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Aishwarya Ratan

Jul 17, 2012

Starting Young: Inculcating Savings Behavior among Young People at School

by Aishwarya Ratan Elana Safran — last modified Jul 17, 2012 08:40 PM

All around the world, even with modest financial aspirations, people find it difficult to accumulate small amounts of savings towards meeting their goals. At Innovations for Poverty Action (IPA), we are committed to gathering evidence about how people can improve their ability to save.

Aflatoun Youth with Books in Ghana

Junior high school students display their Aflatoun Savings Workbooks at Pantang School in Abokobi district, Accra, Ghana. (Photograph courtesy of Jessica Benjamin, Financial Education Fund)

Learning good savings behaviors early is particularly relevant for young people new to the world of financial independence. For this reason, we were eager to team up with Aflatoun, an international NGO dedicated to providing social and financial education to children and youth, to run an impact evaluation of their flagship program.

Aflatoun’s theory of change rests on the idea that teaching financial education and values, side by side, will help young people become economically and socially empowered individuals, through child-centered learning. However, it’s possible that the same outcomes could result from an alternative program that emphasizes financial education alone.

Randomized Control Trial

To test these competing theories, Aflatoun took advantage of its 2010 program expansion in Ghana to conduct a randomized controlled trial with IPA researchers Jim Berry, Dean Karlan, and Menno Pradhan. For this study, IPA created a new financial education-only curriculum called the Honest Money Box (HMB), to compare against the Aflatoun program. The HMB only included the Aflatoun program elements related to financial education and school-based savings.

Results. The results of the impact evaluation are striking: both programs have small positive effects on savings, and an increase in the number of students who report saving at school. At the same time, both programs cause students to become more risk averse, which may imply that the students are thinking more about planning for future shocks.

The HMB program caused a small increase in recognition of the importance of saving and in labor market participation, which together might represent a greater drive to become more financially independent.

We didn’t find any significant effects on other self-reported measures of financial literacy; support for saving at home; general expenditure and spending on temptation goods; future planning, time preference, and spending on self-improvement; social behaviours like teasing and peer influence; or test scores.

Implications. Of course, teaching young people to save is only important if the habit continues throughout life. This evaluation was conducted over the course of one year, and we are interested to see whether either program causes long-term changes in students’ savings habits and attitudes. We are also keen to measure long-run impacts on consumption, assets, or other investments that directly improve the lives of the poor.

In some ways, these results open up as many questions as they answer. We must still investigate the mechanisms through which such programs affect habit formation. An interesting finding from the study so far is that we have seen shifts in behavior without seeing shifts in financial literacy per se. This might point us to the possibility that savings, like many other things we pursue, is a social activity and we are encouraged to engage in it by the social circles in which we participate (in this case the school’s savings clubs).

There is much that we have now learned on the value of financial education and access to savings in schools in promoting savings habit formation among youth. And as always, there remains much more to be discovered through further rigorous inquiry.

Additional Resources

Click here to access IPA's PowerPoint presentation on the study.

To watch a 10-minute video of key take-aways, please visit: