Supported by Lessons Learned & Best Practices 2012 Hawaii Asset Building Symposium Kid’s Savings...

Supported by

Lessons Learned & Best Practices2012 Hawaii Asset Building Symposium

Kid’s Savings Initiatives:

www.cfed.org202.408.9788

About CFED

CFED (Corporation for Enterprise Development) has worked for more than 30 years to expand economic opportunity by helping people save and invest, own homes, succeed as entrepreneurs, contribute to and benefit from the economy.

We combine the vision of a think tank with real-world experience to:

Identify Good Ideas: CFED’s researchfinds ideas with potential for making theeconomy work for everyone, particularlythose on the margins.

Test Them Out: CFED works with local communities to test promising approaches and adapt them to diverse cultures and economic conditions.

Bring Ideas to Scale: CFED then takes it to the next level, bringing effective approaches for building wealth and financial security to scale at the local, state and national levels.


The Power of Assets

Asset ownership… Moves families beyond “paycheck to paycheck” Creates a financial buffer to weather emergencies Is linked to lower rates of divorce and domestic

violence Enhances the well-being and life chances of

children

“Assets are hope in concrete form.”


The Asset Gap

Racial disparities in 4-year college attainment

Racial disparities in median wealth

White Households Households of Color $-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000 $112,647

$8,803

White Households Households of Color0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0% 31.4%

19.8%


Why Assets Matter for Children

Assets & Economic Mobility: Children of parents with savings are significantly more likely to climb up the income ladder – especially for low-income individuals and families.1

Assets & Development: Living in poverty can increase stress hormones in young children and impair blood supply to their brains, permanently affecting language and memory skills – and low-asset families are more likely to be poor.2

Assets & Aspirations: Establishing wealth building accounts in the early years can help parents and children to perceive college as a tangible goal.

1 Cooper and Luengo-Prado, 2010; 2 Cunha and Heckman, 2007, and Hart and Risley, 1995


New Asset-Building Tool: Children’s Savings Accounts

Children’s Savings Accounts (CSAs) are a promising way to increase assets and college-going aspirations for children and their families. In their ideal form, CSAs are:

Established for children as early in life as possible.

Seeded with an initial deposit and built by contributions from family, friends and children themselves.

Augmented by savings matches and/or other incentives and age‐appropriate financial education.

Used for an asset-building purchase, such as higher education, at age 18.

First national demonstration of children’s savings accounts conducted with 12 community partners in the US and Puerto Rico

Lessons from the SEED Initiative


Families of all income levels, with children of all ages, can and will save.

About 1,200 accountholders accumulated a total of almost $1.8 million over 3.5 years.

Average account balance = $1,518 Participants saved about $30 per quarter of

their own funds 57% of accountholders made deposits in their

accounts


Saving is not easy, especially for lower-income families.

Low incomes and tight budgets make it hard to find money to save

Families with multiple children are “stretched” farther

Long-term goals compete with short-term needs

“The high cost of being poor” Financial products and services that don’t

meet the need


Program and account features can greatly affect saving performance.

Account design and program arrangements appear to facilitate savings:

• Inaccessible funds• Designation of funds for a specific use• Program support

The amount and types of incentives—initial deposit, cap on other incentives, and match limit—appear to have distinct associations with savings and accumulation.


Savings can change children’s sense of the future.

Savings can close the gap between college expectations and college enrollment.• Children in families with as little as $3,000 in savings had better

odds of graduating from high school than those without savings.

• Children with college savings accounts are more likely to expect to go to college, and are nearly twice as likely to be in college than those without an account.

Basic financial education can affect future orientation.• Children predicted more future success for themselves when they

learned that college could be affordable and attainable.


CDAs appeal broadly to Americans across political and geographic lines.

In a national poll, almost seven out of ten respondents (69%) and almost eight out of ten parents (78%) supported the idea of CDAs.

After being exposed to messages both for and against CDAs, this support holds at 78% for parents and grows to 72% among all respondents.

Advocating for children’s savings accounts increases voter support for both Republican and Democratic candidates.


Children, Assets & Educational Outcomes

Savings, particularly when paired with financial education, can transform educational outcomes. Children in families with as little as $3,000 in savings had better

odds of graduating from high school than those without savings. Children with college savings, regardless of income, scored higher

on tests measuring math knowledge. Children with college savings accounts are more likely to expect

to go to college, and are nearly twice as likely to be in college than those without an account.

When children have a savings account in their name, they are six times more likely to attend and complete college than similar youth who do not have an account.


SEED Unplugged


Assets Learning ConferenceSeptember 19-21, 2012 – Washington, DC

The Assets Learning Conference is a nationally-recognized biennial event that brings together over 1,000 professionals from leading nonpro

fits, foundations, financial institutions, corporations, academia and government to learn about and advance asset building in the United

States.

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