Absence of conflict of interest.
Citation
Highlights
- The study's objective was to examine the impact of financial coaching on financial knowledge and financial behaviors.
- The study used an interrupted time series design. Using survey data and statistical tests, the authors compared the outcomes of participants before and after they participated in the program.
- The study found that participation in individual or group financial coaching was significantly related to increases in financial knowledge and budgeting behavior both immediately following the intervention and six months later.
- This study receives a low evidence rating. This means we are not confident that the estimated effects are attributable to financial coaching; other factors are likely to have contributed.
Intervention Examined
Financial Coaching
Features of the Intervention
The Financial Capability Center launched a financial coaching program where college students were trained to become coaches for the staff of local nonprofits and their clients. The coaching program was designed to serve low-income individuals and supported participants in making changes to their financial behavior and well-being. Program participants attended three workshops which covered topics such as visualizing and setting goals, money beliefs, and understanding and managing credit which were led by the student coaches. They also attended six coaching sessions (participants were allowed to miss one session). The information presented in the coaching sessions was based on the clients’ needs and goals and followed the COACH model, which was developed by Neighborworks America. The Financial Capability Center offered both individual and group coaching sessions. The group financial coaching sessions included 3-4 people per group and was comprised of individuals with similar goals.
Features of the Study
The study was conducted at Merrimack College in Andover, Massachusetts. The authors used an interrupted time series to examine outcomes associated with completion of the financial coaching program. Participants from the surrounding community were assigned to either individual or group financial coaching. There were 41 participants in the individual coaching condition and 18 participants in the group coaching condition. The majority of the study sample were women (82%), Hispanic/Latino (94%), over age 35 (70%), and had a high school degree (70%). All participants were classified as low to moderate income, with a median household income of $22,410. Over half of participants (55%) had full-time employment.
The authors used surveys to assess financial knowledge and behaviors. Financial knowledge topics included loans and interest rates, credit scores and reports, banking services and fees, and investing for retirement. Financial behaviors consisted of having a budget, saving money in the last three months, and the amount in savings. Prior to attending any workshops or coaching sessions, the participants completed a baseline survey. They completed the same survey at the last workshop and again 6 months following the conclusion of the intervention. Only 31 participants in the individual coaching group and eight participants in the group coaching completed the follow-up survey. The authors used statistical tests to compare the outcomes of participants before and after they participated in the intervention. Statistical tests were only provided for all coaching, not individual or group coaching separately.
Findings
Knowledge and skills for money management
- The study found a significant relationship between financial coaching and an increase in financial knowledge from baseline to post-program, as well as from baseline to the 6-month follow-up.
- The study found a significant relationship between financial coaching and an increase in the use of budgets, savings, and savings amount from baseline to post-program. However, a significant relationship was only found with budgeting behavior at the 6-month follow-up.
Considerations for Interpreting the Findings
The authors compared the outcomes of participants measured before and after they participated in the program. For these types of designs, authors must observe outcomes for multiple periods before the intervention to rule out the possibility that participants had increasing or decreasing trends in the outcomes examined before enrollment in the program. That is, if participants who had increasing financial knowledge tended to enroll in the program, we would anticipate further increases over time, even if they did not participate in the program. Without knowing the trends before program enrollment, we cannot rule this out. Therefore, the study receives a low causal evidence rating.
Causal Evidence Rating
The quality of causal evidence presented in this report is low because the authors did not account for trends in outcomes before the intervention. This means we are not confident that the estimated effects are attributable to financial coaching; other factors are likely to have contributed.