A young girl from Ghana, photographed here with her mother, is a participant in the YouthSave program. She saves about a $1 a week through a savings account provided by YouthSave’s partner in Ghana, HFC Bank.
Many vulnerable families depend on low and irregular earnings, which may or may not materialize depending on the availability of work, the day’s sales in the market or the success of a crop. This makes it even more difficult to manage basic household money management tasks, such as saving enough to cope with emergencies or pay for children’s schooling, investing in small businesses, or getting money quickly and safely to friends or family in need.
In addition, the types of financial services that normally help manage these challenges – safe, accessible savings services, affordable insurance and loans, and convenient payment mechanisms – are often unavailable to the poor. And where they are available, low-income families may not have the knowledge or confidence to take full advantage of them.
Save the Children works to educate young people about their finances, including savings, insurance, credit, and payment services, to help them understand how to save for the future and finance their dreams. When young people are educated and empowered, they can break the cycle of poverty, building better lives for themselves, their children and their communities.
We make the right kinds of savings, insurance, credit, and payments services available in the communities we serve, while helping vulnerable women, young people, and their family members understand how to best use these tools. Our approach to financial services rests on an intimate understanding of the needs of our target communities, which we use to help high-quality commercial partners create innovative, tailored products to fulfill those needs, often through behavioral design work. Partners include financial institutions – both commercial banks and a network of microfinance institutions, many of which Save the Children founded years ago – payments providers, and mobile phone operators, but also communities and local NGOs. We also promote the use of savings and loan groups, especially where solid financial institutions are not available. Finally, we educate low-income consumers on ways to build and protect their financial security, including through financial literacy for adolescents and adults, and behavior change communication and social marketing strategies to encourage positive financial behaviors.
Offering the Right Financial Options
Savings — Save the Children believes that building savings is the foundation of both economic stability and positive lifelong money management habits. Our financial services work centers on making quality savings services available to vulnerable women and young people, and on teaching how to use them in connection with other livelihoods and life skills. For example, Save the Children works with banks to create child-friendly savings accounts, and organizes women and young people directly into savings groups so that they can start accumulating and managing their own money.
Health Insurance — Save the Children is bringing together poor communities to create health insurance packages that protect households from the economic devastation of high medical bills. On the strength of their success, these programs are being expanded into additional communities and examined for adoption by local government.
Credit — Save the Children conducts strategic, targeted experiments with credit products that address the working capital needs of poor families. As with our other financial services work, these credit products are rigorously tested for impact, and the lessons shared widely. Our dissemination efforts benefit from the network of 20 microfinance institutions that Save the Children has had a hand in launching around the world, which still serve the communities in which we work and act as trusted partners in our financial services innovation efforts.
Payments — Focusing on crisis contexts, Save the Children works with payments providers and telecoms mobile phone operators to facilitate the transfer of cash or near-cash resources, such as electronic vouchers, to families suffering from displacement due to civil conflicts, natural disasters, or other shocks. Replacing the distribution of physical cash with card- or mobile phone-based solutions not only increases safety and privacy for transfer recipients, but also enhances the efficiency of relief operations. (Sometimes we also include the multiplier effect, The use of cash or vouchers also has a multiplier effect in affected communities, by providing cash or vouchers, communities can patronize local businesses to meet their needs, strengthening local economies.)
Financial Education — In addition to making the right products available, our work in financial services involves ensuring that families, women and young people have the knowledge, skills, and attitudes needed to make the best use of those products. Save the Children provides financial education through a variety of channels, including face-to-face training, mass media, social media, text messages, peer-to-peer campaigns, and street theater. Combining such innovative financial education with the provision of financial services makes the knowledge memorable, relevant, and understandable — and more likely to actually change financial behaviors.
YouthSave: Helping Youth Build a Stake in Their Future
Between 2010 and 2016, a Save the Children-led consortium project called YouthSave helped over 150,000 young people open safe, tailored savings accounts and start building assets to fuel their dreams. For low-income young people in developing countries, savings can be the springboard to a better future. Research has shown that giving young people the tools to save not only opens up opportunities, but also affects their attitudes and behaviors in positive ways. Savings can help young people pay for future education or start small businesses. They can also improve self-esteem and hope about their futures, which in turn can help young people make positive choices about schooling and health. Such choices affect young people’s lives for years to come.
A growing number of initiatives around the world demonstrate that even poor and vulnerable youth can accumulate savings and assets – when the right tools and institutions are available. YouthSave was designed to help financial institutions develop cost-effective products and delivery systems to serve the low-income youth market. Working with banks in Colombia, Ghana, Kenya, and Nepal, it enabled young account holders to save over US$1M. In addition, over 44,000 youth received direct financial education and 48,000 individuals were reached through community-level events. In Nepal, a radio drama on savings reached an estimated listenership of 660,000.
With the help of local and global research partners, YouthSave also tracked youth saver demographics and savings outcomes, to understand which types of youth were able to access these accounts, and how they saved. In Ghana, an experimental evaluation produced robust data showing that the YouthSave intervention increased the number of young people with accounts and formal savings. The YouthSave Consortium also developed a framework for analyzing the business case for youth savings accounts from a commercial perspective. This tool helps financial institutions evaluate the opportunity to serve a critical market in developing countries, many of which are currently experiencing their largest youth generation ever.
All of YouthSave’s research results and lessons learned can be accessed here. For more information, please email [email protected] or visit us here.
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