Building the case for financial education

TLDR

Financial education is urgently needed in the U.S. because of high bankruptcy rates, consumer debt, low savings, and poor family financial management, prompting a large public and private response. This article reviews the range of financial literacy programs and their evidence of effectiveness, and argues for adopting a comprehensive evaluation framework to guide current and future delivery while addressing key challenges.

Abstract

The need for financial education among Americans is often demonstrated with alarming rates of bankruptcy, high consumer debt levels, low savings rates, and other negative outcomes that may be the result of poor family financial management and low financial literacy levels. The collective response by public and private organizations to the accepted and often demonstrated need for financial education has been impressive in size and scope. This article provides an overview of the wide range of programs aimed at improving Americans’ financial literacy as well as a short review of the current evidence of the effectiveness of financial education programs. We advocate for the adoption of a comprehensive framework or approach to evaluation to assist those currently delivering, and planning to deliver, financial education and highlight some of the key challenges. A five‐tiered approach to program evaluation is described and outlined to provide a general framework to guide financial education evaluation.