Article Bookmarked
Bookmark Removed

Why toddlers need savings accounts as much as millennials


Jun. 5, 2015 Yahoo! Finance

Learning the basics of personal finance is not enough to secure your financial future, a new study shows. Instead, get a savings account, fast.

Millennials who had experience with savings accounts are more likely than people with just a financial education to have money at the ready for emergency expenses, and they were less likely to rely on high-cost loans or have excessive debt, according to research from the University of Kansas. The findings suggest that parents could spend more time encouraging their children to use financial concepts in practice, not just learn them, says Terri Friedline, one of the report’s authors.

“The opportunity to put your knowledge into practice by having a financial product may help to move the needle in terms of financial outcomes,” Friedline says, adding that research suggests kids as young as five years old can start learning about savings. “They can learn and grasp financial concepts.”

For the analysis, researchers looked at how nearly 7,000 people ages 18-34 responded to a set of financial questions in a 2012 Financial Industry Regulatory Authority survey. The researchers categorized people based on whether they took personal finance classes in college, in high school, or at work, and whether they lived in households with a savings account. The study’s analysts also controlled for a range of factors that might make someone more or less prone to financial problems, such as income, education level, and employment status.

People with a savings account and financial education were significantly more likely to have $2,000 set aside for emergencies than people who had only a financial education. Having both an education and practical saving experience also made young people less prone to taking out risky debt, such as payday loans. Just 41 percent of people with both an education and a savings account used these “alternative financial services,” which are known for leaving consumers buried in mounds of intractable debt. More than half of people who just had a financial education used those services.

Read More on Yahoo! Finance

Gene Upshaw Player Assistance Trust Fund

Apply Today

All Resources

Tell Me More

Are Debt Collectors Allowed to Text Me?

There are new rules for debt collectors as of November 30th.

Read More

Understanding Your Credit Score

Find your credit score and come up with a plan.

Read More

One Common Finance Question:

Can a Collection Agency Charge More Than The Original Debt Shown On My Credit Report?

Read More

Which Debt Should You Pay Off First?

Some debts are worse than others.

Read More

The Power of a "We"

Choosing the right pronoun can be the ultimate power move.

Read More

Study links sleep breathing disorders to severe COVID-19 outcomes

If you have a sleep disorder, you may want to be extra careful this winter.

Read More

The Guilt of Living with Chronic Pain

Questioning the legitimacy of a person’s pain induces guilt and worsens pain.

Read More

Ways to Manage Your Everyday Stress

Watch what you eat, how often you move and how you're incorporating mindfulness.

Read More