Absence of conflict of interest.
Citation
Highlights
- The study’s objective was to examine the impact of the Asset Formation Initiative’s financial education program on financial behaviors.
- The study used an interrupted time series design to compare changes in financial behaviors before and after participation in a financial education program.
- The study found a significant relationship between participation in the financial education program and improvements in participants’ budgeting behaviors.
- This study receives a low evidence rating. This means we are not confident that the estimated effects are attributable to the Asset Formation Initiative’s financial education program; other factors are likely to have contributed.
Intervention Examined
Asset Formation Initiative
Features of the Study
The Asset Formation Initiative aimed to increase assets among low-income adults. Its strategies included agency partnership development and capacity building, financial literacy education, case management, and savings clubs. The initiative took place at 10 community agency locations in Massachusetts and the study was conducted at eight of those sites. The study was conducted by a university in collaboration with the community agencies that implemented the program. The author evaluated the financial education program of the initiative. The financial education program provided an introduction to Individual Development Account (IDA) financial principles and was offered in 6-8 class sessions.
The study used a pretest-posttest design where participants’ financial behaviors were measured with a self-report survey administrated before and after participation in the financial literacy program. The baseline survey was administered in person, whereas the follow-up survey was administered in person, by mail, and by phone about six to nine months after program participation. The baseline and follow-up surveys included the same questions about financial behaviors (budgeting and planning, saving, debt and credit repair) while the baseline survey also included items about demographics. A total of 94 participants completed the baseline survey but only 57 entered the program. Of those who entered the program, 39 completed the follow-up survey. The study sample was predominantly women (82 percent) between the ages of 18 and 34 (44 percent). Two-thirds of participants identified as White (66 percent), 17 percent identified as Black, and 12 percent identified as Hispanic. The author compared the financial behavior outcomes of participants before and after the program using statistical analyses.
Findings
Knowledge and skills for money management
- The study found a decrease in the percent of participants who owed $10,000 or more before (41%) and 6-9 months after program participation (18%). However, the statistical significance of the change was not reported.
- The study also found an increase in the percent of participants who reported improved financial behaviors before and after the program. Specifically, there was an increase of those with a bank checking account (97% to 100%), a bank savings account (79% to 87%), a retirement account (46% to 62%), and investment in CDs, stocks, bonds or mutual funds (23% to 41%). However, the statistical significance of the changes was not reported.
- The study found significant increases in engagement in positive budgeting behaviors for each of the nine budget questions in the survey from pretest to posttest.
Considerations for Interpreting the Findings
The author compared the outcomes of participants measured before and after they participated in the financial education program. For these types of designs, the author 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 improving financial behaviors 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 author did not account for trends in outcomes before the intervention. This means we are not confident that the estimated effects are attributable to the Asset Formation Initiative’s financial education program; other factors are likely to have contributed.