Young People Are the Front Lines of Financial Inclusion: A Review of 45 Years of Research

Abstract

Amidst concerns about percentages of households that remain unbanked or underbanked, policy endeavors have emerged to promote financial inclusion by making financial products such as savings accounts readily available. While these endeavors have primarily concentrated on households, young people may be the front lines of financial inclusion because they may be more likely to be banked in young adulthood and beyond when they start off with savings accounts earlier in life. This article addresses young people's financial inclusion by comprehensively reviewing 60 research studies on young people's savings, discussing the role of the family in young people's financial inclusion, discussing financial inclusion from an institutional perspective, presenting policy implications, and identifying gaps in knowledge and opportunities for research. Policies that open savings accounts for young people early in life may be a promising strategy for extending financial inclusion and preventing unbanked or underbanked status later in life.

Financial Socialization: A Decade in Review

“…As two examples of White privilege in the context of financial socialization, White emerging adults received more parent-child financial discussion (Gutter et al 2009 ), and White children and emerging adults were more likely to have a savings account than their non-White peers (Gutter et al 2010 ; Kim et al 2011 ). There is more literature on how financial socialization differs by socioeconomic status, with children from high socioeconomic backgrounds experiencing better financial socialization in terms of parent financial modeling (Shim et al 2010 ), parent-child financial discussion (Luhr 2018 ), and experiential learning of finances (Friedline and Rauktis 2014 ; Kim et al 2011 ). Together, these findings suggest that privilege in terms of gender, race, and socioeconomic status is manifest in financial socialization processes, likely perpetuating a cycle of haves and have-nots in terms of financial knowledge and subsequent wellbeing.…”

The Lengthening Transition to Adulthood: Financial Parenting and Recentering during the College-to-Career Transition

“…Finally, children of lower-SES families may also have fewer experiential learning opportunities regarding finances than their peers (Friedline & Rauktis, 2014; Kim, LaTaillade, & Kim, 2011) and thus may be preconditioned to engage in unhealthy financial behaviors later in life. SES may also correlate with certain financial behaviors.…”

Financial Inclusion of Young People: Disproportions between the Old and New Member States of the European Union

“…Particular attention should be paid to young adults and their financial education. As indicated (Friedline and Rauktis, 2014), young people 'may be the front lines of financial inclusion'.…”