Can a Kid-Centered Bank Help Solve Future Financial Woes?

Davina van Buren

Most adults in the United States struggle with financial literacy—as young people, we likely aren’t taught how to save and invest unless we learn it from our parents. Denver-based Young Americans Bank, which only serves customers ages 21 and under, aims to fill in the gaps of family knowledge by giving youth hands-on experience with money, from coin-counting machines and on-site classes to savings and checking accounts and even loans.

Together with its sister nonprofit, Young Americans Center for Financial Education, the bank was founded by the late Bill Daniels (“the father of cable television”) to teach children these concepts from a young age, empowering a lifetime of smarter choices and prosperity.

We spoke with president and CEO Richard E. Martinez, Jr. to learn more.

Make Change: How exactly does Young Americans Bank work?

Richard Martinez: There are two sides of the organization—the bank side and the nonprofit. The organization started with Young Americans Bank, and from that grew the nonprofit programs, which are delivered through the Young Americans Center for Financial Education. … We run large programs through that side of the house.

MC: Such as?

RM: Young AmeriTowne is a program where kids, primarily fifth graders, run their own free enterprise city for a day, learning the ins and outs of being producers, consumers, running their own government, and exploring a career. International Towne is for 12 to 14-year-olds and teaches the interdependence of our world: trade, tariffs, supply and demand, specialization, and navigating different cultures. And YouthBiz, is a hub for youth entrepreneurial thinking and action.

MC: How is Young Americans Bank different from other banks that offer accounts to minors?

RM: The fluctuations you would normally see in an adult bank—balance increases, utilization of other services such as certificates of deposit, loans, and debit or credit cards—are designed to create “stickiness” [since their objective is to retain these customers for as long as possible]. We also want our customers to have several types of accounts as they learn and grow, but the fluctuations in their needs as young people are different than adults. So, it’s more about the knowledge and not necessarily that “stickiness,” since they will age out of Young Americans Bank at age 22.

MC: Do you really give loans to kids?

RM: Yes. Our clients can apply for loans starting at age 12. It depends on what they need the money for, and they need a cosigner at that age. If mom and dad don’t qualify for credit, we have a guarantee fund that can help.

These are not big loans. Large for us is $10,000 to $25,000, but those are a rarity. Most are under $1,000 and are typically for things such as buying a car, college, starting their own businesses, even pet care.

MC: What are some of the challenges of working with children?

RM: People are very protective of their money as adults, so when you add the youth perspective, they are protective of their child’s accounts as well. … We keep it youth-oriented and age appropriate at every level so that our customers can maximize their education. At our new account openings, we go through

vocabulary words so they understand what they are doing.

We believe in experiential learning—the action is what helps build those good financial habits.

MC: You’re based in Denver. Can people in other geographic locations use your bank?

RM: Yes. We have almost 18,000 customers in 46 states and nine foreign countries. Account holders outside the U.S. are typically armed services families that are stationed elsewhere. I encourage young people to have a bank that they can walk into in their community. Ninety percent of our customer base is in Colorado.

MC: What happens when your clients turn 21?

RM: Our account holders age out before their 22nd birthday. That’s partly because they have outgrown us, and partly because we don’t want to compete with adult banks that may be supporters on the nonprofit side.

We do exit interviews with our customers to help them through the transition. Almost all the banks in town support us on the nonprofit side, so our sponsors get the benefit of having an experienced customer coming into their institutions. These kids will be great investors, borrowers, bank customers, and business owners.

MC: Any final thoughts?

RM: It’s been under fire whether the American Dream actually exists. …You need to have financial knowledge to realize the American Dream. That’s what we do every day: get kids knowledge so they can be financially self-sufficient and function in the system we have here.

Want to get your kids interested in banking? Young American Bank provided these printable financial worksheets to help children set goals and learn the value of saving for what you want.