Head Start Can Help Children and Parents Learn to Save

CAFCA | April 28, 2013 |

 Every year, Head Start reaches nearly one million children—and their parents. This federal program has long played a critical role in preparing poor children for school by providing quality early education, in addition to a range of other supports including health and nutrition services and education and career counseling for parents. But it has the power to do even more. Specifically, Head Start is an ideal vehicle for teaching parents and their children how to save money, accumulate assets, and set themselves on a more prosperous economic path.

A steady paycheck alone is not enough to help low-income families move forward economically. They also need savings and assets so they can pay their debts, cover emergency expenses, and invest in their futures, including buying a home and saving for postsecondary education.

There is ample evidence that even a small amount of savings can have enormous long-term payoffs. Research by the Center for Social Development found that children from families with as little as $3,000 in savings had greater odds of graduating from high school than children in families without savings. Another recent study found that when children have a college savings account in their name, they are six times more likely to attend and complete college than similar youth who do not have an account.

As any financial planner will tell you, the earlier you start saving the better off you’ll be. And Head Start is all about starting early. That makes it a perfect venue for connecting low-income families with programs and services that will help them become financially secure in the short-term and improve long-term economic prospects.

A handful of Head Start programs across the country are already proving that such efforts can have significant payoffs.

At two Head Start centers in the rural Mississippi Delta, for example, children as young as three are being taught how to save money and make purchasing decisions. They are also enrolled in a college savings account program that is seeded with an initial $50 deposit to be used for postsecondary education. Ernestine Bilbrew of the Mississippi Community Financial Access Coalition says the program is helping these preschoolers believe that they will someday go to college. "Just them thinking that has a tremendous impact on their aspirations to go to school," she says.

Additionally, Head Start programs can play an important role in referring families to a variety of financial services, such as connecting them to free or low-cost “starter” bank accounts, free tax assistance, and Individual Development Accounts (IDAs)—matched savings accounts that help adults save toward investments such as buying a first home, paying for higher education, or starting a small business.

When the Umatilla-Morrow Head Start (UMHS) in rural Oregon observed that families in their program were struggling with a range of financial challenges, they formed a partnership with the Community and Shelter Assistance Corporation (CASA) of Oregon, a leading provider of IDAs in the state. Working through their team of home-visit caseworkers, UMHS was able to enroll a small group of Head Start parents in the IDA program while CASA managed the accounts and provided additional support. Buoyed by the program’s success, CASA has approached other Head Start programs in Oregon, with the goal of bringing at least four more into the partnership in the coming year.

Given ongoing discussions in Congress to cut funding for programs like Head Start, these efforts have another distinct advantage—they would cost little or nothing. For example, many free, age-appropriate financial education curricula are already available to preschoolers and come with teacher instruction manuals and other tools. They could easily be adopted by Head Start programs. And financial empowerment and outreach efforts would fit naturally into existing Head Start activities that help parents outline long-term education and career goals. 

While policymakers argue over new policy prescriptions that will pull more people out of poverty and set our country on a sounder economic path, we need to home in on those ideas that have the potential to give us the biggest bang for our buck. If the nearly one million parents and their children reached each year by Head Start began contributing even a few dollars every week to savings accounts and put aside money for their children’s college education, the stranglehold of generational poverty would start to loosen. It’s a small but important start for those families—and for our nation.