Initiatives to Promote Savings From Childhood Catching On

Austin's account, she said, makes him feel special. "He's excited. He knows this is for college."

The idea for children's accounts has been germinating for some time. In Britain, for example, the government in April began mailing vouchers worth 250 pounds -- almost $450 -- to the parents of all 700,000 children born in that country each year, under the Child Trust Fund announced two years ago by Prime Minister Tony Blair.

In the United States, meanwhile, states and foundations are pursuing different experiments. In Kentucky, the Democratic state treasurer and Republican secretary of state have created the Cradle to College Commission, which is working with banks, colleges, businesses and foundations to design a test program of accounts for children. They hope eventually to propose legislation to expand it statewide.

And St. Louis-based Jim Casey Youth Opportunities Initiative began three years ago to offer "opportunity passports" as part of its work with a vulnerable group of older youngsters -- teenagers graduating out of foster care. The program, in 12 communities around the country, provides $1,000 in matching funds for money these young people save for college, an apartment security deposit or a car. So far, slightly more than one-third of the 1,000 eligible participants are saving money.

The SEED Initiative, sponsored by the Ford Foundation and nine other foundations, is the most intensive effort so far in the United States. Investing in children of different ages and family incomes, it provides an initial deposit, then matches family contributions for four years -- up to $1,200 in the Michigan experiment.

Organizers at some of its sites say they are discovering that giving away money can be harder than they imagined. In one SEED location, around Helena, Ark., Angela Duran, president of the Southern Good Faith Fund, said she and her co-workers had expected when they began looking for 75 families for SEED two summers ago that they would enroll them quickly through federally funded Head Start preschool centers for low-income children and a similar state preschool program. Instead, they have just finished setting up accounts -- and only after opening them to other families in the area.

SEED organizers in Michigan found that one impediment was requiring parents to pay $25 up front to get an account. And even after that requirement was dropped, some parents who enrolled -- nearly half of whom, such as Albertson, have no savings accounts of their own -- are having difficulty adding to their children's accounts.

"Just calling something an ownership society doesn't make it an ownership society," said Don Jones of the Oakland Livingston Human Service Agency, who coordinates the Michigan site. Based on his experience, he said, any federal accounts would need to be accompanied by an intense campaign to enroll families and teach them about finances.

But some parents say that they are learning new habits -- and that their children are learning important lessons. "This program here gives me a chance to save. I know it's there. I can't mess with it," said Almedia Jones, of Lexa, Ark., who opened an account in May and made a $20 deposit in June and July. She took her daughter, Brianna, 5, to a SEED class where the children decorated two cans, labeled "savings" and "withdrawal," with butterfly stickers. Brianna began to put her allowance into a can.

One day, Jones took Brianna along when she went shopping for a present for another daughter, Brittney, who had just had surgery. Brianna spotted a pretty purse and turned to her older sister. "If you buy me this purse," Brianna said, "when I turn 18, you know I will have money in the bank, and if I go to college, I'll have even more money, and I'll pay you back."