Creating Future Opportunities for Youth by Understanding Their Needs Today

The following article, written by YouthSave's very own Jamie Zimmerman of the New America Foundation, originally appeared on Microfinance Gateway.

The annual Making Cents Youth Economic Opportunities Conference convened last week on the heels of recent predictions that by 2017 youth unemployment is expected to rise to 12.9% globally and more than 25% in poorer regions. With youth populations and their access to economic opportunities moving in increasingly divergent directions, we face a pressing question: what do youth need to envision, believe in, and put themselves on the path toward the best possible economic future?

The latest insights from the YouthSave Consortium shed new light on this question and aim to highlight the importance of enabling youth to take ownership of their futures. The YouthSave Consortium – an initiative led by Save the Children in partnership with the Center for Social Development (CSD), New America, and CGAP, along with several research and financial institutions partners in the field – is working to test the viability and impacts of savings products on low-income youth in Colombia, Ghana, Kenya, and Nepal.

Results from YouthSave’s recent research and analysis suggest that tools, policies, and institutions that help youth save, manage their resources, and build assets over time are all important components of creating economic opportunities and mobility for youth. Yet, in order to effectively support these developments, the Consortium argues that a better understanding of youth demand, needs, and behaviors is imperative.

The Consortium recently released several research and policy papers that highlight new insights and ideas distilled from their efforts to better understand youth and their money. Some highlights of the findings:

• In Save the Children’s report, “What do Youth Saver’s Want?”, market research exposed that not only do low-income teens save in all four countries studied, but they want to save larger amounts of money, over the long-term, in secure places to pay for their education or to start a small business. Running contrary to popular belief that youth cannot and do not want to save, this latent demand across geographic and contexts should pique the interest of financial institutions interested in acquiring new customers and tapping into an often-ignored market.

• CSD's baseline impact survey in Ghana looked at the living conditions, financial knowledge and attitudes, and savings patterns of over 6,000 youth and 4,500 parents/caregivers — the largest such study to date in the youth financial inclusion field. The survey shows that of several “financial socialization mechanisms,” such as conversations with parents, visiting banks, and receiving financial education, only visiting banks and financial education show a statistically significant effect on teens’ saving behavior. The findings also indicate that while most teens save informally, only 3% had ever saved at a bank or MFI. These findings point to a real need to increase youth’s exposure to financial institutions if we are to maximize the effects of financial socialization mechanisms.

• New America Foundation’s recent paper entitled "Creating Creatures of Habit" acknowledges the psychological challenges to economic decision-making, and posits that policies and programming that facilitate savings at strategic moments in the youth lifecycle can lessen the mental toll taken by every individual decision to save and help make savings more habitual. Policymakers could enhance the tools they provide for economic empowerment and stability over a lifetime by taking these behavioral insights into account.

• CGAP's new publication, "Emerging Perspectives on Youth Savings," looks at policy opportunities and constraints related to promoting youth savings. Specifically, the paper examines how policy efforts can encourage savings behavior among youth, the legal barriers that curtail their ability to do so, and the drivers that make the youth savings market more or less attractive for the private sector. As interest grows in providing youth with economic opportunities, the field must work to create the enabling environments conducive to appropriate access.

Given the complex dynamics facing low-income youth in developing countries, the YouthSave partners deliberately address youth savings from multiple perspectives. But the insights from the recent research reveal a central theme: creating future opportunities requires a keen understanding of what young people are doing now—how they access money, how they spend it, and how they want to save it. These reports aim to provide a deeper understanding and build a more thoughtful dialogue on youth financial access and behaviors.