Teach 'em young

Teach ‘em young

Financial institutions, schools and non-profit organisations in the US can collaborate to successfully teach children about savings and other positive financial habits – knowledge they can use as a sound foundation as they grow older, according to results of a two-year pilot by the Federal Deposit Insurance Corporation (FDIC).

Paybefore (Banking Technology‘s sister publication) reports.

The FDIC designed the Youth Savings Pilot to identify effective approaches to financial education, which included classroom-based financial education with the opportunity to open a low-cost savings account. The pilot included children in grades kindergarten through high school, spanned the 2014-2016 school years, and the curricula was tailored based on the students’ ages.

The report also includes a framework banks can use to develop or expand their own youth savings programmes.

By the end of the 2015-2016 school year, 32,509 savings accounts had been opened in the 21 banks that participated in the pilot.

However, in further evaluating the performance of banks’ student programmes, less attention was paid to hard data in favour of informal observations, according to the FDIC report.

Financial literacy

For example, an elementary school teacher noticed the financial education programme’s impact by the way “students across the board in the [younger] ages are understanding much better the difference in needs versus wants [and] the upper grades are beginning to understand how money and business works”. Another teacher reported that students are having more discussions pertaining to making better spending decisions. What’s more, a high school teacher noticed an overall academic improvement among the students who participated.

“Drawing on these lessons, this report provides a framework for financial institutions and school or community partners to develop programmes that can work,” Elizabeth Ortiz, FDIC deputy director, consumer and community affairs, states in the report.

“We hope this report promotes new opportunities to impart financial concepts and support young people in setting and achieving financial goals.”

Banks benefit too

In addition to the benefit of students learning about financial responsibility at an early age, the report outlines how participating banks can benefit from participating in similar programmes:

  • Many banks have as part of their core mission to give back to the community.
  • Offering youth savings pro­grammes can be an effective public relations strategy and build goodwill in the community.
  • Relationships formed through youth savings programmes have extended beyond the programme, with graduating seniors continuing to bank with participating financial institutions.
  • Three-fourths of banks in the pilot reported their youth savings programmes resulted in new ac­counts for adults as well as children.

The FDIC also recently announced the launch of its Youth Banking Network to help banks connect with schools to develop youth savings programmes. The FDIC will offer conference calls and resources, and solicit feedback from network participants on ways to develop community partnerships. Educators and non-profit organisations also are eligible to join.