Financial institutions, schools and nonprofit organizations 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 2-year pilot by the FDIC.
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 programs.
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 programs, less attention was paid to hard data in favor of informal observations, according to the FDIC report.
For example, an elementary school teacher noticed the financial education program’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 programs that can work,” Elizabeth Ortiz, FDIC deputy director, consumer and community affairs, said 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 programs:
- Many banks have as part of their core mission to give back to the community.
- Offering youth savings programs can be an effective public relations strategy and build goodwill in the community.
- Relationships formed through youth savings programs have extended beyond the program, with graduating seniors continuing to bank with participating FIs.
- Three-fourths of banks in the pilot reported their youth savings programs 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 programs. The FDIC will offer conference calls and resources, and solicit feedback from network participants on ways to develop community partnerships. Educators and nonprofit organizations also are eligible to join.
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