Journal of Social Service Research

ISSN: 0148-8376 (Print) 1540-7314 (Online) Journal homepage: https://www.tandfonline.com/loi/wssr20

Do Financial Literacy Classes Help? An

Experimental Assessment in a Low-Income
Population

Catherine M. Reich & Jeffrey S. Berman

To cite this article: Catherine M. Reich & Jeffrey S. Berman (2015) Do Financial Literacy Classes
Help? An Experimental Assessment in a Low-Income Population, Journal of Social Service
Research, 41:2, 193-203, DOI: 10.1080/01488376.2014.977986

To link to this article: https://doi.org/10.1080/01488376.2014.977986

Published online: 09 Dec 2014.

Submit your article to this journal

Article views: 1130

View related articles

View Crossmark data

Citing articles: 7 View citing articles

Full Terms & Conditions of access and use can be found at

https://www.tandfonline.com/action/journalInformation?journalCode=wssr20
Journal of Social Service Research, 41:193–203, 2015
Copyright Ó Taylor & Francis Group, LLC
ISSN: 0148-8376 print / 1540-7314 online
DOI: 10.1080/01488376.2014.977986

Do Financial Literacy Classes Help? An Experimental

Assessment in a Low-Income Population
Catherine M. Reich
Jeffrey S. Berman

ABSTRACT. Although programs designed to increase financial literacy are widely promoted, there
is little evidence of their impact on financial knowledge or behavior. The present study used an
experimental design to examine the effectiveness of a financial literacy course for low-income
individuals receiving services in a nonprofit residential program. Participants were randomly
assigned either to a 4-week financial literacy course (n D 17) or a wait-list control group (n D 16).
They then completed measures designed for the purposes of this study assessing financial knowledge
(e.g., which loan payments should take priority), negative behaviors (e.g., overdrawing a financial
account), and positive behaviors (e.g., leaving money in a savings account). Results of this
randomized experiment confirmed that the course increased both financial knowledge and positive
financial behaviors, thereby lending support for the continued use of such financial education
programs. Attrition was high in this study, however, and future research might explore alternative
formats or approaches to presenting the course material.

KEYWORDS. Financial literacy, money management, educational programs, program evaluation,

nonprofit organizations

Considerable effort and financial resources
are invested every year in programs designed
to benefit members of society who are disad-
vantaged or at risk for harm. These social pro-
grams are advocated—often in the absence of
convincing evidence—under the assumption
that they are, in fact, beneficial. Given the costs
of such programs, however, it seems important
first to confirm that stated goals are actually
achieved before implementing a program on a
large-scale basis. As is true for other types of
interventions, a social program may appear to
be helpful and even popular, but when tested,
the program might be found to have no effect,
provide insufficiently small gain, or even be
harmful. The evaluation of a program can
therefore serve to safeguard against wasted
resources. These assessments can also help pol-
icymakers see whether recipient populations
are best served by maintaining or increasing
investment in the program, reallocating money
and efforts to other needs, or reforming the pro-
gram. These sentiments are not new as social
scientists (e.g., Campbell, 1969; Morgan, 2011)

Catherine M. Reich, M.S., is a graduate student at the University of Memphis, Department of

