Kids in San Francisco get head start in financial skills

One way to strengthen Gateway Cities is to help families build assets that provide long-term economic stability. In Massachusetts, the Midas Collaborative provides financial education to low-income families and also operates matching-fund programs to encourage long-range saving. As Governing magazine reports, the city of San Francisco is going further by making financial skills part of its kindergarten curriculum.

The Kindergarten to College program (K2C) sets up a savings account for every student in the earliest grade of the city’s public school system. Each kindergartener gets $50 (or $100, depending on financial need) to start the account. Families can add to the account and receive matching funds at various points from private partners in the K2C program (for example, doubling the first $100 that the family deposits). They can withdraw money for post-secondary education; if a student doesn’t attend college by the age of 25, the matching funds are revoked but the rest of the money can be withdrawn for any purpose.

The sums are not high, but the act of setting up savings accounts — a variant of the “nudge” strategy of, for example, automatically enrolling employees in 401(k) accounts — has been shown to be valuable in establishing a sense of financial responsibility. From the Governing article:

Children with a savings account are up to seven times more likely to attend college than children without an account, according to a 2010 study from the Center for Social Development at Washington University in St. Louis. Education researchers believe that opening a savings account increases a child’s chances of attending college by defraying the actual cost, but also by making college a long-term goal for the child.

“It’s really about the kid seeing, ‘oh my God, I have a college savings account. I guess this is what I’m supposed to do,’” [San Francisco treasurer José] Cisneros said.

also points to a study suggesting that children in families with no assets (a car, home, or bank account) have lower test scores and graduation rates.

For more on this topic, see other INCSpot posts on “Family Financial Skills.”

                    – Robert David Sullivan

Our sponsors