Helping Low-Income Teens Save For Financial Independence: A Money Smart Success Story
Financial education is important for everyone -- even for people who don’t earn much income. One nonprofit organization that is using financial education to help make a difference for homeless teens -- in ways that those who work with other low-income youth may want to consider -- is North Shore Community Action Programs, Inc. (NSCAP), based in Peabody, Massachusetts.
NSCAP operates a homeless shelter that offers an eight-week financial literacy course to the adults living there, using the instructor-led Money Smart curriculum for adults and other resources.
But in addition, it has taught an unusual budgeting class to the teens in the shelter, based on the Money Smart for Young Adults curriculum, that features incentives for saving money plus special “field trips.” The hope, NSCAP officials say, is that when the teens get older they’ll become financially independent and better able to manage their money and plan for the future. To help their efforts, NSCAP partnered with Salem Five Cents Savings Bank of Salem, Massachusetts, and Danversbank of Danvers, which each provided a donation to NSCAP to fund two classes of five teens each.
Here’s how the program has worked. Each teen received $10 for each of the 10 Money Smart for Young Adults class sessions they attended. The students then made weekly trips to Danversbank to deposit the money into savings accounts they opened. And to give the students a practical understanding of the importance of saving, spending wisely and working hard, they were taken on trips to the local mall and a Habitat for Humanity site to observe the construction of a home for a low-income family.
At the conclusion of the course, the teens who saved every penny of the money they had earned and attended all the financial education workshops were rewarded for not tapping their savings. They received a matching contribution of an additional $100, leaving each student with a total of $200 in their savings accounts.
In their reviews of the program, the students wrote that as a result of their Money Smart education they are now more aware of the danger of credit cards and that they will be careful with any kind of debt. In a follow-up review a month later, the students reported that while they had spent some of their money on personal items, they saved the rest to use toward future expenses such as college or a car. The knowledge learned from the Money Smart curriculum resulted in sustainable behavioral changes.
One student proudly reported in her evaluation, “I am the first person in my family that I know of to have a savings account.” She added that she will not get a credit card just yet because “you might pay more for something if you don’t pay the loan off in 30 days.” She also vowed to always pay her bills on time.
Deborah Grace, Director of NSCAP’s Transition to Training program, which runs the financial education programs at the shelter, said “the Money Smart financial training material is really effective in delivering the necessary outcomes for the populations we serve. The material is very trainer-friendly and the curriculum provides great practical exercises for participants.”
Ms. Grace added that NSCAP is contemplating making financial education for youth a mandatory component of the shelter’s programs over the long term and that both banks have committed to re-funding this initiative.
“NSCAP’s inter-generational approach of providing financial education to both adults and teenagers at the shelter is an example of reaching out to impoverished members of the community in the hopes of making a difference today and long into the future,” said Irma Matias, an FDIC Community Affairs Specialist.
These teens from a homeless shelter in Peabody, Massachusetts, are shown during one of their weekly trips to deposit money into savings accounts funded by their earnings for attending Money Smart for Young Adults financial education classes taught by North Shore Community Action Programs.