The Independent Effects of Savings Accounts in Children's Names on Their Savings Outcomes in Young Adulthood

Abstract

A question of interest in children's savings research asks whether there are unique effects on children's later savings when savings accounts are opened in their names earlier in life, either independently from and or simultaneously with accounts in which parents save on children's behalf. Using longitudinal data from the Panel Study of Income Dynamics, this study created a combined measure of children's (ages 12-19) and parents' savings account ownership to predict savings outcomes in young adulthood (ages 20-25). All possible combinations of children's and parents' account ownership were significantly related to young adults' savings account ownership; however, only children's savings account ownership was significantly related to savings accumulation. Implications for the independent effects of savings accounts in children's names are discussed.

Keywords: Children; mental accounting; parents; savings account; young adults