Development Digest: Key Takeaways from “Pathways to Development: Evidence from YouthSave”
Can low-income teens in developing countries build savings? Does it matter for their futures? These were some of the questions asked at our most recent Microlinks event, featuring lessons from the YouthSave project.
Over the past five years, YouthSave has investigated the potential of savings accounts as a tool for youth empowerment and financial inclusion. In that time, more than 130,000 young people, mostly between the ages of 12 and 18, opened project-sponsored savings accounts in Colombia, Ghana, Kenya, and Nepal.
Here are some of the key takeaways:
Myth busted: “Low-income teens have no money to save”
YouthSave proved that low-income youth do want to save money and that doing so can make a positive difference in their lives. Over the course of three years, teens saved about $1 million in YouthSave accounts. In many cases, young people saved enough to make a significant contribution to their school fees, to help their families, or to hedge against emergencies.
One size does not fit all
If you want your program to succeed, you’ll need to tailor your products specifically to young people. Aim for:
- Banking products that are simple to understand and use
- Savings goals that match each life stage
- Easy access to accounts, through in-person or digital financial services
- A combination of financial education and financial services
- Incentives for young customers
- Sales incentives for bank staff
- Youth-centered outreach
- A balance between sheltering savings from temptation purchases and enabling easy access in emergencies
- The encouragement of a parent or other adult
Take the youth to the bank Take the bank to the youth
It’s important to meet young people where they are. YouthSave found that direct outreach at places where youth congregate, like schools and youth clubs, made a big difference.
Branches can be few and far between, with business hours that overlap with the school day. And, young people may feel uncomfortable walking into a branch. YouthSave found particular success with in-school banking.
For many young people, school-based delivery is the easiest way to connect to banking services. It is particularly helpful for young girls who enjoy less mobility in their communities. Special efforts will be needed to reach children who are not in school – perhaps in partnership with other organizations working with marginalized children.
YouthSave found that younger customers tended to have higher monthly savings, likely because of parental encouragement. Starting early also gives savings more time to accumulate and compound into a meaningful sum.
There is also growing evidence that savings accounts have an impact on the future orientation of children who hold them. Even a small amount of savings, especially if it is designated for secondary schooling, can change how children envision their futures.
Do you have experience with Youth Savings Groups? Share your thoughts in the comments! To learn more about the project, check out the resources from our event.
Also, check out some key takeaways from the event in the video below.
The YouthSave project is a partnership between the MasterCard Foundation, Save the Children, CGAP, New America, and the Center for Social Development.