Foster kids “age out” without a financial education

When Eddye was a senior in high school, her goal was to save money to buy a car.

“I wanted to make sure I had reliable transportation for college,” she says.

That's a pretty common goal for someone her age. But Eddye faced more hurdles than the average kid. Eddye was “aging out” of the foster care system, which meant she would soon be on her own.

Typically, someone in her situation has to save up for a car by herself, in addition to handling the rest of her finances and responsibilities. Usually that means racking up a lot of debt to pay for it all.

And since Eddye lives in an area without a good public transportation system, a car is a necessity. Without one, her job options are severely limited and getting to class would be difficult.

So what causes kids like Eddye to wind up in situations like that?

The problem is that foster kids aren't taught personal finance skills

When most foster kids age out of the system, they haven't been taught basic money skills. They don't have any experience paying bills or saving money. They don't even have a checking account.

That's actually the norm for all high school kids, as even top-rated schools don't have a personal finance requirement. In fact, only 13 states require high school students to take a personal finance class to graduate, according a survey by the Council for Economic Education.

But a financial education is especially critical for kids aging out of foster care for a few reasons.

For one thing, foster kids usually don't have a safety net. If they lose their job and can't pay rent, that could mean no money for groceries, losing electricity, or even homelessness. After all, they don't have parents who can help them make ends meet. “At 18, a young person is not really ready to be on their own,” says Christine Johnson, who has worked in juvenile justice and child welfare for the last 16 years. “[The age 18] is just a number that we've used, and we've seen disastrous results.”

And if they do go back to their biological family, it can be just as detrimental. “Those are the people they had to get away from in the first place,” says Eddye. “A lot of times they take advantage of you, and then you're also relying on their financial choices instead of learning how to manage money on your own.”

Also, the lack of a bank account puts kids' savings at risk. “I know one girl who's a single mom, and she kept her money in a shoebox under the bed,” says Eddye. “She was robbed and basically had to start all over.” Eddye says that she knows quite a few people who stash money in shoeboxes and sock drawers because they don't have a bank account.

So why isn't more being done to get kids ready to live on their own?

Two reasons why foster kids aren't taught personal finance skills

There are a couple of reasons this problem occurs.

First, young people in foster care don't get much hands-on experience with money. “Foster parents are encouraged to give kids an allowance,” says Christine. “But the kids tell us that rarely happens.” That means that many of them enter the real world without any experience earning or saving money.

Second, foster kids don't get much of a personal finance education. They don't have parents to show them how a checking account works or to teach them about the importance of saving. And it's difficult for kids in foster care to open and maintain a bank account when they're moving from place to place, with different guardians and different rules.

And Christine says that “the last thing on a social worker's mind is a kid's personal finance education and opening a savings account.” There are just too many bigger, more pressing issues that social workers have to deal with.

So what can be done to give foster kids a solid personal finance foundation?

Opportunity Passport bridges the gap

Eddye's story isn't that of the typical kid aging out of the system.

After she turned 18, her caseworker told her about a program called Opportunity Passport that would match every dollar she saved, up to $1,000 per year. All she had to do was complete some personal finance classes.

“The classes didn't seem like a huge thing,” says Eddye. “But when I learned about the match, I thought, ‘OK, I'm game.'”

Eddye used matched funds to purchase a car and a laptop. She's also used her savings to pay for her Certified Nursing Assistant and Emergency Medical Technician licenses.

The program has three main benefits for participants:

First, the program gives foster kids experience in handling money. In a classroom, personal finance concepts are theoretical. But when there's real money in their hands, kids can better understand why it's important to make good financial decisions.

“I knew what a budget was, but I thought it didn't pertain to me because I never had a large amount of money,” says Eddye. “But now, I see why it's important to track my spending. Without that, I would probably be in a lot of debt. My budget is my rock.”

Her success has also made her feel more capable and confident: “I've been comfortable keeping a budget for three years, and I'm really proud of that.”

Second, the program gives kids incentive to save. Like Eddye, many kids are initially drawn to the program's savings match. It's the catalyst to start saving money and it motivates kids to stick with it, resulting in a higher savings balance.

