Why Children and Youth Savings?
People who own assets – such as a savings account – are more likely to have a more positive outlook and higher expectations for their futures and the futures of their children. Equally important are the expectations of children themselves: interviews with accountholders in the Saving for Education, Entrepreneurship and Downpayment (SEED) Initiative show that children who are saving for their future begin to formulate ideas about their futures as early as elementary school. Other research indicates that children with college savings are nearly twice as likely to have higher expectations for attending college as students with no college savings.
Children’s Development Accounts
One promising new tool to help children and youth accumulate savings is a Children’s Development Account (CDA). CDAs – also known as Children’s Savings Accounts – are universal, long-term asset-building accounts established at birth with the potential to grow over a lifetime. Seeded with $100 to $1,000, CDAs grow with contributions from family, friends and the children themselves. Most CDA funds are then augmented by savings matches and other incentives. Financial education, a key component of most CDA initiatives, helps young savers and their families to build financial aspirations, knowledge and skills. With CDAs, all children regardless of background will be free to dream – and achieve.
What Children’s Development Accounts Do
Change Expectations: CDAs address the achievement gap by helping low-income parents and students see college as an attainable goal, improve students’ K-12 academic performance and broaden the pool of college applicants, while building a stronger and more skilled workforce.
Provide Economic Mobility: studies tell us that regardless of household income, the children of parents with assets – a college degree, a house, a business and savings – are more likely to do well in school and also complete more years of education.
Increase Savings: By making regular deposits into a CDA account, parents and children are more likely to develop a pattern of regular deposits and lifelong savings.
Expand the Economy: as young adults begin to use CDA funds to go to college, buy a home, or start a small business, the benefits expand beyond the family to the broader community and larger economy. When times are tough, families with assets/savings are better able to weather sudden job losses and other threats to their financial security.
The SEED Initiative
The Seed Initiative is a 10-year national policy, practice and research endeavor to develop, test, inform and promote Children’s Development Accounts. the Seed Initiative seeks to set the stage for universal, progressive American policy for asset building among children, youth and families. The initiative was designed as an integrated, multifaceted effort that includes rigorous research, federal and state policy development, and demonstration at 12 sites that are testing and documenting specific aspects of children’s development accounts.