Center on Assets, Education, and Inclusion

This article considers the processes through which parents' and children's wealth may influence children's academic achievements, and examines how these processes may vary across race and gender. It starts by reviewing existing research on the wealth-academic achievement relationship, and the role of college expectations in explaining this relationship. The study used 2002 data from the Panel Study of Income Dynamics (PSID), a national annual survey of US individuals and households, to examine wealth effects in relation to children’s maths and reading scores. The analysis sample included black and white children between the ages of 12 and 18 who were enrolled in a public school, giving a sample size of 1063. The data were analysed using multi-group structural equation modelling (SEM) to examine wealth effects on maths and reading scores by gender and by race. The results suggest that there are important statistical differences across race and gender. For example, children's school savings predict maths scores among white children but not black children. Net worth is a positive predictor of black males' maths scores but a negative predictor of black females'. In the case of income, the results find that it is directly related to black females' maths scores but not black males'. In general, the findings suggest that liquid forms of wealth (i.e., forms of wealth that are easily converted into cash) may be better predictors of children's academic achievement than net worth.

This study extends previous analyses in several ways. First, in addition to parental wealth, the relationship between children's wealth and math and reading scores are examined. Second, we examine different mediating pathways that wealth may affect children's math and reading scores in a single path analysis model. The advantage of path analysis over traditional regression analyses, which are typically used in this area, is that researchers can get a glimpse of relationships among variables. Furthermore, mediation can be tested more easily and extensively in path analysis compared to regression. Third, we examine whether different forms of wealth (net worth, homeownership, and children's savings for school) have different effects. Forth, we examine whether wealth (parental and/or children's) effects vary across racial groups.

A groundswell of interest in young people’s ability to understand and handle financial decisions has generated keen interest in financial knowledge and effectiveness of financial education. This study examines an innovative four-year school-based financial education and savings program, called “I Can Save” (ICS). Using a quasi-experimental design, the study examines quantitative and qualitative data to analyze program effects on financial knowledge. Elementary school children who participated in ICS scored significantly higher on a financial literacy test taken in fourth grade than comparison group students in the same school, regardless of parent education and income. Results suggest that young children increase financial capability when they have access to financial education and it is accompanied by participation in meaningful financial services.

Policies and programs designed to help low-income families save and build assets for developmental uses such as higher education, homeownership, and entrepreneurship are emerging and growing globally. This study uses participatory concept mapping techniques to explore perspectives of low-income parents in a children's college savings account program in a large US city. Participants in this study worked together to generate data on effective components of child savings account (CSA) programs. They then sorted these CSA components into conceptual groups reflecting their perspectives on which of the program elements were related to one another. Finally, participants were asked to rate the importance of each CSA component. Findings suggest that parents view CSA components that: (1) demonstrate respect for parents and (2) enhance accountability as being particularly effective and important elements of matched saving programs. While much more research is needed, particularly with lower-income families and communities, these findings are consistent with an emerging institutional theory of saving and asset accumulation. Implications for institutional theory, asset-building policies, CSA programs, and future research are discussed.

In this study, we propose that children who have a savings account may be more likely to have higher math scores than children without a savings account. We find that children’s savings accounts are positively associated with math scores. Children with savings accounts on average score almost nine percent higher in math than children without a savings account. Further, results suggest that children’s savings accounts fully mediate the relationship between household wealth and children’s math scores. However, household wealth moderates the mediating relationship. We find math scores of low-wealth children increase by 2.13, middle-wealth children’s increase by 4.36, while high-wealth children’s increase by 6.59 points. Policy implications are discussed.

This paper explores young children's perceptions and expectations about attending college, and the potential influence of a savings program on shaping children's perceptions about paying for college. As part of a four-year study of a school-based college savings program called “I Can Save”, this paper uses qualitative evidence from interviews conducted in second and fourth grades with a diverse group of 51 children. Findings suggest that most of the children in the study have a general understanding of college and have begun a process of considering higher education. Further, children in “I Can Save” are more likely than a comparison group of children to perceive that savings is a way to help pay for college.