Low-Wealth Families Need Cash Flow, Seed Capital, and Appreciating Assets

Joanna Smith-Ramani framed the central problem as a false choice that has become harder to avoid as household budgets have tightened: if families are struggling to pay for food, gas, housing, childcare, and medical care, why prioritize wealth and ownership now?

Her answer was that the choice itself is wrong. Financial stability and wealth have to be pursued at the same time because they reinforce each other. Aspen FSP’s work, she said, is not only about helping families “get by,” but about ensuring that all Americans have the “essential wealth” they need to thrive. Wealth, in that framing, is not a luxury appended to stability after the crisis passes. It is part of what makes stability durable.

Genevieve Melford gave the economic context for why the question has become urgent. She defined affordability as a straightforward relationship: whether people can buy what they need given the resources they have. That means looking at the cost of living relative to income. By that measure, the core problem is not simply that households are making bad choices or failing to budget. The cost of essentials has been rising faster than household income for decades.

The source showed a line chart comparing real median U.S. household income with childcare, housing, and medical care costs from 1998 to 2026, using U.S. Bureau of Labor Statistics and U.S. Census Bureau data via FRED. The essential-cost lines rose much faster than the income line. Melford emphasized that the specific time frame or category mix could change, but the basic story would not: costs that families cannot realistically opt out of have grown substantially faster than household incomes.

The consequences show up directly in household cash flow. The figures presented by Aspen included: 49% of full-time workers do not earn a living wage, attributed in the presentation to Dayforce 2026; 49% of all households, and 68% of households with less than $25,000 in income, have expenses equal to or greater than income, attributed to the Federal Reserve Board 2025; one-third of the American middle class cannot afford basic necessities, attributed to Brookings 2025; and 65% of voters think a middle-class lifestyle is out of reach for most people in the United States, attributed to a Times/Siena poll from January 2026.

Melford’s point was not that income does not matter. Americans need more income relative to the cost of essentials. But income is not the only source of security. Ownership matters because assets that appreciate — financial assets, real estate, retirement savings — can generate income, absorb shocks, reduce future costs, and compound over time in a way paychecks do not.

A second chart compared inflation-adjusted median income with the S&P 500 from 1974 to 2025, citing Scott Galloway’s “War on the Young” post and data from S&P and the St. Louis Fed. The chart showed stock-market returns rising dramatically while median income was comparatively flat. Melford paired that with Aspen FSP research showing homeowners have experienced substantially larger wealth gains than renters, along with more stable housing costs.

The structural lesson was that households with durable financial security often have a foothold in appreciating assets. Those without that foothold are asked to get by on cash flow alone, even as cash flow becomes less reliable.

Aspen’s framework for financial security described three interconnected pillars: routinely positive cash flow; personal resources such as savings, credit, insurance, financial wealth, and other assets; and public and private benefits. Positive cash flow lets people save and build resources. Those resources let people withstand shocks and invest. Appreciating assets can produce non-labor income or reduce expenses, strengthening cash flow further. But the negative cycle works the same way in reverse: when costs exceed income, households accumulate debt, draw down savings, rely on expensive credit, and lose the capacity to invest.

Smith-Ramani said Aspen FSP’s own field has swung between two incomplete approaches: an overemphasis on wealth building that ignored what households were experiencing day to day, and an overemphasis on short-term stability that left no room for ownership. The argument for combining stability and wealth comes from that history. Helping families manage scarcity is not enough, because families also have ambitions, plans, and opportunities they want to pursue.

Low-wealth households should not be expected to build assets from constrained cash flow alone. Markita Morris-Louis called it “disrespectful” to ask people with limited resources simply to save more of their own money. People with limited cash flow need externally funded savings opportunities, the same way many higher-income households already rely on employer retirement matches, tax advantages, and other supports.

Smith-Ramani extended the point by saying most people do not save entirely on their own. She pointed to her own employer’s retirement savings match and said she could not self-save enough for retirement without that support. She also mentioned 529s and, as another example of seeded wealth-building infrastructure, “new early wealth building accounts” that she said had been launched in the most recent tax season for households and young babies.

Morris-Louis argued that the language of the social safety net should be more expansive. It should include not only programs associated with low-income households, but also employer matches and the mortgage interest deduction. “I know very few people who are truly financially independent,” she said.