Psychology, Memphis, TN.
Jeffrey S. Berman, Ph.D., is Professor of Psychology at the University of Memphis, Department of
Psychology, Memphis, TN.
Address correspondence to: Jeffrey S. Berman, University of Memphis, 202 Psychology Building,
University of Memphis, Memphis, TN 38152 (E-mail: jberman@memphis.edu).
193
194 C. M. Reich and J. S. Berman
and government agencies have long encour-
aged program evaluation (e.g., U.S. Depart-
ment of the Treasury, Financial Literacy and
Education Commission, 2010). Too often, how-
ever, social programs are promoted in the
absence of rigorous evidence (e.g., Manzi,
2012).
One type of social program gaining increas-
ing attention is an intervention that aims to
enhance financial literacy. Financial literacy
can be conceptualized as the attainment of nec-
essary knowledge and skills to manage finan-
ces, utilize financial services, and navigate the
consumer market effectively. This can include
financial behaviors such as budgeting, bill pay-
ment, debt acquisition and payment, manage-
ment of consumer problems, and comparison
shopping. Given the recent economic crisis
combined with an increasingly complex finan-
cial system, raising the financial literacy of the
public seems especially important (e.g., Marco-
lin & Abraham, 2006). Low levels of financial
literacy have raised concerns for the well-being
of young people (Mandell, 2006) as well as the
nation more broadly (Braunstein & Welch,
2002; Lusardi & Mitchell, 2011). The risk for
serious negative outcomes such as bankruptcy,
unmanageable debt, foreclosure, and low sav-
ings for retirement further underscore the seri-
ousness of this issue (Bell & Lerman, 2005;
Lyons, Palmer, Jayaratne, & Scherpf, 2006;
National Endowment for Financial Education,
2004). Agencies and institutions typically
respond to such concerns by developing and
promoting financial education programs. An
inherent assumption of this approach is that an
educated public will behave more responsibly
with their finances.
Research examining these educational pro-
grams provides some evidence of their effec-
tiveness for increasing financial knowledge and
promoting positive behaviors. For example,
some research has supported home ownership
counseling (Hirad & Zorn, 2001; Hornburg,
2004; Mallach, 2001) and credit counseling
(Elliehausen, Lundquist, & Staten, 2007).
Workplace-based financial education has also
shown some promise for increasing knowledge
as well as positive financial behaviors, such
as increased savings for retirement (Bayer,
Bernheim, & Scholz, 2009; Bernheim & Gar-
rett, 2003; Kim & Garman, 2003; Loibl & Hira,
2005; Muller, 2001; Thaler & Benartzi, 2004).
Similarly, school-based financial education
seems to increase financial knowledge (Danes
& Haberman, 2004) and positive behaviors
such as savings and asset accumulation (Bern-
heim, Garrett, & Maki, 2001; Danes & Haber-
man, 2004).
One might question whether financial educa-
tion programs have a differential impact
depending on socioeconomic status. Few of the
studies to date have examined the effectiveness
of interventions with individuals at the very
lowest levels of the socioeconomic scale. Low-
income adults might respond differently to
financial literacy courses because some evi-
dence has emerged to suggest that this popula-
tion may have a marked deficit in basic
financial knowledge (Anderson, Zhan, & Scott,
2004). In addition, low-income adults face a
number of practical barriers for participation in
educational programs that might interfere with
these individuals obtaining the full benefits of
an intervention (National Endowment for
Financial Education, 2004).
Studies examining financial education for
low-income and poverty groups have focused
almost entirely on programs for which enroll-
ing in a financial literacy course is one of sev-
eral requirements for receiving matched
savings (Lyons, 2005). Studies examining the
educational component of these programs typi-
cally find that it increases savings (Clancy,
Grinstein-Weiss, & Schreiner, 2001; Grinstein-
Weiss, Wagner, & Ssewamala, 2005; Loibl,
Grinstein-Weiss, Zhan, & Bird, 2010; Richards
& Thyer, 2011; Schreiner, Clancy, & Sherra-
den, 2002; Shockey & Seiling, 2004; Willis,
2008) or credit scores (Birkenmaier, Curley, &
Kelly, 2014). However, this does not address
directly how these groups might react to a
financial literacy course outside of matched
savings programs.
Although financial literacy courses have
been portrayed as being helpful, it is important
to note that the research evaluating their effec-
tiveness has been methodologically limited
(see reviews by Braunstein & Welch, 2002;
Fox, Bartholomae, & Lee, 2005; Hathaway &
 Financial Literacy Classes
Khatiwada, 2008; Lyons, 2005; Lyons, Palmer,
et al., 2006). One limitation in previous
attempts to evaluate these courses is that many
of them rely on measures that do not clearly
indicate the success of the intervention for
increasing financial literacy. Instead, such stud-
ies have focused on global impressions of par-
