Researchers at the University of Kansas followed thousands of young people from adolescence into adulthood using data from the Panel Study of Income Dynamics, one of the longest-running household surveys in the United States. The researchers found that young adults who held a savings account in their own name as teenagers were twice as likely to have savings, twice as likely to hold a credit card, and four times as likely to own stocks into adulthood. Families with modest balances in those accounts saw the same outcomes as families with more. The research points to the account itself, and the decisions that come with owning one, as the biggest factor that drove the results.
All this said, today access to that early savings accounts remains uneven. According to research published by the University of Michigan’s Center on Assets, Education, and Inclusion, only 40 percent of Black adolescents between ages 12 and 17 have savings accounts, compared to 68 percent of adolescents overall. Children growing up in households without a bank account also have a harder path to a savings account in their own name.
What Account Ownership Builds
When an account belongs to a child, the decisions belong to the child. Watching a balance respond to a real choice, even a small one, builds financial habits in a way that a conversation about saving does not. The Consumer Financial Protection Bureau spent years studying how financial capability develops across a lifetime and identified this kind of early hands-on experience as more predictive of adult financial stability than financial knowledge learned later.
Several federally insured credit unions and community banks offer youth savings accounts with no minimum balance. Families can search for insured institutions by location using the FDIC’s BankFind tool.
What Parents Can Do at Home
Beyond opening a savings account for your child, the CFPB’s research identifies household money conversations as a second driver of long-term financial outcomes. Children who grow up watching adults work through financial decisions develop stronger financial instincts than those who do not. 34 percent of recently banked households in the 2023 FDIC survey reported that receiving a government payment was what prompted them to open an account, which suggests many families are entering the banking system later than the research recommends.
The CFPB’s Money as You Grow program provides free conversation guides organized by a child’s age. The materials are written for caregivers at every level of financial experience and focus on real household moments rather than formal financial instruction.
Sources: University of Kansas, Friedline and Elliott, Panel Study of Income Dynamics (2013); Consumer Financial Protection Bureau, Building Blocks to Help Youth Achieve Financial Capability (2016); Consumer Financial Protection Bureau, Money as You Grow; FDIC National Survey of Unbanked and Underbanked Households, conducted in partnership with the U.S. Census Bureau (2023)