Compass Working Capital’s core model is built around that premise. It uses the federal Family Self-Sufficiency program, a 36-year-old HUD program available to families in public housing, families with Housing Choice Vouchers or Section 8 vouchers, and families in project-based Section 8-assisted units. Morris-Louis described it as a potentially powerful but underused engine for wealth building.

The program creates an externally funded savings opportunity tied to earned income growth. In many HUD-assisted housing arrangements, rent rises when income rises, which can make additional earnings feel as if they are being taxed away and can push families into benefits cliffs. Under Family Self-Sufficiency, when a participating family increases earned income and pays higher rent, the rent increase is saved in an escrow account. The family still pays the higher rent, but the income gain unlocks savings in the background.

Families can participate for up to five years. Compass works with public housing authorities and private owners of HUD-assisted housing in 16 states. Morris-Louis said Compass families increase earned income by an average of $26,000, often doubling income, and save an average of $10,000 in escrow accounts.

Morris-Louis said the accounts have unusual advantages: the money is held by the housing authority until the family graduates or completes the program; the escrow savings are not counted as income toward means-tested benefits; they are not considered an asset; they have no impact on the availability of housing assistance; and they are not subject to federal income tax.

Compass then works to help families convert that accumulated sum into further wealth building. Some families use it for down payment assistance. Some start businesses. Compass also partners with Stackwell to provide seed capital and investing education to families who have been in Compass programs for several years or have graduated, so they can learn about capital markets in a lower-risk environment and build confidence to contribute their own money over time.

Hope Wollensack described a different version of externally funded capital through GRO’s Freedom Futures program in Atlanta. The program serves 50 young people ages 18 to 25 and includes financial advising, a guaranteed income payment of $500 per month for four years, and a simulated or accelerated baby bond: a $40,000 lump sum that can be used for wealth-building purposes such as buying a home, paying for higher education, starting a business, or seeding a retirement account.

For Wollensack, those funds are a way to approximate supports that young adults from wealthier families may receive privately. Smith-Ramani put the point directly: for young people who do not come from families with private wealth, programs may need to “synthetically create the financial environment” they would have had if family wealth were present.

That design logic also shaped Trevor Rozier-Byrd’s model at Stackwell. The company uses seed investment and financial wellness education programs to help people begin participating in the capital markets. Seed capital is not treated as a symbolic gesture. It gives participants a lower-risk way to form the habit, confidence, and identity of investing.

Across all three models, capital is not separated from behavior or aspirations. It is the bridge that lets people move from managing shortage to making future-facing choices.

A promised future asset does not solve the monthly rent problem. That was the reason GRO built guaranteed income into a program that is also meant to test the effects of a baby-bond-style wealth asset.

The age range in Freedom Futures matters. Hope Wollensack said 18 to 25 is a critical period when choices about employment, higher education, internships, and early career pathways can shape a person’s long-term trajectory. But many young adults’ finances are tight. Some do not have family support; some are supporting other family members. GRO heard from young people that while they were concerned about school and college, the immediate monthly worry was often rent.

Freedom Futures was designed with young people, Wollensack said, so that the program would reflect both pressing policy questions and participants’ real financial lives. It includes a research and evaluation component over four years. The $40,000 lump sum becomes available for drawdown halfway through the program, after participants complete financial education. But GRO saw a design problem: two years is a long time for young people facing unstable finances. If the program promised a future asset without addressing present needs, participants would still face the same short-term tradeoffs that could undermine their ability to use the asset well.

The guaranteed income component gives young people breathing room so they can make choices that support their future rather than only choices that meet the next bill. Joanna Smith-Ramani connected this to Aspen’s earlier young-adult financial-security work: during a period when young people are expected to invest in themselves, some non-labor income can be essential. Not because they do not want to work, but because they cannot work enough hours while also completing the education, training, internships, or early-career steps that are supposed to improve their future.

In its first year, Wollensack said, GRO has already seen the guaranteed income component affect future orientation, goal setting, sense of identity, and long-term decision-making. She mentioned employment choices, internship choices, decisions about work hours, and time spent on schoolwork. About half of participants are working. The income support helps smooth the tradeoffs they face between earning enough now and investing in their future.

