is a bit easier when you start young and start small.

At the American Bankers Association, April marks our Teach Children to Save initiative. Each year, 10,000 bankers bring lessons on the basics of saving to classrooms across the country, reaching 6 million kids since 1997. It’s a way of leveraging classroom instruction and real-life business expertise to make an impact in children’s lives. However, bankers’ efforts are no match for the daily example that parents and neighborhood leaders must be for their kids.

That’s where this community comes in. Our organizations are partnering to amplify this message for people of all ages and leverage resources to promote economic mobility. For example, Operation HOPE is helping to demystify the bank through our HOPE Inside program, which embeds nonprofit financial counselors in bank branches. Call us the private banking to the working poor and the struggling middle class.

The message about financial capability has to come from all levels and points of society, from the president to a parent, and from a business leader to a bank to a teacher. We need to return to the era when, instead of running up a $17.5 trillion national debt, our leaders understood the value of savings. Think Lincoln, and the Freedmen’s Bank.

Saving may not be sexy, but it’s a crucial x-factor if we want to narrow economic inequality and help the poor build wealth.

Bryant is the founder and chairman of Operation HOPE and author of the forthcoming “How the Poor Can Save Capitalism.” Keating, a  former two-term governor of Oklahoma, is president and CEO of the American Bankers Association.