Building wealth is critical for achieving financial security, buying a house, paying for college, and retiring. But building wealth is generational, and not everyone has access to the same wealth-building opportunities in the first place.

In recent years, early life wealth-building programs (such as baby bonds and child savings accounts) have emerged as a way to increase opportunities for all children to build wealth, reduce racial wealth inequities and improve national economic growth.

Evidence shows pairing access to capital with access to good information and coaches can help people navigate financial decision making. That’s why some (PDF) existing child development accounts and baby bond (PDF) programs have outlined basic guidance for financial literacy or financial education requirements. These provisions, however, do not specify the type of programs required.

Without intentional design and implementation, financial literacy requirements risk adding hurdles that might prevent recipients from participating, benefiting, and accessing capital. Financial coaching, on the other hand, involves multiple one-on-one sessions that focus on topics related to achieving participants’ financial goals, and financial education includes workshops, classes, or curricula covering specific topics, such as reducing debt or managing credit. Financial coaching and education better suit the goals of early life wealth-building programs.

To address this concern, the Urban Institute convened a group of researchers, policymakers, and practitioners who carry out state- and local-level early life wealth-building programs to elevate best practices for ensuring financial coaching and planning helps accomplish these projects’ goals.

Financial education supports and programs should meet young adults’ unique needs

Because young adults experience unique financial challenges during early adulthood, such as poor credit history and delinquent debt, lack of savings, and employment instability, the financial education offered alongside early life wealth-building programs should be tailored to financial needs and programmatic goals.. For example, financial coaching and education focused on saving as a goal does not suit program participants who typically have to use the funds on limited-use options (often education).

Convening participants, including Michelle Witthaus and Christopher Harrell from Rooted, Amit Khanduri from the Gro Fund, and Norel Knowles and Margaret Libby from MyPath, shared a few lessons for incorporating financial education from their respective programs, and although their curricula differed in structure, common best practices emerged:

1. Center young people’s preferences. Design curricula with feedback from representatives of target populations such as youth groups, those with lived experience as members of households with low (and lowest) income, and people of color.
2. Hire financial planners with shared lived experience. Assign participants to financial planners and staff with shared social and cultural backgrounds to better understand and meet participants’ needs.
3. Personalize financial plans. Building wealth is a personal process. Financial plans set by the participant and their planner must account for the participant’s goals and be flexible to changes in their financial situation. Assign professional staff with the knowledge to build wealth through financial institutions to each participant and personalize their plans.
4. Create opportunities for peer learning. Opportunities for participants to speak to other participants and peers creates space to share experiences, empower and learn from one another, and reduce some of the anxiety around financial conversations.

This guidance empowers participants, addresses barriers to financial stability and wealth building, and increases the impact potential of capital investment through early life wealth building programs. The best practices outlined by our panelists are—importantly—focused on the individual and meeting their needs. But as we consider the future of universal early life wealth-building programs and how to reduce racial and national wealth inequities, researchers, policymakers, and practitioners will need to plan to scale services.

Scaling financial education in early life wealth-building programs

As early life wealth-building programs continue to emerge, more financial education staff will be needed. Developing a financial planning workforce at a scale that satisfies the needs of a potential national, universal early life wealth building program will require inclusive strategies and large investments. Equipping young people, including those with lived experience, and people of color with the skills and education to serve as financial planners and coaches can expand an inclusive workforce able to deliver on many of these best practices.

What this looks like at the local, state, and federal levels will vary based on participants’ needs. To successfully diminish wealth inequities through early life wealth-building programs, legislators, policymakers, and changemakers need to provide capital, provide attentive support, and, most importantly, listen to young people.