How Philanthropy Can Strengthen the Financial Well-Being of Youth and Young Adults
A report from the Asset Funders Network examines the state of financial security among young people in the United States. High Stakes High Reward: How All Funders Can Make Critical Catalytic Contributions to Investing in the Financial Security of Youth and Young Adults draws upon research funded by the Annie E. Casey Foundation and offers ideas for how philanthropic organizations can invest in and support young people.
“Ensuring young people are financially secure is critical to their success later in life,” says Francesca Jean-Baptiste, a senior associate with the Foundation. “This report provides important insights into the challenges youth and young adults face — and the assistance they need — as they become financially independent.”
What Is Financial Security?
Individuals who have financial security can comfortably pay their bills and other basic needs. This means greater financial freedom for themselves and their families. Financial security is the intended outcome of many types of economic mobility programs and policies.
To enjoy financial security, young adults have needs in four distinct areas that must be met:
- Financial stability. This is the foundation of financial security. Financial stability means an individual can pay for everyday or emergency expenses while continuing to meet their financial goals.
- Opportunity pathways. Workers need clear ways to prepare for and access education and job training. For youth and young adults who are newly financially independent, these pathways are critical for building assets.
- Financial capability. This includes the knowledge and skills needed to manage your own finances as well as access to high-quality fiscal products, such as money management services or financial advising.
- Support and guidance. Youth and young adults need support and guidance from knowledgeable adults and peers and access to mental health services or support services for young parents.
Barriers to Financial Security for Young People
Youth and young adults in the United States face several obstacles on their path to financial security, including:
- the declining value of wages and workplace benefits;
- reduced public investment in education and homeownership opportunities;
- longstanding systemic discrimination that has prevented Black, Latino and Native American households from accessing the support they need, building wealth and finding financial stability; and
- the rising cost of college and other postsecondary education or training.
Recommendations for Funders
To ensure young people can achieve financial security throughout their adult lives, the report offers several key recommendations for grant makers:
- Develop partnership models that draw on young adults’ experiences and insights. It’s important to remember that young people are experts when it comes to their experiences, challenges and needs.
- Target investments that address financial stability. To become financially secure, young adults need time and money. Funders should ensure young people have access to reliable income that allows them to cover their basic needs and pursue education or career training.
- Focus on practices and policies that provide accessible, reliable support. Grantmakers should fund initiatives that are reliable, easy to access and responsive to the changing needs of young people.
- Fund work that considers and integrates all facets of financial security. While public- and private-sector institutions have invested in different aspects of financial security, the report emphasizes that all aspects should be considered equally important. To see substantive results for young people, grant makers should ensure investments support financial security, opportunity pathways, financial capability and support and guidance while addressing any gaps they identify.