“Save Steady. Dream Huge.” is the tagline of San Francisco’s Kindergarten to College Program. Currently, students at nearly 40 schools (and by 2012 district-wide) automatically get a college savings account at Citibank, with an initial $50 deposit made possible by the City and County of San Francisco. The children and their families can make contributions to this deposit only account in person, by mail, or online as frequently as they like, in small or large quantities, up to $2,500 per year. Among other incentives to encourage savings is a match of the first $100 saved, and more incentives are forthcoming.
Once the student graduates from high school, s/he can apply the savings towards tuition, books, and other education-related expenses for (public or private) college, community college, graduate school, or other kinds of training programs. Foreign institutions may also be eligible. A public-private-partnership among the San Francisco Mayor's Office, the Treasurer's Office of Financial Empowerment, the Department of Children Youth and Families, the San Francisco Unified School District, EARN, CFED, the San Francisco Foundation, the New America Foundation and Stanford University created this head start to financial inclusion and savings.
The SallieMae Fund also has a similar program, which since 1992, has been building excitement about college in young students and already reached 70,000 students. Its Kids2College program seeks to “Open Doors to Higher Education” and starts with middle school students.
Such a head start to financial citizenship has capacity for significant long-term impact. As we wait for the conclusions and learning from the various ongoing efforts mentioned in a previous post, here are a few personal experiences that I imagine will be revealed among the studies and interventions.
A head start to financial citizenship can:
- Foster Dialogue: While conversations about money started with my mom and older siblings, they have expanded to dialogue with my friends, neighbors, parents of my friends, and now my husband. Money has become less of a taboo topic and instead, we share techniques and best-practices ranging from credit cards to taxes. Just as we would share recipes or restaurant reviews, we’ve exchanged stories about credit reports, IRAs, and student loan management. Each month, my husband and I hold budget meetings, where we review our numbers and progress towards our financial goals, responsibilities to our families, and opportunities of philanthropic giving.
- Encourage Planning: Knowing at a very young age that my parents not only lacked the financing to send me to college, but also that they would soon need an allowance of support from me spurred me to action and also managed my expectations. As a young child, I did not ask for toys and candy while waiting in line at the grocery store check-out. In middle school, I began participating in various competitions, whether speech or essay contests, to start raising money for college. In high school, I began applying for scholarships my sophomore year. Early planning and a future orientation enabled me to be (i) financially independent upon graduation from high school (ii) start sending money home at the completion of college and (iii) self-finance a year of volunteer work, my wedding, and down payment on an apartment. This would not have been possible without a head start.
- Practice Habits: I also think it made a difference for me to start my personal relationship with finance via savings instead of credit. In fact, it has resulted in an orientation toward credit, where I only considered it when necessary to finance graduate school and for a mortgage. Starting young allowed me to practice saving up toward a specific goal and instilled in me the time value of money which helps me overcome some of the biases that research in behavioral economics and the psychology of savings are revealing about barriers to saving. Starting early almost created the same affect—the same discipline—that many develop from debt.
- Enable Financial Competency: Finally, an early start enabled me to diversify the sources and types of financial education from which I benefitted. I recall attending workshops at my local library in Tennessee on budgeting; participating in webinars provided by some of the sources of my college scholarships regarding credit; reading books and blogs about investments; and joining workshops provided by my personal banks or the human resources and staff associations of my employers. Cumulatively and over time, I gained the knowledge and attitude towards financial competency. Each intervention provided new lessons, and I still have much to learn.
- Secure a Safe and High Quality Financial Passage: I think of all of these experiences are like stamps in a financial passport. They each have contributed to my personal financial citizenship, and hopefully, they will enable me to create financial inclusion and opportunities for others, whether in my personal or professional capacities. These experiences also inform why I believe in initiatives like FAB (Financial Access at Birth), which aim to challenge the process, to make us think differently about whether financial citizenship can start at birth, and how interventions like financial education can ensure a safe and quality experience.