Teaching Young Girls To Save Could Change The Global Economy

Call it the power of the piggy bank. As the worldwide population of girls peaks in the next decade, access to simple savings accounts can have a big impact on their economic futures.

Girls as young as 10 years old are regularly accumulating money, actively managing it, and wanting a safe place to save it, according to a study by the Women’s World Banking (WWB) organization.1

The positive impact of youth savings is especially strong for girls in developing countries, who are often forced into early marriage and childbearing as the only path to adulthood, the organization says.

In WWB programs in the Dominican Republic and Mongolia that provided both savings accounts and financial education to young girls, however, new pathways began to emerge. “About 10 to 20 percent of girls stay in school longer, they marry later, and they have fewer children,” says Anna Gincherman, director of products for the WWB.

For every extra year of primary school a girl attends, her future wages grow 10 to 20 percent, states the WWB report, boosting her chances of becoming a greater economic contributor and helping to reduce poverty.

Women are also more likely than men to reinvest their earnings into their families and communities. “From our research in 30 markets, the priorities for women are education, health, and housing – that’s where they put their money,” Gincherman says.

Every WWB youth savings program has a financial education component. While learning how to manage money is an important skill, setting up savings goals that require asking girls about their aspirations for life has an even greater impact, Gincherman says.

“It’s probably one of the few occasions when the girls are actually asked what they want, or even start thinking about it in a more systematic and structured manner,” she says.

Once a girl starts saving, “she’s empowered and has some sense of security that connects with her aspirations for the future,” adds Gincherman. In some cases, girls are the first in their families to have a savings account, which further impacts the entire household by introducing them to a formal financial system.

The WWB’s savings programs help local banks and financial institutions as well. While youth savings accounts aren’t big revenue leaders, banks can develop a new generation of clients and develop opportunities to sell services to parents.

“It really strengthens the brand and positions them in the market as financial institutions that care about their communities,” says Gincherman.

In addition to the Dominican Republic and Mongolia, the WWB also has or is developing programs in Ethiopia, Nigeria, and India. Despite geographic differences, some things are universal. Nearly all the kids like spending their money on sweets, says Gincherman. “And they all love piggy banks.”
1 Source: Can Financial Education Be the Engine for Savings Growth? A Case Study, Women’s World Bank, 2013

Lisa Wirthman is a freelance writer who covers business, sustainability, and public policy. Her work has been published in The Atlantic.com, USA Today, U.S. News & World Report, Fast Company, Investor’s Business Daily, the Denver Post and the Denver Business Journal.