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Youth Savings Initiatives Most Effectively Taught By Peers, Financial Panel Concludes

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"How much money would you have to save each day to be a millionaire by 65, if you start saving at age 20?" a freshman at Chicago's Michele Clark High School and "save leader" asked a panel of her classmates. Her answer--$7.50--joins a host of statistics as part of a statewide initiative to teach Illinois public school students responsible financial practices at an early age.

Efforts to transition younger generations' "spend culture" into one focused on saving were highlighted at a Nov.16 listening session sponsored by the President's Advisory Council's Youth Subcommittee, where a panel of Chicago education and business leaders discussed the importance of beginning financial education at an early age, and the challenges schools face integrating life-skill education into curriculum that often revolves around standardized test material.

Experts say one of the most effective ways to change younger generations' spending habits is through peer-to-peer education. That's the basis of the logic behind Young Illinois Saves, a statewide initiative to increase youth saving and financial literacy. Sponsored by the Economic Awareness Council as part of America Saves, the program recruits "Young Illinois Savers" and "save leaders," who are trained in the basic principles of saving, and investing to guide their classmates through opening bank accounts and working towards long-term goals.

Damon, a high school junior and Illinois save leader, first began saving thanks to a hard-line rule from his mother when he asked for new Michael Jordan gym shoes.

"[She] told me that before I could get another pair of Nike gym shoes, I had to own a piece of the company, so ever since then I have been investing and saving to invest," he said in a video interview for the Young Illinois Saver program. Now, he advises his peers to do the same. "No money is too little to invest. You can start with $10 a month--everybody can scrape up $10 a month, just buy one less bag of chips today...the younger you are, the better. Time is on your side."

Damon said he felt empowered by saving, seeing it as a long-term investment in stability, to avoid "scraping by living paycheck to paycheck." The program relies on success stories, and the enthusiastic young people behind them, to change students' opinions about money management.

Young Illinois Saves was one successful initiative spotlit at the youth subcommittee panel, but many barriers remain when trying to expand student access to financial education. Chicago Treasurer Stephanie Neely expressed frustration with what she called "weak legislation" that allows schools to skirt lesson plans that were once standard in classes like Home Economics.

"You can say the word 'checkbook' and qualify as having taught some financial literacy," Neely said. She and several other panelists including Christine Poorman, the Executive Director of the Network for Teaching Entrepreneurship (NFTE), Hector Gonzalez, the Family Outreach Coordinator at John Hancock High School, and Andrea Ingram, Vice President of Education and Guest Services at the Museum of Science and Industry, which hosts a paid internship program, spoke about the need for deep-rooted social changes to shift young people's views on money matters.

One way to do that is to focus on educating parents, a role Gonzalez plays at the Southwest Side college preparatory high school, where he has frequent interactions with parents who are undocumented and often don't practice good financial habits, or discuss them with their children, he said.

"Members of the Latino community don't like to talk finances," Gonzalez said. "We had to change parents' mindsets."

Gonzalez said his program offers parents financial literacy and math classes, encouraging them to learn responsible financial practices, and share them with their children.

Timing as also an issue when teaching kids about financial responsibility, the panel determined. There are two key stages where financial education benefits students: at a young age, when positive habits can begin forming (Neely has been targeting 3rd and 5th graders with her Save-Spend-Grow initiative), and at the end of high school, when many young people are facing college costs or their first forays into financial independence.

Gonzalez focuses on the latter stage. By coaching students through the Free Application for Federal Student Aid (FAFSA), he's brought his school's college enrollment rate up from 49 percent in 2008 to 80 percent last year, and from a school-wide intake of $5,000 in free or low-interest scholarship money to about $3.5 million last year.

The forum also demonstrated that real-world experience handling money before the stakes are high can provide a reality-check for students to learn about spending and build good habits around experience. Brandon Gray, a two-year student intern at the Museum of Science and Industry, said that his first year of money mismanagement taught him to take better care in his second.

For one thing, he learned that direct deposit worked better for him than "cash in hand," he said, something they encourage in the museum program, where Ingram says they try to interject financial advice into the internship experience. Gray says was able to see the impact of what he calls his tendency for "'oh-it's-only" spending. "Oh it's only $20 here, $40 there, until it adds up." His internship stipend disappeared quickly the first year, but with his second he's covered the costs of his books and other college expenses, and is living leanly, minimizing his loan debt.

Panelists emphasized that an integral piece to the puzzle was shifting young people's thinking through positive peer pressure. Karalyn Kelley, a senior at Gwendolyn Brooks College Prep who sat in on the panel as a NFTE success story, started a company she calls "Food Girl," where she's made almost $1,000 taking classmates' lunch orders and preparing brown bags of sandwiches and sides in bulk. Kelley said that seeing her savings build up--and shifting a mindset to one that values money in the bank over money spent on clothing, meals out or other values of what she calls her "right now" generation--has inspired her classmates to save, too.

She and others like Damon have taken their charge to educate their peers seriously.

"I always tell people: I wore those shoes, I wore them out and threw them out," he said, "but I'm still making money off the Nike stock I got. Now I have over 100 shares...I am trying to build wealth, and that is something everyone should try to do...have more of a long-term outlook."