LAWRENCE — An interdisciplinary research team at the University of Kansas is leading a project to study how children and families save and gain financial knowledge. Researchers Barbara Phipps, Karin Chang, Utako Minai, Emily Rauscher and Terri Friedline, along with staff and graduate students, have been working together over the past year to plan and design the Investing With Kids project in partnership with Truity Credit Union and Lawrence Public Schools. The project studies whether opening savings accounts for kindergartners and teaching them financial education can help improve their academic progress and help them make good financial decisions.
“The financial decisions that young people need to make are becoming ever more complex, and our institutions place greater emphasis on being personally responsible for those decisions. College is getting more expensive, and children and families need to save in advance for these future educational costs," said Friedline, assistant professor of social welfare and one of the project leaders. "So we need to start early — at kindergarten or even sooner — if we want children to grow up to be academically successful and financially capable."
Friedline was invited to present the research at a recent convening of the Financial Literacy and Education Commission in Washington, D.C.
"Policymakers are beginning to realize the importance of starting early. Just like reading and writing were critical skills taught in elementary schools at the turn of the 20th century, being able to use a savings account and make informed financial decisions are critical skills in the 21st century," Friedline said.
The project began with a conversation that was initiated by Truity Credit Union. The team then worked with Truity to develop a project that would randomly open savings accounts and teach financial education for kindergartners in participating Lawrence schools.
Phipps, associate professor of curriculum and teaching and director of the Center for Economic Education, is leading efforts to teach financial education.
“We’ll be working with teachers and providing classroom lessons on topics like counting coins, spending money and saving," Phipps said. "We'll also be giving parents ideas on how they can talk with their kids about money.”
A grant to Phipps from the National Endowment for Financial Education provides funds to compensate parents and their children for completing surveys and participating in one-on-one interviews. Children and parents can earn up to as much as $150 per year. For those who have savings accounts at Truity Credit Union, the money can be deposited directly into their accounts.
With as many as 1,500 children and families invited to take part in the project over three years, Investing with Kids has the potential to make a difference in the local community and on program and policy development through the research findings. These potential effects would not be possible without the support of principals and teachers, who are strong partners in this project, the researchers said.
The primary research questions are designed to help the team figure out the most effective programs for improving children's outcomes, such as whether providing children with savings accounts and financial education increases the likelihood that they save, develop expectations about attending college and improve their academic outcomes compared with those who only have financial education, or neither. The research team plans to test the questions quantitatively through surveys and information from academic records. In addition, they plan to qualitatively study the mechanisms behind the effects, such as how children develop identities regarding financial capability and college aspirations.
“The rigorous methods, including random assignment and collection of detailed information, will give policymakers a lot more information about whether and why college savings accounts and financial education have benefits,” said Rauscher, assistant professor of sociology.
The team is also leveraging its interdisciplinary expertise to ask questions related to cognitive/linguistic development, health, and assessment and survey design. Minai, assistant professor of linguistics, will study how children’s cognitive and linguistic development relate to what children know about money and finances.
“It will be a chance to learn what children understand about money and finances in relation to areas of language and cognitive development, like how they conceptualize numbers,” Minai said.
Rauscher will analyze whether having savings and financial education relates to stress levels, self-rated health and body mass index, as well as whether interventions increase equality of outcomes and opportunity.
“Children from less well-off backgrounds get less exposure to savings and financial information at home, so they will likely benefit more than others. If so, savings accounts and financial education programs could offer a cost-efficient way to help reduce inequality,” Rauscher said.
The researchers will also be able to evaluate the effectiveness of using a gamelike approach for assessments with children. An innovative program will be used to survey children and ask them to identify with cartoon characters who state varying opinions on topics related to saving and school.
“We will be able to explore the effectiveness of using computer-based assessments for young children,” said Karin Chang, director of evaluation for the Center for Educational Opportunity Programs. “This might be a way to efficiently and effectively administer assessments in educational settings.”
The unique, interdisciplinary expertise of the team and potential for exploring additional research questions have drawn national interest. The researchers have been invited to give a briefing to the Consumer Financial Protection Bureau on the interdisciplinary nature of the project, the research design, methods and intended outcomes in October. The team hopes the findings from the project will be able to inform national conversations about how to develop programs and policies that start children early on the paths to academic and financial success.