Designing to Engage Youth for Financial Health
Originally published by Center for Financial Services Innovation.
This story is part of CFSI’s online series Designing for Financial Health. Learn more about the series here.
How can providers motivate youth to engage with financial health products?
“Millennials” have become a hot topic in the financial services field. Teenagers and young adults are hyperconnected and technically savvy more than any other generation, and are at the early stages of their financial lives. With this in mind, for-profit and nonprofit providers continue to search for ways to better understand and serve the needs of today’s youth.
Though there is a lot to be learned about this group, one fact is clear: youth is an optimal time to establish good financial habits that can continue into adulthood.
So how can providers help today’s youth create positive financial behavior that will enable them to achieve financial health throughout their lives ?
FCIF projects to engage youth
Earning and managing money typically begins in the teenage and early adult years: first jobs, paychecks, bills, new expenses, future financial goals, etc. Oftentimes, young people lack the financial knowledge and tools to properly manage these new financial responsibilities and struggle financially as a result.
CFSI’s comprehensive consumer study found that 67% of 18-25 year-olds are financially unhealthy, compared to 57% of all American adults. Nearly one-third, or 31%, of this age group is “Unengaged” according to CFSI’s analysis of consumer segments. The “Unengaged” segment earns its name from consumers’ lack of awareness about their financial lives and their low level of engagement with traditional financial services.
Recognizing this challenge, several projects funded by the Financial Capability Innovation Funds (FCIF) have sought to reach out to youth to instill positive habits and equip them with the tools they need to be financially healthy today and in the future. A partnership with a collaborative of funders led by the Citi Foundation, the Funds provided support to innovative projects designed to help low-income and underserved consumers adopt positive financial behaviors.
Moneythink maintains a national network of chapter organizations focused on improving youth financial health. Through Moneythink, college students act as financial mentors to low-income high school students. As a part of the FCIF, the organization created MoneythinkMobile, a new mobile app that allows mentors and mentees to engage with each other beyond weekly in-person mentoring sessions.
The app sets up a series of challenges students complete outside of the classroom – for example, logging in moments when they saved or decided not to spend money. Its social media elements also enable students and mentors to “like”, comment, and add emojis and hashtags when their peers make posts related to their challenges.
Read Moneythink’s complete profile and results here >>
CollegeSet Facebook application
CollegeSet helps low-income high school students save for and complete a four-year college degree. Developed by Juma Ventures, CollegeSet is conducted in partnership with youth development organizations across the country. Juma expanded CollegeSet to develop a Facebook application and two-way text messaging system to keep students motivated to save toward a goal of $500.
Read CollegeSet’s complete profile and results here >>
MyPath Savings is a program designed to provide youth enrolled in workforce development programs with financial guidance, a savings account and incentives to help youth save for a goal. To support and scale the program, MyPath created an online platform - MyPath Online - to help efficiently provide financial advice and help students budget for savings.
Read MyPath Savings’ complete profile and results here >>
These organizations learned important lessons about engaging youth, specifically: when to engage youth, what to provide them, and the usefulness of making financial behaviors social.
First paychecks are an opportune time to engage youth
As we wrote about in our Designing for Financial Health installment on encouraging repayment, engaging clients can depend upon strategic timing.
The CollegeSet and MyPath Savings programs recognized that a key time to engage youth is when they enter the workforce and begin receiving their first paychecks. As youth confront their own financial responsibilities for the first time, providers can offer education, tools, and accounts to help them start off on the right foot.
Savings is a vital component to financial health, and both CollegeSet and MyPath inspired good savings behavior among their low-income teenage and young adult clients.
CollegeSet and MyPath partner with youth workforce development organizations to help students find employment, and to connect the guidance from their programs to actual, real-life moments when youth are receiving their first paychecks. Meanwhile, both programs provided students with a way to direct money from their paychecks into a savings account.
Engaging youth starts with a youth-focused product
In addition to timing, easy access to products and the products’ youth-focused design were two key factors that contributed to the success of these FCIF projects.
MyPath Savings and CollegeSet allow youth to open their own savings accounts and provide guidance to help youth reach savings goals. Both programs developed online platforms - MyPath Online and the CollegeSet Facebook app - designed to appeal to youth in a fun and easy-to-understand manner.
The approach appeared to work. Seventy percent of MyPath participants enrolled in MyPath Online, and 62% of these participants completed the entire online program. Users saved a significant percentage of their pay, setting aside 34% of their wages on average, or about $329 each.
CollegeSet’s gamified app, social media integration and two-way text messaging system increased student engagement and drove higher savings in their youth college savings program. The app produced a 24% increase in the dollar amount that students saved, and a 17% increase in both the number of students who set and reached their $500 savings goal. Students saved an average of $309 during a two-month period, a 24% increase from the baseline set in the previous year.
Making financial health social can reinforce good behavior
Socializing financial health can be a powerful factor in improving consumer behavior. Several studies have suggested that parents’ intentional instruction and reinforcement of activities can impact their children’s financial knowledge and behavior1, and young adults raised in homes where parents modeled prudent financial behavior were less likely to report financial missteps such as abusing credit cards2.
Results from FCIF also suggest that promoting financial health across peer networks can influence financial behavior.
MoneythinkMobile incorporated social design features such as the ability to “like” or comment on posts. When students posted pictures of saving opportunities or completed challenges, peers and mentors were able to provide real-time feedback and encouragement.
After using these social design features, Moneythink students reported that the app helped them become more mindful about spending and savings opportunities. Survey data revealed an increase in the number of students who felt empowered to control their own finances (10% to 15%) and an increase in the number of students who budgeted (65% to 70%).
The social app also increased student engagement. Students who completed one challenge were more likely to complete multiple other challenges. By combining mentor guidance with the Moneythink app, 30% of students who didn’t previously save became regular savers, and 20% of unbanked students opened bank accounts.
Similarly, MyPath Savings used peer-led reflection sessions and instructions online to strengthen users’ connection to financial health. Adding these brief, peer-led modules appears to have boosted outcomes and increased financial knowledge and confidence among the students.
What does it mean for the field?
There are myriad programs and providers looking for ways to help youth gain financial knowledge and access good products. The examples from the FCIF grantees offer useful tactics for taking their impact to the next level.
The three FCIF projects used technology to engage digitally fluent youth, but programs designed to engage young people do not always have to take the form of an app. Youth-focused programs can, however, make use of the opportune time when potential clients are first entering the workforce, while designing programs that cater to a youthful mindset and leverage the power of social interactions and support.
Providers have a significant role to play in equipping youth with safe products and tools to help them effectively improve their financial health. Doing so will ultimately create a long and valuable customer relationship while helping youth build positive financial behaviors to set them on the right course for sustained financial health.
- Red Hot report! The 2014 Underserved Market Size report. Download it here >>
- See an overview of the 2014 Underserved Market Size report in this infographic. Check it out >>
- Learn more about 18-25-year-olds consumers in Understanding and Improving Consumer Financial Health in America. Read the report now >>
1. Gutter, M. et al, Which Students Are More Likely to Experience Financial Socialization Opportunities? Exploring the Relationship between Financial Behaviors and Financial Well-Being of College Students, Networks Financial Institute Working Paper, no. 2009-WP-07, June 2009.
2. Hibbert, J. et al., Financial Prudence and Next Generation Financial Strain, Association for Financial Counseling and Planning Education, 2004.