Stay Informed!

By Stephanie Halligan on 09/28/2011 @ 11:00 AM

Tags: Children's Savings Accounts, Events, Financial Empowerment

On Wednesday, September 14, the Take Charge America Institute at the University of Arizona hosted a webinar to highlight their latest findings from Wave 2 of the Arizona Pathways to Life Success for University Students (APLUS) study. With support from the National Endowment for Financial Education (NEFE) and the Citi Foundation, the institute launched APLUS in 2007 as a landmark longitudinal study exploring the elements of financial capability: how young adults develop financial knowledge, attitudes, beliefs and behaviors and how that development impacts life success as adults.

Asset Building for Children

The Wave 2 analysis re-surveyed the original 1,508 university participants three years after the baseline study and, most notably, in the midst of a still-struggling U.S. economy.

Findings:

1. Financial Socialization: Parents play a key role during a student’s college career, and help their young adult children become financially capable adults. Parents’ influence is 1.5 times greater than that of financial education and more than twice that of friends.
2. Cumulative education: Ongoing financial education is critical to better outcomes. Researchers documented a “snowball effect,” with earlier financial education exponentially increasing the likelihood of later financial education, including informal learning.
3. Followers, Drifters & Pathfinders: Participants in the study cluster into three groups by financial management style, including (a) followers: those who mostly accept what their parents say is best, (b) pathfinders: those actively building a self-chosen style of financial management, and (c) drifters: those who don’t follow their parents’ style but have no individual approach. Not surprisingly, Pathfinders have significantly greater financial capability: they know more about personal finance, have more positive financial attitudes, and make better financial decisions.

While further research is needed to test the quantitative impact of financial education on responsible financial decision-making, the APLUS study breaks new ground as a longitudinal analysis of changes in financial behavior. The findings presented in Wave 2 highlight the need to provide financial education for both parents and their children, and the importance of administering financial education early and often to kids and young adults. For these reasons, financial education is a critical component of CFED’s Asset Building for Children work. Financial education, especially when provided in tandem with a savings account, gives children and young adults a tangible opportunity to develop and test their financial decisions.

For more information on Asset Building for Children, please visit our Asset Building for Children page.

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