Training Young Adults How To Save At Work
Everyone, young and old alike, can benefit from making savings a habit, and Young America Saves can help!
The Federal Deposit Insurance Corporation (FDIC) and America Saves are collaborating nationally to promote saving at work for young adults. Low-income youth are more likely to utilize expensive non-bank financial products and are less likely to have a checking and / or savings relationship with an insured financial institution or save a portion of their paycheck, all to their determent. Without savings, it is difficult or nearly impossible for individuals to move out of poverty.
This collaboration seeks to change that behavior by initially offering youth-serving organizations the opportunity to participate in a pilot project to promote workplace savings in an insured account. The program is based on the belief that the most fundamental action someone can take to achieve financial literacy is to develop a habit of saving in an insured financial institution account. This effort allows opportunities to those who normally do not save. When funds are not available, money may be borrowed, potentially at a high cost. Research has shown that these emergencies tend to be the biggest obstacle in achieving some assets such as higher education, a home or starting a business and certainly financial self-sufficiency, and for youth, successfully transitioning into adulthood.
The products and programs developed support young adults saving at work including receiving relevant financial information, being part of a national savings movement, and learning how to take advantage of opportunities for saving and asset development.
“The Young America Saves Employer Initiative” has been tested and developed in Chicago with several employers of youth during the summer months offering direct deposit, encouraging or mandating a minimum to be saved out of each paycheck, a no-fee savings account with a partner bank, and ongoing financial information to support savings behavior.
The FDIC launched its Model Safe Accounts Pilot on January 1, 2011 to evaluate the feasibility of financial institutions offering safe, low-cost transactional and savings accounts that are responsive to the needs of underserved consumers. Nine banks are offering accounts to consumers through this pilot. America Saves and the FDIC will provide technical assistance, particularly on reaching out to local banks to help facilitate organizational stakeholders having access to appropriate deposit account products, and ongoing financial information and motivation to young people receiving regular payments for work or training.
If this is a project you are interested in participating in and would like to discuss how this effort can benefit your participants and your organization, please contact:
George Barany, America Saves, GBarany@consumerfed.org
Nicola Kelly, FDIC, NKelly@FDIC.gov
For more information about this topic, please visit our section on Transition Age Youth at youth.gov.