The Potential for Savings Accounts to Protect Young-Adult Households from Unsecured Debt in Periods of Macroeconomic Stability and Decline

The effects of different types of debt can vary widely: some debt is considered productive by advancing financial health, while other debt can be unproductive, pushing financial health out of reach. A savings account may be associated with young-adult households’ reduced reliance on unproductive debt and their increased access to productive debt that can facilitate wealth building. This article tests the association between a savings account and debt in the lives of American young adults during periods of macroeconomic stability and decline. Owning a savings account in 1996 was associated with a 14 percent decrease (844) in young − adult households′ accumulated unsecured debt, while closing an accounting 2008 was associated with a 12 percent increase (1,320) in this type of debt. Thus, a savings account may help young adults invest in their debt by entering better, healthier credit markets and protecting them from riskier ones, especially during bad economic times

Predicting Savings From Adolescence to Young Adulthood: A Propensity Score Approach

This is the publisher's version, also available electronically from http://www.jstor.org/.This paper examines the progression of savings between adolescence and young adulthood. Using data from the Panel Study of Income Dynamics, we ask whether the likelihood of having a savings account in young adulthood and the amount of savings can be significantly predicted by two factors: having a savings account during adolescence and having parents who own assets. Descriptive statistics reveal that adolescents with savings accounts are more often White, employed, and live in households in which the head is married, has more education, and owns assets. Propensity score analyses confirm that young adults are more likely to have a savings account when they have a savings account as adolescents. Some evidence suggests that adolescents whose parents have savings on their behalf and have higher net worth are more likely to have higher amounts of savings as young adults. Findings suggest that parents play an important role in modeling saving habits for adolescents. Further, our findings suggest that having a savings account in adolescence leads to an increased likelihood of having a savings account in young adulthood; however, this finding requires confirmation in future research

Coming Up Short: Family Composition, Income, and Household Savings

Objective: Existing research on savings and liquid-asset accumulation is largely quantitative and focuses on descriptions of how income inequality leads to the ability or inability to save. What has been left out of this body of research is an in-depth exploration of the role family composition may play in the way that households accumulate liquid assets. The purpose of this research is to understand how lower and higher income single- and two-parent families characterize reasons for saving, obstacles to saving, and strategies to save. Method: A diverse sample of 42 parents of kindergarteners were asked questions about household saving at 2 time points. Results: Compared to other family types, lower income single mothers report little savings and aspirations toward very short-term savings horizons as a result of persistent income shortfalls. Unlike two-parent households, lower-income single mothers discussed their reasons for avoiding mainstream financial institutions and opting to use cash instead. Conclusions: To alleviate economic inequality and improve households’ ability to withstand financial volatility, social work practice and policy should consider implementing interventions that are responsive to the unique experiences of poverty by family composition