ticipants such as satisfaction, self-confidence,
attitudes, subjective sense of improvement, and
self-reported measures of intended changes in
financial behavior (e.g., Boyce & Danes, 1999;
Garman, Kim, Kratzer, Brunson, & So-hyun,
1999; Kim & Garman, 2003; Lyons & Scherpf,
2004). Although these constructs might be
important to program developers wishing to
increase the appeal of course offerings, studies
solely using these sorts of outcomes do not
answer the question of whether financial pro-
grams are effective at increasing financial
knowledge and positive behaviors. For exam-
ple, Lusardi and Mitchell (2011) found that
people tend to rate themselves as financially
well informed even when they objectively per-
form poorly on financial literacy tests.
A second limitation of previous attempts to
evaluate these courses is that often, their effec-
tiveness is ambiguous because they do not
include a rigorous control group. For example,
many studies make comparisons between indi-
viduals who elected to attend courses and those
who did not (e.g., Bayer et al., 2009; Bernheim
& Garrett, 2003; Elliehausen et al., 2007; Gar-
man et al., 1999; Hirad & Zorn, 2001; Loibl
et al., 2010; Loibl & Hira, 2005; Muller, 2001).
This type of design leaves unclear whether dif-
ferences between groups are the result of the
course or an artifact of some other difference
between participants such as precourse differ-
ences in knowledge or motivation. Likewise,
uncertainty results from the popular pretest–
posttest design in which initial financial knowl-
edge or behavior is compared to knowledge or
behavior following the course (e.g., Anderson,
Scott, & Zhan, 2002; Danes & Haberman,
2004; Kim & Garman, 2003; Lyons, Chang, &
Scherpf, 2006; Lyons & Scherpf, 2004;
Shockey & Seiling, 2004; Thaler & Benartzi,
2004). Although these study designs could be
useful for addressing questions of importance
to the agency or researcher, such methods leave
195
open whether or not changes observed are due
to the effectiveness of the course. For example,
other factors changing during the same period
of time such as maturity, the effectiveness of
other services the participants are receiving, or
practice effects could account for financial
improvement. These ambiguities could be
addressed, however, through the use of an
experimental design.
Although experimental designs control for
these confounds and are considered the least
ambiguous way to assess the effectiveness of
an intervention (Campbell, 1969; Manzi,
2012), few studies have employed such a
design when studying financial education (e.g.,
Gartner & Todd, 2005; Servon & Kaestner,
2008) perhaps due to institutional restraints as
well as a lack of evaluation experience (Hath-
away & Khatiwada, 2008). This begs the ques-
tion of whether financial literacy courses are
actually helpful or if the time, money, and
resources devoted to such programs might be
better invested elsewhere.
Therefore, the aim of this study was to use
an experimental design to evaluate the effec-
tiveness of a financial literacy course for low-
income individuals in a nonprofit residential
program. Half the participants were randomly
assigned to an experimental condition in which
they attended a financial literacy course, while
the other half were assigned to a control condi-
tion in which they did not receive such training
during that time. When the financial literacy
course ended, both the experimental and con-
trol participants completed measures assessing
their financial knowledge and behaviors. This
design allowed for a clear assessment of
whether the course caused changes in both
financial knowledge and behavior.
METHOD
Program Setting
The study was conducted at a housing pro-
gram in a large city in the Southeastern United
States from 2008 to 2011. This program, which
was a service provided by a nonprofit organiza-
tion, offered transitional housing and life skills
196 C. M. Reich and J. S. Berman
courses for homeless families. The program
serves one of the lowest-income populations in
an urban area. At the time the study was con-
ducted, the program housed during the course
of a year approximately 150 to 180 homeless
families with 300 to 400 children. This program
was not intended to be a long-term homeless
shelter, and residents were required to find
alternative housing within 12 months of intake.
During the period in which the research
occurred, applicants for the program were eligi-
ble if they had children younger than the age of
17 years; were a county resident, homeless,
and employed or employable; and passed a
background check and drug screening. Accep-
tance was also determined by housing unit
availability. While in the program, all resi-
dents—including all participants in this
study—received housing on a sliding scale
from $25 to $325, budget counseling, and case
management. Residents also had opportunities
to obtain vouchers (for food, clothing, and
transportation), employment guidance, and
