Image from Flickr.com/camusartink
By Mat Despard and Julia Stevens, Center for Social Development
Do Ghanaian youth have money? How do they get it? What do they do with it? These are questions we are beginning to answer in YouthSave using data from a baseline survey of over 6,000 in-school youth.
What makes answering these questions so exciting is that we know very little about the financial lives of youth in Sub-Saharan Africa (SSA). And yet, this data is important. As efforts grow to provide financial education to youth to increase their access to financial services, we need to have a better handle on how youth interact with money.
In May 2011, the Institute of Statistical, Social and Economic Research (ISSER), a research partner in YouthSave, conducted surveys with 6,252 in-school youth from treatment and control schools. The youth survey included questions about financial capability and asset ownership among other youth characteristics. The key findings are discussed below.
Do youth have money? How do they get it?
Youth in the baseline study reported having an average of about 15 GHS or about 10 USD, but the median amount was more like 5 GHS or a little over 3 USD. If we remove the top 5 percent as outliers, the average amount was 9 GHS or nearly 6 USD—not a lot of money.
The money comes mostly from parents and other family members, but about a quarter comes from working and/or selling things. For example, youth told us they help their mothers at the market, crack stones, fetch water, get tips for running errands, and sell cassava.
Boys had more money than girls, and youth in higher-grade levels had more than those in lower grade levels. But the big difference was whether youth said they got money from working and/or selling things. Youth who worked had about three times as much money as those who did not have earned income.
More than a quarter of youth we surveyed had no money. Those without money were more likely to be from particular regions of Ghana; nearly half of youth from the Northern region, for example, said they had no money. Interestingly, there were no differences by gender, as girls and boys both said they had no money. Not surprisingly, youth who had no money had parents or guardians with less earned income than youth with money.
What do youth do with their money?
Youth who had money judged themselves to be capable money managers. Most said they pay careful attention to what they spend their money on and frequently set aside money for later use. However, the money they set aside is held for very short durations. Only 17 percent intended to hold on to their money for three months or longer. This was not surprising, as we also learned that youth mostly intended to use their savings to purchase school supplies and other basic needs. In short, youth set aside their money, but most did not really save their money for long-term development purposes, such as funding their education.
Another anticipated finding— and really the reason why YouthSave was launched—was that very few (3 percent) save their money with a bank or microfinance institution (MFI). Youth reported that they save their money in informal ways—safekeeping with family members or friends, using Susu collectors or savings clubs, or keeping their money in a hiding place.
What are the implications for YouthSave?
Certain findings from the baseline survey are especially important to note:
- Youth who have money report having only a small amount (about 9 GHS/ 6 USD), and most of these youth keep their savings for less than three months to use for basic needs and school expenses. Over a quarter of youth have no money. This suggests that saving for longer periods may be challenging for many youth in YouthSave. However, saving with a bank and earning interest has not been an option for these youth.
- Youth with earned income have three times more money than youth without earned income. However, other research suggests that work activities may interfere with educational attainment among youth. It will be important to examine how activities to earn money affect school performance for youth.
- Youth report being careful with money and have practice setting it aside, if only for short periods. This suggests that youth already have some of the skills and habits they need to save successfully in a YouthSave account.
- Although they have some practice saving informally, only 3 percent of youth have saved with a bank or MFI. This suggests that the YouthSave project, and other similar projects, may fill a distinct need among this population. However, this finding also indicates that formal saving is unfamiliar to the majority of youth and barriers to participation, such as a desire to keep money where it is more immediately accessible, may need to be overcome.
These findings give us a glimpse into the financial lives of Ghanaian youth where little understanding currently exists. However, we have only begun to scratch the surface. More data analysis is needed to examine the relationship between youth’s financial behaviors and a host of other factors like household assets, gender, and prior exposure to financial education.
On July 26, the YouthSave Consortium will discuss some of the results of its baseline surveys in Ghana (the research briefs can be found here), in addition to a discussion about its most recent data on the financial preferences of low-income youth and methods to encourage positive financial behavior. Join the Youth Save Consortium as it explores the ideas about the future direction of the field and examines new insights on youth savings at this event.