The same cash-flow logic sits inside Compass’s use of the Family Self-Sufficiency program. FSS is not simply a savings account. It is structured around the reality that increased earnings can trigger higher rent and collide with means-tested benefits. By turning rent increases into escrow savings, the program changes the experience of income growth: the household pays the higher rent, but the additional earnings also create an asset rather than disappearing entirely into higher required expenses.

That matters because households cannot participate in long-term wealth building while every increase in income or every small shock pushes them backward. Aspen’s framework made the same point in broader terms: positive cash flow allows people to build personal resources, while negative cash flow leads to unmanageable debt, expensive credit, fees, and other choices that further weaken cash flow.

Wollensack described income and wealth as parts of the same equation, “probably greater than the sum of their parts individually.” The early Freedom Futures lesson was not surprising to GRO so much as affirming: stability and wealth-building supports work better together than apart.

Access alone does not produce ownership. Trevor Rozier-Byrd rejected the idea that financial stability and wealth building are sequential: first relief, then growth. Stackwell treats them as mutually reinforcing. The deeper issue, in his view, is that the financial-services, philanthropy, and financial-inclusion fields have long separated “stability” from “wealth” until they feel like different missions: one urgent and about relief; the other aspirational and about growth.

That split shapes design errors. Rozier-Byrd said the prevailing assumption across those fields is that wealth and financial-stability gaps are driven by lack of financial literacy or insufficient disposable income. Stackwell’s experience, he said, points elsewhere. Underserved populations may be undercapitalized, but they are not disengaged. More importantly, he argued, they are underconfident.

For Stackwell, the barrier is not only access to information or capital. It is trust, identity, and whether people believe they can participate in the financial markets. Many people still perceive ownership and investing as “not for people like me.” In that environment, access by itself does not produce participation.

Financial decisions, Rozier-Byrd said, are shaped by emotion, identity, lived experience, relationship to money, fear, and shame. “Money is not a neutral thing.” A solution that assumes knowledge alone will change behavior misses the psychological and social conditions under which people decide whether investing is safe, legitimate, or meant for them.

Stackwell’s model responds by pairing capital with structured education. The company develops seed investment and financial wellness programs that provide participants with money to invest alongside education designed to build sustained investing behavior. Rozier-Byrd described the goal as more than opening accounts or building portfolios. It is to create investor identity.

He reported that Stackwell has seeded more than 3,500 new investment accounts and deployed more than $3 million in seed capital. Across portfolios, he said, participants have seen a 32% average rate of return. But he treated behavioral change as the more important differentiator: 91% of participants take concrete action to improve their financial wellness within days; investing knowledge increases 2.5 times; nearly 90% of participants come to believe investing is for people like them; and more than one-third begin investing their own capital after receiving seed capital.

Distribution is part of the intervention. Stackwell works through national partners and trusted pathways rather than expecting people to find financial-market access on their own. Rozier-Byrd said the company operates in 130 metro areas and 40 states, partners with United Way organizations and nonprofits including Compass, and works with nearly 50% of HBCUs in the country.

That distribution point connects to the larger critique. If people need income support, confidence, education, seed capital, and market access, those interventions should be stacked rather than forced into separate resource lanes. The problem is not that low-wealth households lack aspirations. Rozier-Byrd said people across financial conditions often want the same underlying thing: agency. They want to support families, pursue careers, buy homes, and shape outcomes according to their own definition of the future. The mechanisms needed to make that agency possible differ by circumstance, but the desire is not different.

A recurring tension was whether policymakers, funders, and program designers trust people to use money well. Joanna Smith-Ramani named a pervasive and harmful stereotype: assumptions about what other people will do with their money. Those assumptions damage families and lead to poor policy and program design.

Compass’s experience with interim disbursements is the clearest example. Markita Morris-Louis said Family Self-Sufficiency participants can receive an interim disbursement — effectively a withdrawal during the program — for particular purposes. There was an assumption, she said, that if rules were loosened and families were given more flexible access, they would drain the accounts.

During the pandemic, Compass advocated for loosening rules so families could make emergency withdrawals. What Compass heard from families was the opposite of the stereotype. The escrow account was often the last pot of money they wanted to touch because it allowed them to remain future-oriented when everything else in life demanded immediate attention. Families looked first for other safe resources that would preserve their financial goals before withdrawing.