And money in the bank means one emergency won't be a huge setback. “[When I bought my car] I didn't think about costs of maintenance,” says Eddye. “But the reality is that cars break down. I've learned the hard way that you need that cushion.”

Third, the program provides education and support. Kids learn how to avoid debt, manage a bank account, and keep a budget, which are critical skills when you're on your own. Although Eddye initially felt overwhelmed and intimidated, she says, “Now I'm not afraid to ask questions and dig in and do the research,” she says.

So how does the program work?

How Opportunity Passport gives kids a leg up

Opportunity Passport, launched by the Jim Casey Youth Opportunities Initiative, provides personal finance classes for young people who were in foster care after the age of 14.

Total Assets Purchased with Matched Funds in the Opportunity Passport program, as of October 2011

Total Assets Purchased with Matched Funds in the Opportunity Passport program, as of October 2011

Participants also receive a personal bank account and an individual development account (IDA). Money saved through Opportunity Passport is matched dollar-for-dollar in their IDA, up to $1,000 each year. The money can be used for approved assets, such as education expenses, housing costs, and health care. Participants can remain in the program until age 24.

Since Opportunity Passport launched in 2002, it has helped nearly 5,000 young people like Eddye collectively save more than $6 million.

Christine, who's a consultant with the Jim Casey Youth Opportunities Initiative and an Opportunity Passport trainer, says the key to the program's success has been partnerships and involvement from participants like Eddye, who's now serving as president of her state's youth advisory board. “The solution has to be bigger than child welfare,” says Christine. “Child welfare can't do it all, even though we expect them to do it all.”

Christine says their next goal is to expand from 15 states to 25 states, so that “half the country is implementing the Opportunity Passport model”.

Considering that even top-rated high schools don't provide a personal finance education, it's pretty amazing that this program is successfully providing one for kids in foster care. If you want to learn more about the program or how you can help, check out the Jim Casey Youth Opportunities Initiative website.

More about...Budgeting, Education

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AMW
AMW
7 years ago

Thank you so much for sharing this organization! I am going to look into this more. It sounds like something I would like to support.

I have done hands on work with my local foster care systems in helping them not only navigate personal finance but how to apply for college. They really need the help and are very appreciative that someone would take the time to help them.

Carole
Carole
7 years ago

Whether or not they go on to college, most kids need help getting started. They need an adult to help them find an appropriate car and to help them understand the financial aspects of owning one. Getting an apartment requires a big financial outlay at first. It’s reallly unfair to turn these kids loose at 18 and expect them to survive decently. I imagine this is why some are forced into prostitution and other illicit activities

TB at BlueCollarWorkman
TB at BlueCollarWorkman
7 years ago

It’s a sucky situation. Society isn’t always set up for “outlier” type people. In my past, I racked up a criminal record, paid for all my crimes, and finally got myself cleaned up and turned around. And guess what? No one woudl hire me. Couldn’t get a job, couldn’t get credit, couldn’t do or get anything! I understand why no one would hire me, but at the same time, like foster kids, sometimes parts of society get left out in the cold and have few options but to turn to crime or some other bad means to get money and… Read more »

Lisa Aberle
Lisa Aberle
7 years ago

We have only had one child placed with us through foster care so we don’t have a lot of experience and NONE with older kids, but I am so glad this resource is available to the kids who age out.

Holly
Holly
7 years ago
Reply to  Lisa Aberle

I was a biokid in a foster family. I’ve kept in touch with four or five of the many, many kids who stayed with us (some for days, many for months, a few for years) and to a one, they have all led challenging lives as adults. We’re all in our 40s now, and it is sad to see the pattern repeat for many of the kids.

Something like this provides a desperately-needed opportunity for change.

Thanks for the info!

Katie
Katie
7 years ago

Thank you for writing this story and highlighting this organization! Their results are absolutely amazing. I am definitely going to look into how to get involved.

olga
olga
7 years ago

Off topic: is it me or is it something new that I can’t see the top of post through the almost-clear add, and when I click on add, instead of opening in another window, it opens here, and I loose still that first 2 paragraphs?

