LOS ANGELES — Give teenagers a summer job, and they may well be broke again by Labor Day. But a summer job plus a savings account and a bit of sound advice is more powerful.
Financial literacy education is sometimes maligned as ineffective, but Obama administration officials argue that it can work under the right circumstances.
Buried inside President Obama's new budget proposal is about $30 million to support the connection between youth employment programs, financial literacy and the responsible use of financial products, according to Treasury officials.
In the grand scheme, that is pocket change, of course. And the funding request may never be approved by Congress.
But the administration's proposal would put federal dollars behind an idea — known as just-in-time financial education — that has been gaining currency in recent years.
It certainly makes logical sense that people are better at absorbing lessons about money when they already have some in their pockets. And that intuition has support from a growing body of academic research.
"If you can provide information on an important issue when individuals are actually dealing with that issue, they can better incorporate the education into their current thinking," University of Colorado professor John Lynch, a leading researcher on financial decision-making, has said.
On Tuesday, acting assistant Treasury Secretary Amias Gerety attended a roundtable discussion with Los Angeles Mayor Eric Garcetti about a summer employment program for local youth. Later in the day, he spoke about the L.A. program during remarks at a community reinvestment conference.
"The program works with educators, employers and city agencies to make sure young people are prepared with job skills and money management skills to succeed as they become adults," Gerety said.
"We know from their experience that these programs work, because there is no better time to address financial inclusion than with young people receiving their first paycheck," he said. "We have heard from cities and youth leaders around the country that this is needed and can make a real difference in our communities."
The president's budget proposal also states that all recipients of grants to support summer job opportunities must help participants establish bank accounts and set up direct deposit.
"These accounts must be established with reputable banks and be affordable to youth. The accounts would be a tool to allow youth to learn sound money management practices, and would be used by youth employment programs to implement high-quality financial literacy education for participating youth," the document states.
Numerous banks and credit unions are already active in programs designed to encourage youth employment. Sometimes those efforts involve philanthropy. Sometimes they involve hiring teens and young adults. And sometimes they involve providing access to affordable financial products.
In the context of President Obama's final budget proposal, the financial-education push is an uncontroversial, small idea that will surely be overshadowed by big contentious ones, like the administration's oft-proposed bank tax.
For banks interested in collaboration with the government, however, it may present new opportunities.