psychological counseling. To remain in good
standing with the program, residents were
required to pay back debt, pay rent, adhere to
agency policies (e.g., nonviolence, abstinence
from drug use), and attend life skills courses. In
particular, all residents received one-on-one
financial counseling with agency staff, which
included budget and debt repayment planning
and credit repair. Residents could also attend
an employment life skills course that taught
elements of budgeting education. In addition
they were required to attend a financial literacy
course.
Financial Literacy Course
The financial literacy course was based on
the Money Smart program developed by the
Federal Deposit Insurance Corporation (U.S.
Federal Deposit Insurance Corporation, 2010)
and modified by a local bank. It was taught by
volunteer employees of the bank and trained
research assistants.
The financial literacy course combined lec-
ture with moderated discussions and also
included visual aids such as handouts and
projected slides. Participants were encouraged
to ask questions, recall terms previously used
in the course, and apply knowledge from the
course to their own financial situation. The
curriculum began with a unit about the impor-
tance of budgeting money and how to pay off
loans. The following units focused on noncash
payments, such as checking accounts and pay-
ing on credit. Toward the end of the program,
topics focused on loans and regimented pay-
ment plans such as automobile financing and
the repayment of debt. Interspersed throughout
these lectures were short lessons about safe-
guarding money and assets, such as tips to
defend against identity theft and how to read a
credit report.
Participants
Of the 61 participants recruited, a total of 33
residents (17 assigned to the course condition,
16 assigned to the control condition; 32 female,
1 male) completed the study. Of these partici-
pants, 29 (88%) were African American, 1
(3%) was Caucasian, 1 (3%) was Asian, and 2
(6%) specified the Other category for ethnicity.
The mean age of participants was 30.2 years
(SD D 8.4, range D 19–58). The majority of
participants were in single-parent households
(n D 29; 91%) with only a few (n D 3; 9%)
two-parent families. The mean number of
dependents was 2.3 (SD D 1.1, range D 1–5).
Most of these participants (n D 20; 63%)
reported being unemployed; the remaining par-
ticipants reported working part-time (n D 6;
18%) or full-time (n D 5; 15%), or they did not
indicate employment status (n D 2; 6%).
Among these participants, 4 (21%) had only
a grade-school education, 19 (56%) had a high
school diploma or GED equivalent, 7 (21%)
had attended some college, and 3 (9%) had a
college degree. Participant income levels were
low: Most participants reported no annual
income (n D 15; 33%) or an annual income of
less than $15,000 (n D 10; 30%). Only 1 partic-
ipant (3%) reported an annual income of
$15,000 or greater. The remaining 7 (21%) par-
ticipants did not respond to the question about
annual income.
 Financial Literacy Classes
Procedure
All procedures for this study were approved
by the Institutional Review Board of the Uni-
versity of Memphis.
Recruitment and Assignment to Condition
Only residents who were older than 18 years
of age and the head of the household were eligi-
ble to participate in the study. Residents were
not considered for participation if they missed
appointments with agency staff or if there were
known barriers for their completion of the
study (e.g., pregnancy, attending night school,
medical problems).
Within the first 30 days of admission to the
program, participants were contacted by tele-
phone or in person and were told about the
study. Interested participants met with a
researcher individually. During the first meet-
ing with the researcher, participants were
informed of the study, gave their consent to
participate, and completed initial measures of
financial knowledge, negative financial events,
and positive financial behaviors along with pro-
viding information about themselves.
Participants were then randomly assigned to
take the financial literacy course immediately
or to wait 5 weeks. Participants assigned to the
experimental condition completed a weekly
financial literacy course for 4 weeks, with each
session meeting for approximately 2 hr.
Because enrollment into the residency program
occurred on a rolling basis, participants in the
study started the course at the next available
meeting time. This schedule allowed partici-
pants to begin the course within the 5-week
period from the start of the study rather than
waiting for the first session to be offered again.
Therefore, participants in the financial literacy
course did not receive the lessons in the same
order.
Monitoring and Retention Efforts
A number of efforts were made to decrease
attrition. All participants were mailed a letter to
remind them of their assignment. Staff at the
197
agency also monitored attendance to ensure
that participants in the wait-list control condi-
tion did not begin the course before the end of