That evidence was useful to bring back to government, policymakers, legislators, and program designers who do not necessarily have direct relationships with communities. Morris-Louis said Compass regularly uses families’ experiences to dispel myths.

Smith-Ramani extended the point beyond financial programs. People make choices in context. She gave the example of judgments about whether families should have good cable or good televisions. Her own mother, she said, made sure the family had a decent TV because sometimes it was safer for children to be inside than outside. Judging a household’s choice without understanding the surrounding conditions misses what the choice is doing.

Morris-Louis said Compass’s work is centered on families with low incomes, primarily households led by Black and Latina women raising children. The organization’s marketing, communications, programming, and policy priorities are informed by those families’ voices. She also brought her own experience of housing insecurity, financial challenge, and living in a household that relied on public assistance.

Wollensack made a similar design claim about Freedom Futures. GRO built several aspects of the program with young people, because the program had to answer policy questions while also meeting real needs. Those two objectives, she argued, are not in conflict. Programs that integrate people’s real financial circumstances can produce better practice and better policy.

The same principle applies to evaluation. Smith-Ramani asked who decides what products and programs look like, who evaluates whether they worked, and whose values define “worked.” That question matters because the metrics of a program built around scarcity management may not capture agency, future orientation, confidence, or the ability to make a different education or employment choice.

The models differed in population and mechanism. Stackwell uses seed investment and education to build investor identity and participation in capital markets. Compass uses HUD’s Family Self-Sufficiency program to turn income growth into escrow savings, then links those savings to further asset building. GRO combines guaranteed income, financial advising, and an accelerated baby bond for young adults at a critical life stage.

The underlying architecture was shared: stabilize cash flow, provide externally funded capital, build confidence and agency, and create a route into appreciating assets.

Markita Morris-Louis said she finds it frustrating that the relationship between financial stability and wealth building could be considered controversial at all. Compass takes what she called an “all of the above” approach because poverty alleviation and public policy too often look for single solutions.

Her phrase for the alternative was “silver buckshot,” not silver bullets. The scale and history of the problem, she argued, demand multiple tools. She named slavery, the Homestead Act, redlining, predatory lending, anti-Black racism, and Jim Crow as part of the broader system that created today’s racial wealth gaps and inequalities. Those were not single-cause problems, so she rejected the expectation that one intervention could close them quickly.

“These are generational problems that require generational interventions,” Morris-Louis said. She also criticized the impatience of three-to-five-year funding and evaluation cycles when the harms being addressed were built over generations.

Hope Wollensack located GRO’s work in Atlanta, where she said national trends are especially pronounced. Atlanta has the lowest economic mobility of any major U.S. city, she said, and a racial wealth gap of 46 to 1 between white and Black households — as wide as it was when the Emancipation Proclamation was issued. At the same time, Atlanta has experienced substantial economic growth. For Wollensack, that combination raises the question of shared prosperity: how to combine income and wealth tools so that growth is more broadly felt.

Design therefore has to match the size of the problem. Morris-Louis put it plainly: “We underinvest in solutions and we overstate problems.” Wollensack argued for bold design even at smaller scale. A solution does not have to begin as a national program to be ambitious; it can be a place-based program willing to take a big bet. The problems were created over centuries, she said, so responses should be unapologetically large in ambition and adequately invested.

Trevor Rozier-Byrd’s final design principle was that access is insufficient. Programs must activate participation. That means designing for lived experience, psychological safety, behavioral change, and persistence through the wealth-building process. He argued that the goal should be to help people “stack interventions” that build balance sheets resembling the balance sheets wealthy families use to secure their futures.

Rozier-Byrd pointed specifically to the financial markets as, in his view, a proven wealth-building tool, saying there is “a hundred plus years of empirical data” suggesting their power. His conclusion was not that everyone should be handed a brokerage account and left alone. It was that the tools already known to build wealth — capital, ownership, savings, investment, institutional supports, trusted pathways, and confidence — should be assembled for broader use.

Morris-Louis sharpened the funding challenge: “When do we stop piloting and just start rolling out programs? Write old checks.” Her challenge was directed at a field that, in her view, already knows enough to move beyond endless demonstration and toward larger-scale implementation.