LauraElle
LauraElle
7 years ago
Reply to  olga

Yes, I noticed that as well. I refreshed the page and it returned to normal.

Laura
Laura
7 years ago
Reply to  LauraElle

Thanks for the tip. I had the same problem and your suggestion fixed it.

Shari
Shari
7 years ago
Reply to  LauraElle

I refresh the page and it stays the same. Very frustrating. I really hope this isn’t a sign of things to come….the ads are starting to get more intrusive.

Debbie
Debbie
7 years ago
Reply to  Shari

Same here – I can’t read the top part of the article, and refreshing does nothing.

Kat
Kat
7 years ago
Reply to  olga

Same here. The clutter at the top is over the article and makes it unreadable. I think my page may look even worse since I have javascript turned off. Please guys, test your page before publishing it. If this stays, I won’t.

William @ Drop Dead Money
William @ Drop Dead Money
7 years ago

It gets worse. According to the recent ESPN movie, most athletes who graduate from those big time universities are totally unprepared to deal with their money.

Bart Scott, NY Jets linebacker, told of how he took his first paycheck to a check cashing joint… because he honestly didn’t know where else to go with it! The league minimum wage is $25,000 per paycheck, and those people never have that much on the premises, so they just laughed at him.

Katie
Katie
7 years ago

Athletes not knowing what to do with $25k is worse than aged-out foster kids with no support system or financial education? Huh.

LeRainDrop
LeRainDrop
7 years ago
Reply to  Katie

No, not worse. But another example of kids who have not been prepared adequately to deal with adult finances, even at a basic level.

Christian
Christian
7 years ago
Reply to  Katie

You are correct in that the scope and scale of these two problems aren’t even close. However, I think “worse” in this context refers to the depth of financial ignorance, across the spectrum.

William @ Drop Dead Money
William @ Drop Dead Money
7 years ago
Reply to  Katie

The part that’s worse is the athletes “graduate” from institutions who receive hundreds of millions of dollars from TV and merchandise revenues, for which they are supposed to be educating the kids in their care.

Samantha
Samantha
7 years ago

I Googled the story, and it looks pretty interesting. If anyone else is curious, the ESPN movie is called “Broke” and I found this review:

http://ptmoney.com/why-athletes-go-broke-review/

Kate
Kate
7 years ago

What a fantastic program!

Mom of five
Mom of five
7 years ago

Thanks for posting on this important topic. In most states, a child’s foster parents can continue to receive payments until the child turns 20. In some states, 21. It’s not a difficult process. In those cases where the foster parents are unable to fill out the form, the case worker will do it for them so long as the foster parents are willing to continue caring for the child.

Fostering a child is no walk in the park, but please consider opening your home to one of these children.

rather not say.
rather not say.
7 years ago
Reply to  Mom of five

Some foster parents can’t be trusted to know good person finance or to teach it to their foster children. There are enough terrible people in the foster system that simply extending it solves nothing. This kind of education has to be built into the system and required or it simply won’t get done.

Kelly@Financial-Lessons
7 years ago

I feel a little guilty that I’ve never even thought about this subject or the situation that “aging-out” teenagers are in. I think personal finance is something that needs to be taken much more seriously in all school systems and households across the country, especially with the economy in this state. Every high school senior should be required to take a class about personal finance (I remember ours was an optional 5 day class during senior week when there were other way better ones like self defense and yoga to choose from). Its vital for our country and young adults… Read more »

Sarah
Sarah
7 years ago

This is a great article and one of the most important I have read in some time. I have been thinking a lot about how to reach out to young people and those who are disadvantaged, and the one idea I think I can offer is build an emergency fund…it’s critical and can help prevent you from spiraling down and it can help pull you up. But, how can I say it and not put some cash behind promoting the idea? In my early working years I’ve earned minimum wage and even with strong family support, it took me YEARS… Read more »

Lori
Lori
7 years ago

That is a great program to assist foster care kids toward their future goals. My husband and I fostered several kids who were teenagers. We always helped to set them up with a credit union account (which was cheaper for them than local banks and they could join since we were members.) I know foster care rules vary from state to state. In Michigan, they don’t “age out” until age 20 as long as they are going to school of some type. Once they turned 18, our foster care case worker encouraged them to switch to independent living with us… Read more »