the 5-week period. In addition, if a participant
was assigned to take the course but missed a
session, a trained researcher provided a make-
up session. Participants in the experimental
group completed measures of financial knowl-
edge, negative financial events, and positive
financial behaviors at the end of the course.
Participants in the wait-list control group com-
pleted the same measures at the end of the 5-
week waiting period.
Measures
Measures of both financial knowledge and
behavior were developed for the study to assess
the impact of the financial literacy course.
These measures were used to assess partici-
pants before and after the study period and
were not used as part of the course materials.
Items assessing financial knowledge were
derived directly from financial literacy lecture
materials. Behavioral items were based on the
goals and objectives of the literacy class, some
of which were implicit in advice given in the
course materials. Special care was taken to
keep the language of the measures accessible to
individuals of lower educational levels, and all
items were reviewed and edited by experienced
agency staff.
Knowledge
Participant financial knowledge was mea-
sured by items representing content from the
course units. The test was a multiple-choice
format, with five options per question including
I don’t know. For example, the question “When
forced to make a choice, which loan payment
should take top priority?” included the follow-
ing response options: a) the one with the high-
est interest rate, b) the one that has the largest
amount of debt, c) the one that has the lowest
interest rate, d) the one that has the smallest
debt, or e) I don’t know. Of 16 initial knowl-
edge items, 4 were removed from the final mea-
sure after item analysis revealed that they had
198 C. M. Reich and J. S. Berman
poor item–total correlations. Analysis indicated
that the 12-item measure had reasonable interi-
tem reliability, Cronbach’s a D .70. These
questions asked what a fixed expense is, how
long to keep tax information, which loan pay-
ments should take priority, benefits of a check-
ing account, benefits of electronic bill payment,
how long to take in notifying a bank of an error,
how long a bankruptcy remains on your credit
report, how long information remains on your
credit report, definition of a charge card, ideal
annual percentage rate for a credit card, and
best payment options regarding down pay-
ments, size of payments, and time it takes to
pay it off in full.
Negative Events
Negative financial events were assessed by
items such as “overdrew a financial account”
and “took a cash advance.” Participants indi-
cated whether the event occurred in the past
month and responses were yes, no, or does not
apply. Of the 20 items, 4 were removed from
the measure after item analysis indicated that
they had poor item–total correlations. The
resulting 16-item measure had good interitem
reliability, Cronbach’s a D .83. These items
inquired about having financial legal trouble,
acquiring new debt, pawning items, overdraw-
ing an account, missing bill payments, taking
cash advances, receiving calls from collectors,
credit, repossession, inability to afford medical
care, debt, borrowing money from friends or
relatives, or needing vouchers for gas, clothing,
or rent from the program. The response of does
not apply was coded as a no. The percentage of
total endorsed negative events was calculated
for each participant such that a higher percent-
age indicated a greater proportion of negative
events.
Positive Behaviors
Participants were asked to rate themselves
on a series of positive financial behaviors such
as “leave money in my savings account” and
“put bills in a designated area.” Responses
were made on a 5-point scale with labels of
never (1), rarely (2), sometimes (3), often (4)
and always (5). Of 11 initial positive behaviors,
3 were removed from the measure after item
analysis indicated low item–total correlations.
The resulting 8-item measure had reasonable
interitem reliability, Cronbach’s a D .74. These
items included putting money into savings,
leaving money in savings, paying bills on time,
keeping bills in a designated area, comparing
bills to receipts, storing account information in
a secure place, researching before making a
major financial decision, and packing lunch.
Responses to the 8 items were averaged to
form an overall rating of positive behavior.
Attrition From Study
Despite efforts to reduce attrition, 28 indi-
viduals did not complete the study and were
not included in the sample. These noncomplet-
ers were excluded because they failed to com-
plete the assessments (n D 7; 25%), did not
follow instructions about course attendance
(n D 7; 25%), chose to leave the housing pro-
gram (n D 7; 25%), graduated from the housing
program (n D 4; 14%), were evicted (n D 2;
7%), or had a scheduling conflict with the
course meeting time (n D 1; 4%). Completers
did not reliably differ from study noncomplet-
