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Think back to your very first paycheck, what it was like to have your own money in your pocket, thinking about what to buy. It's an exciting moment. It's also a teachable one - the difference between heading down a good financial path or bad one. Gabrielle Emanuel of the NPR Ed team sent this report.
JOHN LUNA: So you're looking at payday lenders, check-cashing outlets...
GABRIELLE EMANUEL, BYLINE: In San Francisco, I meet up with John Luna on the corner of Mission and 20th. It's a busy block with food trucks and thrift stores, pharmacies and liquor stores. But Luna isn't looking at that.
LUNA: I mean we could see it from here - money loaned.
EMANUEL: Luna grew up in this area, where many people are unbanked. Without a traditional bank account, they often turn to stores like these which have really high interest rates.
LUNA: Walking to work the first of month, the 15th, you see those payday lender lines just - it's like trying to get into the most popular nightclub in the city.
EMANUEL: In those long lines, there are lots of young people, many with that very first paycheck in their pocket, often hoping to borrow against the check. Joshua Ontiveros was one of them.
JOSHUA ONTIVEROS: You know - and I have to take money out. And then you got to pay them back, like, two weeks, you know, later with interest. It's stressful, you know what I mean?
EMANUEL: He's 26 and grew up working odd jobs and going to a payday lender one block over.
ONTIVEROS: They give you, like, 150, and you're paying, like, $100 in interest. It's double the stress.
EMANUEL: Ontiveros saw his earnings evaporate again and again. Soon he was waking up in the middle of the night, feeling trapped.
ONTIVEROS: You're kind of lost in a daze, so to say.
EMANUEL: But that changed when he got tired of odd jobs and enrolled in a youth employment program. That's where he met John Luna and became part of a financial program called MyPath.
LUNA: What's up, Joshua? How are you doing?
ONTIVEROS: All right. How are you doing, John?
LUNA: I'm doing well, Man. I'm doing well.
EMANUEL: MyPath aims to help people right when they're earning their first paycheck.
LUNA: Catch me up, like, where you're at right now.
ONTIVEROS: So I have two savings accounts now.
EMANUEL: Ontiveros says John Luna was the first person to introduce him to savings accounts, financial goals and emergency funds. Growing up, Ontiveros never thought about these things. There wasn't really any point.
ONTIVEROS: Like, 95 percent of my friends are not here no more. They're either incarcerated or, you know, they passed away.
EMANUEL: Now things have begun to stabilize. And MyPath hasn't just taught Ontiveros about money. They've also worked with banks and credit unions to design accounts that fit the needs of low-income young people. Like what? Well, there's a savings account that rewards you for meeting your savings goals. And John Luna just launched a new initiative.
LUNA: We link them to this credit builder loan.
EMANUEL: It's a loan, but there's a catch. You can't spend the money. So as you pay off the loan, your credit score goes up. And at the end, you get all the money in the form of an emergency fund.
LUNA: I just wanted to kind of go over when we first pulled your credit report, kind of the baseline score.
ONTIVEROS: Which one was that? That's - oh, this one right here.
ONTIVEROS: Oh, we on our way up.
LUNA: We're on our way up. We're on our way up.
MARY CAPLAN: All of their credit scores improved dramatically.
EMANUEL: Mary Caplan is a professor at the University of Georgia. She studies this program and says there's solid research to suggest it's working.
CAPLAN: When young people are exposed to the opportunity to build credit, they will build credit.
EMANUEL: Same with savings. Researchers at the Federal Reserve Bank of San Francisco studied MyPath savings accounts and found that young adults were saving about 34 percent of their paycheck. Just a few years ago, Joshua Ontiveros would have watched that 34 percent or more disappear into the pockets of payday lenders. But now he's saving it. Gabrielle Emanuel, NPR News.
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