09/28/2012 09:19 am ET Updated Nov 28, 2012

Learning the Value of Money, From Inside the Foster Care System

The financial crisis may have at least one silver lining. A new survey by TD Ameritrade shows that young people who watched their parents deal with the difficult economy have taken the value of money to heart: Three in four young people said they think saving money is important, and four in 10 said they have a budget, which they follow closely.

So much of what young people learn about managing money comes from watching family members, and these last several years have given young people many opportunities to learn the challenges of managing money effectively.

But what happens when young people grow up without permanent connections to family; without those chances to watch and learn about money management? What then, becomes of their financial lives?

Nearly 30,000 young people age out of the foster care system each year, without permanent connections to family. And according to child welfare expert and University of Chicago professor Dr. Mark Courtney, money management is their number one worry.

In a new report, Enduring Assets: Findings from a Study on the Financial Lives of Young People Transitioning from Foster Care, University of Missouri researchers Clark Peters, Margaret Sherraden, and Ann Marie Kuchinski focus on how young people aging out of the foster care system view money, and where the opportunity for improvement lies.

The research was based on participants in the Opportunity Passport, a package of resources available in 15 states that teaches young people who have been in foster care how to manage their finances, and matches their savings toward approved asset purchases such as a car to get to work, a computer for school, or housing. In full disclosure, the Jim Casey Youth Opportunities Initiative commissioned the report, but our foundation had no role or influence in the findings.

As detailed in Enduring Assets, young people in foster care are often not exposed to everyday financial experiences, and their financial "education" often comes in the form of a video on checking accounts. They often miss out on foundational elements that many young people take for granted, like receiving an allowance, stopping at the bank with a parent, or hearing mundane conversations about the bills. Many times, they are even precluded from getting after-school jobs -- missing yet another opportunity to learn about money management.

Without these experiences, it is unrealistic to believe that young people transitioning from foster care will have the financial capacity to thrive on their own. The truth of the matter is that young people who age out of care often find themselves living financially on the edge.

Just like many young adults who may be renting an apartment for the first time, young people who have aged out of foster care may also find themselves late on a payment, or have to spend part of rent on an unexpected expense. But unlike young adults who have a support system to fall back on, young people who have transitioned from foster care have a very slim margin of error. It's the difference between asking mom and dad for a quick loan to cover rent after getting laid off... and homelessness.

Boosting a young person's financial capacity, especially when a permanent family is not in place, requires real world experience with part-time jobs, bank accounts, bill paying, and more. All of this is critical to ensuring that young people in foster care don't simply go from one system to the next. Allowing them to take small risks and make mistakes, with support, is the only way they'll learn to spend and save wisely.

Take Eddye, whose understanding of saving came from her foster parent, who told her to keep the money she earned at her part-time job in her sock drawer. No one advocated for Eddye to have a savings account, and Eddye didn't know to ask for one. And yet, Eddye, who received financial education training at age 18 when she enrolled in the Opportunity Passport, is now pursuing her higher education dreams, supporting herself, and living independently -- on a budget and with a very clear understanding of the value of money.

Helping every young person in care make permanent connections to family will always be my number one goal. But until that goal is realized, we must work together to ensure that these young people receive access to financial training and opportunities to learn by doing, before and after they transition from foster care. Only then can they truly plan for success, beyond the system.