Mar. 30—Most would agree, learning to manage money is a critical part of the transition to adulthood, but researchers at Washington State University have found that youth in foster care often lack key skills centered on financial planning.
In a study recently published in the journal "Child and Family Social Work," researchers surveyed 97 people in foster care who were between the ages of 14 and 20. WSU assistant professor and lead author on the study Amy Salazar said questions focused on five "core competencies:" earning, spending, saving and investing, borrowing and protecting.
She said while foster youth older than 18 were more likely to have developed many of these skills than their younger peers, they often still lacked at least some skills when it comes to financial planning.
Participants answered questions surrounding employment, whether they have a savings or checking account and if they keep a monthly budget among others, Salazar said. She said when it comes to the term "financial planning," what they're really talking about are three elements. These include the knowledge of the resources themselves, the skills to apply that knowledge and access to financial products like savings accounts and credit score assessments.
"I was hypothesizing that the older they get, the more financial capability they would have and we did find that to be true — but there were still quite a few youth that didn't," Salazar said. "The older you got, the more likely they were to have these indicators of financial capability, however, there were still a lot of youth over age 18 that didn't have them."
Salazar said one of the reasons this is concerning is because foster youth are often unable to access the same systems of support as others who were not in the foster system. For one thing, she said it is known from previous studies that most youth in the general population continue to receive financial support from parents through their mid 20s and 30s.
She said this means foster youth often must become more independent more quickly than others their age, without the benefit of parents or close relatives who would traditionally offer advice and support.
"They also were at really high risk of credit fraud because so many people have had access to their personal information over the years," Salazar said, noting that in many cases, people's biological parents will open accounts under their names without their knowledge. "There was just some research done that found that a lot of kids in care have credit fraud issues before they even know what credit is."
Some good news, Salazar said, is foster youth who had adults in their life who could offer advice were more likely to have skills related to financial stability. However these adults were often case workers, independent living workers or foster parents — many of whom go away once the student ages out of the system.
She said part of ensuring these students are better prepared for university life could involve helping them identify the adults in their lives who they can continue to reach out to for advice. She said it also means making sure those adults have access to the resources they need to be effective educators when it comes to finances.
For her part Salazar, who created a program called Fostering Higher Education to help foster youth navigate college planning, said she'd like to incorporate more elements that build financial capability into that program.
"We know college education, obviously, can help youth have pathways out of poverty," she said. "But if they don't have the skills and knowledge and access to financial products and services that they need, that becomes much harder to achieve."
Jackson can be reached at (208) 883-4636, or by email to [email protected].
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