Linking Savings to Youth Development: What Matters?

New work from the University of North Carolina uses analysis of treatment youth in YouthSave’s Ghana Experiment to identify demographic and behavioral factors that differentially characterize youth with more positive development outcomes. Although this analysis cannot establish causality, the data indicate that youths’ age, household living conditions, and the amount of money they reported belonging to them at baseline were the three characteristics most associated with positive or negative outcomes on a range of dimensions. In terms of behavior, while simply opening an account was associated with some positive youth development outcomes, opening and depositing was associated with a greater number of such outcomes.

Youth from households with better living conditions did better than those with poorer living conditions on indicators including commitment to school, future orientation, and parental connection. This was true despite the fact that youth living in the best conditions were 58% less likely to deposit into the savings account under study, than youth in the worst conditions. The positive associations between better living conditions and youth development outcomes were consistent across age, gender, geographical location and asset ownership.

In addition, youth with more money that belonged to them at baseline had more positive outcomes than youth with less money, across age groups, living conditions, and geographic locations. (“Money that belonged to youth” was defined as the amount of money in a youth’s possession, regardless of where the money was stored or whether or not it was considered savings.) In terms of financial capability, youth with more money at the outset had higher savings and were more likely to open a savings account, to make deposits in their accounts, to save regularly, and to have savings goals. Similarly, having more money was associated with desirable youth development outcomes, such as higher level of future orientation and healthier parent-youth relationships.  

Age showed a split trend, positively associated with financial capability but negatively associated with other youth development outcomes. Among treatment youth in the Ghana experiment, compared to younger youth, older youth both experienced more increase in money belonging to them and saved more (two different variables in the research). Conversely, older youth experienced lower scores for commitment to school and orientation toward success, and higher uncertainty for the future, compared to younger youth.

Finally, more positive outcomes were associated with usage (i.e., opening + depositing) than access alone (i.e., opening accounts only). This was true for financial capability outcomes (money that belongs to youth, savings amount) and youth development outcomes (orientation toward success, commitment to school, academic planned effort). Only one outcome was positively associated with opening an account alone: lower uncertainty of the future.

These findings suggest factors to consider in determining which populations of youth might most benefit from savings programs and policies, which would need additional supports, and of which kind. The apparent influence of material circumstances at both the household and youth levels, plus the greater benefits accrued by youth who not only opened but deposited into their accounts, suggest that in addition to providing information and tools to encourage youth to engage in desirable savings behaviors, youth livelihoods interventions should offer opportunities that allow poor youth to access additional financial resources. A multi-level approach that provides new knowledge, increases motivation, and builds tangible resources may lead to more meaningful impacts on youth financial capability and development. Findings also suggests these types of additional supports may be particularly important to provide for maturing adolescents, in order to ensure that their outlook on the future stays positive.

By Rani Deshpande, Gina Chowa, and Rainier Masa