Carla
Carla
7 years ago

I’m so glad someone brought this up. As a CASA I’ve seen foster homes where the children didn’t even have their own toothbrush and shoes that fit let alone someone who can teach them about personal finance. Of course there are many great foster homes out there, but often a lot of time is spend on dealing with so many problems. Not only do these children lack guidance and direction, they lack parenting and all the goodies that come with it. They are forced to grow up without anything telling them that they love them and will be there for… Read more »

Fiona
Fiona
7 years ago

Here in Kentucky, the problem of kids aging out of the system without basic skills has been a problem that the family courts are tackling head on. Children in foster care, once they reach a certain age, work with their social workers to create a plan toward independent living, whether that be renewing their place in the system so that they can pursue college, or planning for transition to the workplace. Part of the independent living plan requires that they take classes in basic skills such as maintaining an apartment, financial management, cooking, and so on. I am on a… Read more »

Peach
Peach
7 years ago

I liked reading about Eddye. She’s a remarkable and focused young woman, and she’s made some great decisions! I’m cheering for her, and hoping things get even better for her as time goes on. It was sad to hear of the young mother who lost her savings, and I know that kind of thing happens, especially with a lack of trust in the banking industry. It’s probably hard to trust anyone or anything sometimes, but keeping cash at home is too risky–we were once ripped off badly, from vcr down to my son’s stash of coins. Turns out it was… Read more »

Jenne
Jenne
7 years ago

What a superficial response to a problem that’s a heck of a lot bigger than you portray it. In a place where public transit sucks, exactly how is a kid– any kid– going to be able to earn enough to get their own place, buy a car, etc. once they turn 18? And if they need a car to get to work, they are already over a barrel unless they have mechanic skills and a place to do the work. An ‘affordable’ used car that isn’t a lemon can still easily suck down a quarter of your income in repairs… Read more »

Lauren {Adventures in Flip Flops}
Lauren {Adventures in Flip Flops}
7 years ago
Reply to  Jenne

Jenne, I don’t think its that superficial a response. Yeah, there are some much bigger issues out there that are affecting these young adults. But, as hard as I’ve tried in my city, no one is going to massively overhaul our transportation system. What’s the next best thing? Helping people navigate what’s there.

Amy
Amy
7 years ago

This is a great article and I echo most of the sentiments above. A friend of mine went through the Foster Care system and despite having good Foster families, still struggles. She attended a state college (as an in-state student) and graduated with a 4.0, but is still struggling under a heavy debt loan (despite getting a job fresh out of college). She went back to school and earned a master’s, only adding to the loan. She’s buried and things are probably not going to turn around for her any time soon. One set of former Foster parents still help… Read more »

Rya
Rya
7 years ago

OFFTOPIC:

Your Geiko-autoinsurance-whatever ad is acting funny! The window is all over the text (so can’t read the first paragraphs) and I can’t find a CLOSE button.

I’m using Google Chrome with Windows Millenium.

I’ve tried to open the site from two different computers, but that ad is very persistent!

Sorry for the offtopic.

Bryan Greenberg
Bryan Greenberg
7 years ago

The laws of New York allow foster care youths to remain in foster care until they are 21 years old. And regulations require that at about age 16, foster care youth are offered what are called PYA (preparing youth for adulthood) or ILS (independent living skills) classes – while not solely concerning financial planning, these programs do touch on the basics of budgeting, bank accounts, and basic personal financial management.

rather not say.
rather not say.
7 years ago

The system assumes most foster children won’t amount to much, and sadly, they are mostly right. I was one of fewer than 50 foster kids in MA to graduate HIGHSCHOOL the year I did. There were few enough of us jordans furniture gave each of us a 100 dollar pda. It took me at least 5 years after that to actually get my life together and I am lucky enough to be innately talented with computers. I was able to worm my way into getting one from the state when I was 13, earning money as a painter and making… Read more »

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