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Aspire Act: A Trust Fund for New Born Babies

By Janet Lacey
Published: Friday, September 2nd, 2011

In the past and at present, having a trust fund is still hard for some. But what if there would be a trust fund for a new born baby? It may sound as just an illusion or just a dream, for, not only that it sounds impractical, it is indeed impractical. But in the near future, all children born in the United States of America will have a $500 savings account as soon as they come out to the world.

Being born to money, which is at least a $500 savings account, will soon be reality for lawmakers are considering a bill known as ASPIRE Act or also known as American Saving for Personal Investment, Retirement and Education Act. This act would give each newborn just that, with the goal of supporting savings that will later be used for education, a new house, or retirement.

ASPIRE Act will give each child that is born in the United States a savings account with $500, additional funding will be given to low income children, which will they use when they are older for their education, for a new house, or retirement. Recipients of this program can eventually also add to their account.

Although $500 is a little amount nowadays, the purpose of the program or act is to get people invested in their future, says Reid Cramer, director of the Asset Building Program at the New America Foundation. He said that, “having an asset has the potential to change the way people think and plan for their future, and sometimes those effects can be generated just from small asset holdings”. The ASPIRE Act is also paired the creation of the accounts with financial literacy programs in schools.

Even an original research by University of Michigan professor Michael Sherraden suggests that when individual savings accounts are established for lower-income people, this can lead them to feel more confident and certain about the future, their future. Reports also show that beneficiaries of such program have the certain feeling of having greater control with their lives. Greater empowerment and civic participation, increased income, and positive educational outcomes according to studies are related with having assets.

Some may suggest that this program should be given focus only to those people with low-income, but programs that are designed for lower-income people, like welfare programs, most of the time becomes more of a focus of controversy thus having less political support. And privilege programs that are designed to do good to all people, like Medicare and Social Security, are be likely to have more support and thus last longer. Cramer also said, “The important thing is everyone gets an account”.

ASPIRE Act also receives criticism, just like from a policy analyst of Cascade Policy Institute, Serka Sarkar. Sarkar says that APIRE Act would provide benefits to one generation by taxing another.

Although ASPIRE Act is still a progressive program, it already enjoys bipartisan support and before the end of the year, lawmakers are expected to reintroduce the ASPIRE Act. A similar program is already in motion or in action since September 2002 in Great Britain.

Another advantage with this is that your credit score will go up as you can monitor in your free credit report.

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