The Great Recession exposed the financial fragility of millions of American families. Now researchers and policymakers are striving to improve the next generation’s grasp of personal finance and its access to safe financial products.
Toward those ends, a special issue of The Journal of Consumer Affairs (JCA), “Starting Early for Financial Success,” features articles that explore the links among financial education, financial inclusion, and financial well-being. Contributors to the issue point out that even young children can learn and apply financial lessons and that facilitating financial capability—both the ability and opportunity to act in one’s best financial interests—is a key imperative for policymakers.
Michal Grinstein-Weiss, PhD, associate director of the Center for Social Development (CSD) and associate professor at the Brown School of Social Work at Washington University in St. Louis (WUSTL), and Margaret S. Sherraden, PhD, Founder’s Professor of Social Work at the University of Missouri-St. Louis and research professor at WUSTL, served as guest editors of the issue, which also publishes some of their research findings. The special issue was created in collaboration with the national Financial Literacy and Education Commission (FLEC), a group established by Congress in 2003, comprised of representatives of more than 20 federal agencies, and chaired by the secretary of the U.S. Treasury.
Sherraden and Grinstein-Weiss’ introduction to the special issue establishes that efforts to increase financial capability are occurring in the context of three trends: everyday financial decision making is increasingly complex; young people confront high-stakes financial decisions earlier than was common a generation ago; and many families with children are struggling financially. Although each of these trends challenges the financial capability and well-being of the next generation, policies and programs that offer promise are underway, many of which are highlighted in this special issue.
The special issue presents 10 scholarly contributions that add to understanding financial socialization across childhood and present empirical evidence on interventions that introduce young people to the financial world early. Articles analyze developmentally appropriate innovations in financial education, financial services, and asset building that engage children and youth in building financial capability. For example, findings from the research in this special issue include:
- Children as young as 3 years old can benefit from developmentally appropriate interventions to improve future financial well-being (Drever et al., p.13-38).
- By age 5 or 6, children are capable of demonstrating savings behaviors (Friedline, p.39-68).
- After modest amounts of financial education, children in grades four and five in two dissimilar districts retained lessons on financial knowledge, behavior, and attitudes (Batty, Collins, & Odders-White, p.69-96).
- An intervention that leverages the teachable moment when teens receive their first paycheck can help them accumulate savings (Loke, Choi, & Libby, p.97-126)
JCA and FLEC called for research papers last March, and authors of articles selected for the special issue presented their findings at a FLEC symposium in Washington, D.C.
The articles in this special issue contribute to understanding how starting early can contribute to financial success, Sherraden and Grinstein-Weiss say. More important, they say, they suggest how to nurture a more financially capable next generation.