Guest Post: Youth Summer Paychecks: an Untapped Opportunity to Promote Financial Capability?

Editor’s note: This post was authored by Vishnu Sridharan, Director of the Make Your Path (MY Path) Program at Mission SF Community Financial Center in San Francisco, California and a former member of the Global Assets Project at New America.

In 2012, San Francisco responded to President Obama’s call to provide increased opportunities for low-income and disconnected youth by launching a Summer Jobs + initiative that reached over 5,000 youth. In 2013, in collaboration with Mission SF Community Financial Center, United Way’s Matchbridge program, and Community Trust, a division of Self Help Federal Credit Union, San Francisco took its Summer Jobs + program to the next level by integrating Mission SF’s award-winning MY Path program. In doing so, the city became the first in the nation to incorporate not just financial education, but access to financial products, direct deposit and saving incentives, into its youth summer workforce system. This innovative collaboration—and its impressive impact on working youth—has generated important lessons for the fields of financial capability and asset-building, in particular demonstrating the power of workforce development programs as platforms for asset-building interventions.

Mission SF’s Make Your Path (MY Path) Program promotes financial security and catalyzes economic mobility by providing disadvantaged youth with peer‐led financial capability trainings, a savings account at a mainstream financial institution, direct deposit and incentives to set and meet personal savings goals. Designed to be integrated into youth workforce programs, MY Path has seen great success over the past two years, supporting 750 low-income working youth to save over $500,000 since 2011. Building on this success with school-year employment programs, this past summer, in collaboration with United Way and Community Trust, Mission SF’s MY Path summer pilot provided more than 80 Matchbridge participants with two bank accounts — one to keep their spending money and another to keep their savings— financial education to learn how to use their accounts, as well as both peer support and cash incentives to set personal savings goals, budget, and track expenses.

While the MY Path pilot involved just six weeks of savings due to the duration of summer youth employment placements and earning periods, the results were very promising. Almost 90 percent of participants (64) enrolled in MY Path, saving almost a combined $17,000 of their summer earnings. Altogether, that amounts to an average of $250 in savings for each participant, well above the $100 they were incentivized to save, and an impressive 25 percent of their summer wages. As Matchbridge participant John Wong, who saved about 30 percent of his wages in his MY Path account to put toward college textbooks, put it: “The MY Path program made it really easy to save. After I set my savings goal, my wages were split, with part going into my MY Path account, so that I would automatically achieve it. I think this is something I will do again at my next job.”

San Francisco Mayor Ed Lee, a strong proponent of financial capability initiatives also had strong praise for this one-of-a-kind collaboration. “We are proud to have innovative financial capability programs like MY Path coming out of San Francisco and are pleased to partner with Mission SF and United Way as they expand MY Path’s reach in the city,” he said. “We know that saving is connected to upward economic mobility, and San Francisco wants to support its working youth to open accounts, start saving and learn how to manage their paychecks.”

President Obama’s efforts to promote employment opportunities for disconnected youth and young adults is a powerful opportunity not only to provide on-the-job skills to those who can benefit most from them, but also to help them start to build the foundations for their economic security and mobility. While countless millions are invested in these programs nationwide –including more than $10 million in youth workforce wages in San Francisco alone – there is no system to steer working youth away from check cashers, engage them in the financial mainstream, and help them save and manage their paychecks. With the unwavering support of Community Trust, Mission SF continues to demonstrate the role MY Path can play in building this system, a system we know is essential for low-income youth and young adults to realize their potential and achieve economic mobility.