Youth Banking Resource Center
The Promise of Youth Savings Programs
Why Youth Savings Programs?
Financial education combined with a deposit account experience at an early age can shape a young person's financial identity, attitudes, and habits in a way that can last for a lifetime. In the process, young people and their families build confidence in the financial system as they gain value from the products and services they use.
Youth Savings as a Promising Strategy for Young People
School-based experiential financial education is among the most promising frontiers in the field of financial capability. This method of teaching can support students’ independent decision-making, take advantage of teachable moments, provide opportunities for repeated practice, and incorporate planning and goal-setting—all of which help build important skills and positive financial habits. Participants not only learn key financial concepts, but also form positive attitudes and behaviors that can help them become financially capable adults. Moreover, students who participate in financial education that includes a hands-on saving component are more likely to demonstrate financial knowledge than their peers.
The FDIC’s two-year Youth Savings Pilot was designed to identify and highlight promising approaches to experiential financial education—that is, approaches that combine traditional, classroom-based financial education with the opportunity to open a safe, low-cost savings account. Specifically, the pilot aimed to identify approaches that help school-aged children develop strong financial knowledge and good financial habits and attitudes. During the 2015–16 school year, the 21 banks participating in the pilot created over 4,500 youth savings accounts and provided financial education to thousands more children. A majority of the banks that participated in the pilot expanded their outreach programs to engage even more young people over the course of the school year.
The programs carried out by the 21 Youth Savings Pilot banks (Appendix A: Youth Savings Pilot Programs) were diverse. Approaches used by pilot programs included opening school-based branches, setting up in-school banking operations in common areas so that students can make deposits on designated “banking days,” and helping students to use nearby bank branches to open accounts. Financial education strategies included using the FDIC’s Money Smart curriculum, offering workshops for students and their parents, and overseeing peer-to-peer financial education instruction.
The pilot findings can help banks and their partners start, enhance, or expand youth savings programs. The pilot demonstrated that the benefits of a savings program go far beyond the dollars and cents deposited into the accounts of school-age children.
Benefits Observed by Participants in the FDIC Youth Savings Pilot
Banks in the pilot identified a range of benefits, including:
- Improving a child’s financial future. Banks understand that financial education and banking access are essential to financial well-being. But banks are in a unique position to offer hands-on learning as well—helping students open a real savings account and manage their own money. This three-pronged strategy can be a very effective way to teach skills, increase knowledge, and encourage an attitude toward saving that can serve a child well into adulthood.
- Fulfilling a mission. Many banks—community-based, regional, and national—emphasize giving back to the community as part of their core mission. Administering a youth savings program, and imparting financial knowledge to youth, can benefit a local community in the short-term and well into the future. At a personal level, too, bank employees can feel a sense of pride and accomplishment when they see that their work benefits the local community.
- Building trust. Providing youth savings programs can be an effective public relations strategy, building goodwill toward the bank and helping local residents and businesses see financial institutions as trusted members of the community.
- Earning Community Reinvestment Act (CRA) credit. Banks and savings associations may receive CRA consideration if they provide youth savings and financial education programs primarily targeted to low- and moderate-income students.
- Building a pipeline of future customers. Banks have reported that the relationships formed through youth savings programs have extended beyond the program itself, with graduating seniors continuing to bank with them. One bank describes its youth savings program as “a long-term investment in future customers.”