Low-income urban youth methodically saved money when taught about goal-setting and given access to savings accounts and other basic banking tools, according to a report issued Tuesday about a financial education program called America Saves for Young Workers.
The program, backed by JPMorgan Chase and part of a Consumer Federation of America savings campaign, worked with 238 low-income participants ages 16-20 in eight major cities after they had completed summer jobs. In brief sessions they were taught about putting money aside, provided access to savings accounts and offered options such as direct deposit, split payments and automatic transfers between accounts. The impact on their behavior was studied from August 2015 to March 2016 by C+R Research.
Here were some of the findings:
Following their summer jobs, 58% of participants owned savings accounts, a 66% increase in ownership.
About three quarters of young workers were given a choice of deposit method, and an average of 66% chose direct deposit.
Participants saved an average of $400 and kept those balances relatively steady during the survey period.
Their savings rate exceeded by 34% the rate of low-income teens nationally.
And 61% of the participants made a deposit eight months after their summer jobs ended though only 38% of them were formally employed.
The program was touted as a chance to teach young workers about savings at their first real jobs. "This special moment in time then becomes an opportunity for employment programs, financial institutions, and America Saves to show young workers how to save and, more importantly, help them set up the systems to save automatically," said George Barany, the director of strategic initiative for the overall America Saves campaign.