ers on any demographic variables (all ps >
.05).
Comparability of Treatment Conditions
Analysis failed to reveal any statistically sig-
nificant differences between participants com-
pleting the two treatment conditions in terms of
their age, income, or number of dependents (all
ps > .07).
RESULTS
One question is whether course participants
performed better on measures of financial
literacy than did the control-group participants.
Table 1 reports comparisons between the train-
ing and wait-list conditions for measures of
financial knowledge and behaviors. As can be
 Financial Literacy Classes
TABLE 1. Financial Knowledge, Negative
Financial Events, and Positive Financial
Behaviors for the Financial Literacy Course and
Control Conditions
Course Control
Measure M SD M SD F testa db
% knowledge 40.9 19.8 21.4 14.9 10.20* 1.11
% negative events 19.4 19.8 26.5 23.6 0.88 0.76
Positive behaviors 3.3 0.7 2.8 0.5 4.78* 0.33
Note. N D 32. The knowledge measure was the percentage correct
of 12 items; the negative events measure was the percentage
endorsed of 16 items; and the positive behaviors measure was the
mean of 8 behaviors rated on a scale from 1 (never) to 5 (always).
a
df D 1, 31. bCohen’s d effect size, indicating the degree to which the
course improved financial knowledge, decreased negative events, or
increased positive behaviors.
*p < .05.
seen, participants who took the financial
literacy course performed better on a test of
financial knowledge. In fact, on average, the
participants in the course answered almost
twice as many questions correctly than did
wait-list participants. Further, participants who
had taken the course reported engaging in more
positive financial behaviors. Those who
attended the course also reported fewer nega-
tive financial events, although this difference
was not statistically significant. The number of
course sessions attended was positively corre-
lated with the measures of financial knowledge,
r(15) D .30, positive behaviors, r(15) D .18,
and negative events, r(15) D .23, but none of
these relationships were statistically significant
(all ps > .2).
Another question is whether the effects of
the course can be accounted for by differences
in baseline performance between the course
participants and control-group participants. The
possible influence of initial levels of financial
knowledge or behaviors was examined by
including participant baseline scores as an addi-
tional continuous independent variable in the
analysis model. Using this model, the effective-
ness of the course did not vary depending on
initial levels of knowledge, Condition £ Base-
line F(1, 29) D 0.59, p D .5, or negative behav-
iors, Condition £ Baseline F(1, 29) D 1.49,
p D .2. However, the effect of the course did
199
vary depending on the initial level of positive
behaviors, Condition £ Baseline F(1, 29) D
4.16, p D .05. Follow-up tests revealed that the
financial literacy course was most effective for
those who already exhibited a relatively high
level of positive financial behaviors. For exam-
ple, for participants with an initial positive
behavior rating of 3.5 (which was approxi-
mately 1 standard deviation above the baseline
mean), the estimate of positive behaviors for
those completing the course was higher (M D
4.1, SE D 0.20) than for those in the wait-list
control group (M D 3.2, SE D 0.18), F(1, 29) D
10.89, p D .003. In contrast, for participants
with an initial positive behavior rating of 2.0
(which was approximately 1 standard deviation
below the baseline mean), there was no statisti-
cally significant difference in the estimate of
positive behaviors in the course condition
(M D 2.8, SE D 0.16) or the wait-list condition
(M D 2.6, SE D 0.14), F(1, 29) D 0.53, p D .5.
We also assessed whether the effectiveness
of the course varied as a function of particular
levels of participant characteristics. No statisti-
cally significant differences between conditions
were observed as a function of participant age,
ethnicity, education, income, employment sta-
tus, or number of dependents (all Condition £
Characteristic ps > .1).
DISCUSSION
Participants assigned to complete the finan-
cial literacy course demonstrated superior
knowledge relative to participants in the wait-
list control group. In fact, test scores among
control-group participants indicated, on aver-
age, scores equivalent to chance-level guessing.
In contrast, course completers scored nearly
twice as high, although the average was still
quite low. Participants assigned to take the
financial literacy course reported more positive
financial behaviors relative to participants in
the wait-list control group. Surprisingly, partic-
ipants reporting low levels of positive behav-
iors prior to the course did not show
improvement in these behaviors after taking
the course, whereas their counterparts reporting
high precourse positive behaviors reported
200 C. M. Reich and J. S. Berman
significantly greater positive behavior as a
result of the course. This finding is in contrast
