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.

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.

Read more: http://thehill.com/blogs/congress-blog/economy-budget/204315-x-factor-for-getting-ahead#ixzz30HaSoGks 
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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.

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