Editor’s note: This post was authored by Vishnu Sridharan, Director of the Make Your Path (MY Path) Program at Mission SF Community Financial Center in San Francisco, California and a former member of the Global Assets Project at New America.
To mark the launch of Financial Literacy Month in April, the Council for Economic Education will release a new set of standards to establish what youth should know about money by the end of 4th, 8th, and 12th grade. The state of Florida is considering passing a bill that requires that “financial literacy must be included in high school graduation requirements.” An increase in attention to financial literacy is a positive development. However, growing research shows that financial literacy alone is “not sufficient,” and that what genuinely impacts the economic trajectory of youth is the ability and opportunity to act on their knowledge. As such, we might be better off focusing not on financial literacy initiatives as such, whose primary aim is to impart information, but instead on financial capability initiatives, which also include a strong behavioral component.
As detailed in a recently released white paper from the Federal Reserve of San Francisco, Increasing Financial Capability among Economically Vulnerable Youth: MY Path, as well as a highly influential paper by Joshua Sledge at the Center for Financial Services Innovation (CFSI), the primary difference between traditional financial education and financial capability efforts is that the latter incorporates access to financial products and services, in addition to the educational component. The Make Your Path (MY Path) initiative – one of the many youth and young adult financial capability programs housed at Mission SF Community Financial Center – takes this distinction as its foundation to promote financial security and catalyze economic mobility by providing disadvantaged youth with peer‐led financial capability trainings, a savings account at a mainstream financial institution, and incentives to set and meet savings goals.
The MY Path pilot focused on youth 14-17 earning their first paycheck—a critical “teachable moment” to promote savings and connect youth with mainstream financial products. MY Path uses a hands‐on, experiential approach, with an emphasis on peer learning and support, and helps youth develop healthy financial habits and behaviors. The full data set of the pilot can be found in the paper, but highlights of the program so far include:
Participants saved an average of $507 over a six‐month period. Including incentives, each youth had accumulated an average of $735 though MY Path;
Participants saved an average of 86 percent of their savings goal, and 46 percent of them fully met their savings goal.
The program reported consistent increases in youth financial knowledge after each training workshop;
Increases in reported positive financial behaviors, such as budgeting, tracking spending, differentiating between needs and wants, and saving;
Increases in confidence about making financial decisions and comfort in doing business with a mainstream financial institution; and
Increases in a sense of control over money.
Instead of taking my word for it, though, you should listen to the inspiring stories from actual MY Path participants about how the program made savings easy and led them to change their behaviors around money management. (Spoiler alert: Kyle saved up to buy a laptop for school, Christina bought a $700 camera, and Pedro was able to visit his home country, El Salvador!)
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