Financial literacy can be safely added to the long list of deficits young people with a background in the foster care system face, according to a study of the rarely examined problem.
Most American kids learn the basics of managing their money from their parents. But according to a University of Washington-Vancouver paper published in the journal Child & Family Social Work, foster youth ages 14 to 20 sometimes lack supportive family members in their lives who show them how to use the tools that lead to financial independence — looking for work, opening a checking account, following a budget, building up savings and establishing credit.
“Foster kids have distinctive challenges,” said Amy Salazar, the lead author on the study and an assistant professor at Washington State University Vancouver. “They need more support in several areas, and financial capability is one of them, especially when they’re transitioning out of the foster care system and into adulthood.”
The research paper calls on the foster care system to make a more concerted effort to provide foster youth with courses on financial literacy. Researchers also found that most kids in the system say their caseworkers or independent workers are their primary source of information about money management. Those workers should be better trained to help in that aspect of preparing youth for the day they leave the system.
“That’s concerning because those are people who will disappear when these youths age out of foster care,” said Salazar. “Some respondents said foster parents were helpful, but not all youth have good relationships with their foster parents. They need more support.”
As might be expected, the study found that foster youth over the age of 18 were more financially capable than those under 18. Researchers also noted that foster youth are especially vulnerable to identity theft because of the number of people who have access to their confidential records. They suggested that training youth in how to access and read their credit reports could help them remain free of the problem.
The study, which was funded by the Annie E. Casey Foundation, did not compare the foster youths’ financial literacy with their peers outside the system. The study was based on a 2014 survey of 97 foster youth, age 14 to 20, from an urban area in the Northeast United States.