with a pretest–posttest study that observed
more change for individuals with lower posi-
tive precourse behaviors after taking the course
(Lyons, Chang, et al., 2006). The results of the
current study, however, suggest that course mod-
ifications might be needed to reach individuals
with low initial positive financial behaviors.
Overall, these findings are consistent with the
larger literature showing that financial education
can be effective in improving financial knowl-
edge and positive behaviors (Anderson, Scott, &
Zhan, 2002; Danes & Haberman, 2004; Gartner
& Todd, 2005; Lyons & Scherpf, 2004; Servon
& Kaestner, 2008). Given the financial literacy
deficit seen in low-income populations (Ander-
son, Zahn, & Scott, 2004), the results of this
study indicate financial education outreach is an
effective means of intervention.
Few studies have previously examined
course effectiveness for reducing negative
events (e.g., Hirad & Zorn, 2001). The results
of the current study would suggest financial
education does not assist in this area. This
might be because simple positive behaviors
such as putting money into savings might be
more amenable to change than factors that lead
to overdrawing an account. For such negative
events, there may be a number of contributing
external forces that cannot be reasonably
expected to change in a 5-week period. Another
possibility is that participants in this sample
were receiving interventions based on need
from the program agency staff, which could
have obscured a subtle effect for these low
base-rate events. If this is the case, future
research might attempt to increase the statisti-
cal power to detect differences by increasing
the sample size. Future research also could
examine the potential long-term impact of edu-
cation on negative financial events as well as
examine whether gains in knowledge and posi-
tive behavior are maintained.
This study focused on the general effective-
ness of the course utilizing an experimental
design, and therefore, the majority of participants
attended all or none of the course sessions. Previ-
ous research with a low-income population
(Lyons, Chang, et al., 2006) suggests that a
course will be incrementally effective with each
additional hour of education up to 12 hr. Future
research could revisit this issue and determine if
there is specific course content that especially
assists in change. Such research could lead to a
more efficient (and therefore more economical)
educational curriculum.
Future research might also attempt to obtain
more objective measures of financial behaviors
as well as broaden the populations examined.
For instance, the current study used self-report
measures of positive behaviors and negative
events, which leave open the possibility of
socially desirable responding. Objective long-
term data such as credit scores and savings
might yield further insight into course effec-
tiveness. Also, the course was provided to a
predominantly female unemployed population
living in a residential assistance program, and
the results might vary when administered to
other populations.
Although this study suggests a course inter-
vention can be effective, one might still ques-
tion the utility of this approach. For example,
there was a high level of attrition in the study,
and future research might explore course reten-
tion efforts and examine the impact of the
course for all target participants. Furthermore,
the average performance on the test of financial
knowledge remained lower than might be
desired, and future performance might be
improved by altering the course. For one, low-
income audiences might not feel connected
when taught from traditional classroom
approaches (Hogarth & Swanson, 1995), and
future studies might compare this approach to
more learner-centric approaches (National
Endowment for Financial Education, 2004). In
addition, future course offerings might consult
other relevant research findings (Hogarth &
Swanson, 1995) and evaluate course effective-
ness of these reforms. For example, individuals
experiencing homelessness and poverty may
feel hopeless about their circumstances and
therefore unmotivated to complete the course.
As such, research demonstrating the impor-
tance of motivation (Hilgert & Hogarth, 2003;
Hogarth & Anguelov, 2003) and an orientation
toward the future (Howlett, Kees, & Kemp,
2008) might suggest the usefulness of adding a
 Financial Literacy Classes
motivational interviewing (Miller & Rollnick,
1991) component to a program involving finan-
cial education. Additionally, the current study
took place within an agency that provided for
the needs of the low-income (or no-income)
participants. Future research and practice might
consider which needs are most pressing and
should take precedence before completion of a
financial literacy course.
Previous research has left ambiguous the
effectiveness of financial literacy courses. The
current study evaluated the effectiveness of a
popular financial literacy program for a low-
