Increasing Youth Financial Capability: An Evaluation of the MyPath Savings Initiative

Abstract

Although there has been mixed evidence from research on the efficacy of financial education efforts for youth, there is an emerging consensus that focusing on financial capability may be a more effective approach. This article examines the impact of the MyPath Savings pilot on 275 economically disadvantaged youth participating in a youth development and employment program. MyPath Savings targets youth earning their first paycheck-a critical "teachable moment" to promote savings and connect youth with mainstream financial products. The results indicate that MyPath Savings is highly relevant to participants' needs. In addition, youth experienced significant increases in financial knowledge, financial self-efficacy, and the frequency with which positive financial behaviors were carried out. Participants also saved an average of $507 through MyPath Savings. Gains in financial capability were mostly independent of the youths' race, gender, household income, and public benefits receipt. Possible factors for the promising results are discussed.

Revaluing the Role of Parents as Financial Socialization Agents in Youth Financial Literacy Programs

“…In this way, these programs prevent the continuation of wealth inequalities due to the fact that low‐income families have fewer resources to contribute to the child's saving account (Johnson and Sherraden ). These programs belong to a wider class of programs that stimulate direct financial experiences (e.g., by means of having a bank account [and other mainstream financial products] or having work experience) and that have been found to raise financial knowledge and capabilities, even after accounting for socioeconomic differences (see, e.g., Loke ; OECD ). As these direct experiences transcend the school context, they present a natural opportunity to increase parental involvement as well.…”

Financial Outcomes in Adolescence and Early Adulthood in Australian Longitudinal Data

“…Although adolescents commonly hold bank and savings accounts, the balances in those accounts tend to be modest (Elliott ; Friedline ; Loke, Choi and Libby ). Low account balances frequently persist into young adulthood because of schooling and large non‐discretionary expenses (Friedline, Elliott and Nam ; Elliott ; Lobaugh, Stephens and Simpson ).…”

“…Adolescents appear to make their savings decisions in the same way as adults, with considerations of trade‐offs between present and future outcomes and with the development of more conservative risk preferences and precautionary motivations (Otto ; Friedline ; Sutter, Zoller and Glätzle‐Rützler ). Research has linked adolescent and young adult savings behaviour to earlier experiences with savings (Elliott ), parents’ savings behaviour (Friedline ), family socialisation (Angulo‐Ruiz and Pergelova ; Drever et al ; Kim, Kim and Moon ), financial knowledge (Angulo‐Ruiz and Pergelova ; Loke, Choi and Libby ) and other characteristics.…”

“…Because of the limits on their responsibilities and autonomy, fewer financial management behaviours are examined among adolescents. For example, Loke, Choi and Libby () examine a financial education intervention that improved adolescents’ rates of tracking spending, budgeting, evaluating needs versus wants in making spending decisions, and saving. Drever et al () and Sutter, Zoller and Glätzle‐Rützler () summarise evidence regarding adolescents’ developmental capabilities for making financial management decisions.…”

“Four Bright Coins Shining at Me”: Financial Education in Childhood, Financial Confidence in Adulthood

“…This field of research is quite novel, as the previous literature has concentrated on the effects of (well‐structured) financial education programs for children/students and pointed out that these courses produce a persistent impact (Bernheim, Garrett, and Maki ; Loke, Choi, and Libby ; McCormick ). Batty, Collins, and Odders‐White () for the United States, Romagnoli and Trifilidis () for Italy, Alan and Ertac () for Turkey provide evidence of long‐lasting effects of basic courses taught to pupils in elementary schools.…”