child savings accounts

Since the inception of the Global Assets Project in 2006, I have advocated that having opportunities to save and accumulate assets earlier in life will lead to a more economically and socially secure future. Now, as I write my last blog post before beginning maternity leave to care for my first child, this assets "perspective" has transformed into much more of "reality." Now more than ever, I am sensitive to the fact that we all need a fair and decent shot at success in life. Yet such success, all over the world, is often hindered by exclusion from a financial identity; from opportunities to save and grow assets, or from the policies and products that the better-off take for granted that allow them to accumulate wealth and pass it along from generation to generation.

In a pseudo-memo to President-elect Obama today, Michael Gerson (former speechwriter/policy advisor to President Bush and current Washington Post columnist) has this interesting hypothetical:

"Political indifference to durable poverty in our midst has long been a scandal; from Obama it would be a tragedy. America does need to ‘spread the wealth' -- but not in the simply redistributionist sense. The racial divide in our country is widest when it comes to assets. The median net worth of white and Asian Americans in 2004 was $142,700. The median net worth of African Americans was $20,400. There are many reasons for this massive disparity, including what Lincoln called centuries of ‘unrequited toil.' Reparations are a politically self-destructive dead end. But what if President Obama, for example, proposed to set up tax-free savings accounts for every poor child at birth and seeded those accounts with a few thousand dollars? Addressing the wealth gap through the miracle of compound interest would be a lasting contribution to the justice of our country."

Here in the Asset Building Program, we couldn't agree more.

In the United States and many developed nations, banks offering savings to children as a means of social and economic inclusion and empowerment may seem tired tradition of the thrift era that has long passed.  Gone are the days of widespread school banking programs once so common in the US. And in the very few developed nations where efforts to provide children social and/or economic opportunity through financial inclusion exist, they typically come in the form of social policy (UK's Child Trust Fund, Singapore's Baby Bonus, USA's ASPIRE Act).  In developing nations, however, we're witnessing a wholly different phenomenon: financial institutions are, out of their own volition and with no push from the government, choosing to target the child market segment.