Boosting the Power of Youth Paychecks: Integrating Financial Capability into Youth Workforce Programs

Laura Choi
Senior Research Associate, Community Development, Federal Reserve Bank of San Francisco

“At my school, they talk a lot about the future, but nobody ever talks about how we’re supposed to pay for it.” These insightful words came a local teen in San Francisco who recently participated in MyPath, a youth financial capability initiative aimed at low-income youth earning their first paychecks.

Financial capability experts have long discussed the importance of the “teachable moment,” and for this young person, along with the 20.3 million young people who worked this past summer, that moment came in the form of receiving a paycheck. For many lower-income youth, these first paychecks represent an important opportunity to get youth into the financial mainstream, avoid costly predatory financial services, and establish positive financial behaviors and attitudes. The SF Fed, in partnership with MyPath and Eastern Washington University, recently hosted a convening and released a working paper that presents the results of the first quasi-experimental design study of a youth financial capability initiative seamlessly integrated into a youth workforce development program.

MyPath Savings supports low-income working youth to bank, save, and build their financial confidence through a comprehensive model that includes financial education, goal-setting, and non-custodial accounts. MyPath provided technical assistance and training to prepare nonprofit youth employment programs to implement MyPath Savings, as well as to the financial institution partner, Self-Help Federal Credit Union, to ensure the accounts youth received were aligned with MyPath’s Youth Banking Standards.

The study included 375 low-income young people ages 16-21 years old participating in youth workforce and employment programs operated by ten nonprofits in partnership with San Francisco’s Department of Children, Youth and their Families. Participants were assigned to one of two treatment groups, or a comparison group, and received a range of interventions:

Comparison Group:

• 1 hour workshop on fringe financial products

Standard MyPath:

• 1 hour in-person workshop
• Supported enrollment into two accounts
• Direct deposit
• Support setting a personal savings goal
• Three online, interactive financial education modules

MyPath Plus Coaches:

• 1 hour in-person workshop
• Supported enrollment into two accounts
• Direct deposit
• Support setting a personal savings goal
• Three online, interactive financial education modules
• 2 hours of Peer-led Group Coaching

Both Standard MyPath and MyPath Plus Coaches participants experienced increases in youth banking and saving outcomes and significantly improved confidence in their ability to carry out basic financial tasks compared to the comparison group, with no statistically significant differences between the two treatment groups in those areas. Both models prove equally effective in producing youth financial capability outcomes, including:

• 97 percent of youth participants enrolled into safe youth-friendly accounts.
• 100 percent set a personal savings goal, using a MyPath Savings contract.
• 96 percent met their savings goal.
• Youth in treatment groups were three to five times more likely than those in the comparison group to have increased confidence to carry out basic financial behaviors, including saving, budgeting and smart spending.
• Youth saved on average 34 percent of their income, for an average of $329 each, amounting to a total of $66,500 in savings across all participants.

Four Key Lessons:

1. Both models increase youth financial capability, including banking, saving, and money management outcomes. Adding peer led group coaching workshops boosts financial knowledge gains, and is best suited for longer programs or those with more capacity to provide additional financial capability programming.
2. Blending in-person and online education provides an effective mix of scalability and impact. Technology can help scale programs, while the in-person activities cement learning and action.
3. Young people bank and save when given the opportunity, but need youth friendly accounts in order to do so. The high take-up and account enrollment rates reflect the strength of using the MyPath Youth Banking Standards with partner financial institutions to reduce youth barriers and maximize enrollment.
4. Youth workforce staff and settings differ from classroom settings and require different curricula. MyPath Savings’ action-based curriculum is tailored for youth workforce and employment staff and settings: It is shorter and designed to give youth earning their first paychecks a positive experience banking and saving for the first time.

To learn more about the MyPath initiative and details on the research study, read Boosting the Power of Youth Paychecks: Integrating Financial Capability into Youth Workforce Programs.