income population and in so doing answered a
recent call for research evaluating programs in
a more controlled manner (Morgan, 2011).
This research can be seen as a model regarding
how to assess for other sorts of training as this
study did for financial literacy. These findings
are promising for the continued practice of
investing time, money, and resources into
financial literacy courses for low-income popu-
lations. Future research might utilize a larger
sample size, explore the long-term impact of
the course, and utilize more objective meas-
ures. Additionally, future research and practice
might consider alterations to the course dura-
tion, content, and format and may weigh the
alternative needs of low-income populations.
ACKNOWLEDGMENTS
The study was made possible through the
generous cooperation of the Memphis Inter-
Faith Association and the assistance, in particu-
lar, of Margaret Craddock, Caprice Snyder, and
Tonya Crowder. We would also acknowledge
the help of Henry Hua, Elizabeth Crunk, Mat-
thew Roberts, and Regina Turner.
FUNDING
This research was supported by a Centers of
Excellence grant awarded to the Department of
Psychology at the University of Memphis by
the state of Tennessee.
201
REFERENCES
Anderson, S., Scott, J., & Zhan, M. (2002). Financial
links for low-income people (FLLIP): An evaluation of
implementation and initial training activity. Chicago,
IL: National Center on Poverty Law. Retrieved from
http://www.povertylaw.org
Anderson, S., Zhan, M., & Scott, J. (2004). Targeting
financial management training at low-income audien-
ces. Journal of Consumer Affairs, 38, 167–177.
doi:10.1111/j.1745-6606.2004.tb00470.x
Bayer, P. J., Bernheim, B. D., & Scholz, J. K. (2009). The
effects of financial education in the workplace: Evi-
dence from a survey of employers. Economic Inquiry,
47, 605–624. doi:10.1111/j.1465-7295.2008.00156.x
Bell, E., & Lerman, R. I. (2005). Can financial literacy
enhance asset building? (Brief No. 6 in the series
Opportunity and Ownership Project). Retrieved from
http://www.urban.org/url.cfm?ID=311224
Bernheim, B. D., & Garrett, D. M. (2003). The effects of
financial education in the workplace: Evidence from a
survey of households. Journal of Public Economics,
87, 1487–1519. doi:10.1016/S0047-2727(01)00184-0
Bernheim, B. D., Garrett, D. M., & Maki, D. M. (2001).
Education and saving: The long-term effects of high
school financial curriculum mandates. Journal of
Public Economics, 80, 435–465. doi:10.1016/S0047-
2727(00)00120-1
Birkenmaier, J., Curley, J., & Kelly, P. (2014). Matched
savings account program participation and goal com-
pletion for low-income participants: Does financial
credit matter? Journal of Social Service Research, 40,
215–231.
Boyce, L., & Danes, S. M. (1999). 1997–1998 Evaluation
of the NEFE high school financial planning program.
Greenwood Village, CO: National Endowment for
Financial Education.
Braunstein, S., & Welch, C. (2002). Financial literacy: An
overview of practice, research, and policy. Federal
Reserve Bulletin, 88, 445–457.
Campbell, D. T. (1969). Reforms as experiments. Ameri-
can Psychologist, 24, 409–429. doi:10.1037/h0027982
Clancy, M., Grinstein-Weiss, M., & Schreiner, M. (2001).
Financial education and savings outcomes in individ-
ual development accounts (Working Paper No. 01-2).
St. Louis, MO: Washington University, Center for
Social Development. Retrieved from http://csd.wustl.
edu/Publications/Documents/65.FinancialEducationAnd
SavingsOutcomes.pdf
Danes, S. M., & Haberman, H. (2004). Evaluation of the
NEFE High School Financial Planning Program
2003–2004. Retrieved from http://www.hsfpp.org/
Portals/0/Documents/NEFE%20HSFPP%20Impact%
20Study%202003-2004.pdf
Elliehausen, G., Lundquist, E. C., & Staten, M. E. (2007).
The impact of credit counseling on subsequent
202 C. M. Reich and J. S. Berman
borrower credit usage and payment behavior. Journal
of Consumer Affairs, 41, 1–28. doi:10.1111/j.1745-
6606.2006.00066.x
Fox, J., Bartholomae, S., & Lee, J. (2005). Building the case
for financial education. Journal of Consumer Affairs, 39,
195–214. doi:10.1111/j.1745-6606.2005.00009.x
Garman, E. T., Kim, J., Kratzer, C. Y., Brunson, B. H., &
So-hyun, J. (1999). Workplace financial education
improves personal financial wellness. Financial
Counseling and Planning, 10, 80–91.
Gartner, K., & Todd, R. (2005, April). Effectiveness of online
‘early intervention’ financial education for credit card-
holders. Paper presented at the Community Affairs
Research Conference, Washington, DC. Retrieved from
http://www.chicagofed.org/digital_assets/others/events/
2005/promises_and_pitfalls/presentation_intervention.pdf
Grinstein-Weiss, M., Wagner, K., & Ssewamala, F. M.
(2005). Saving and asset accumulation among low-
income families with children in IDAs. Children and
Youth Services Review, 28, 193–211. doi:10.1016/j.
childyouth.2005.03.005
Hathaway, I., & Khatiwada, S. (2008). Do financial edu-
cation programs work? (Working Paper 08-03).
Retrieved from http://www.clevelandfed.org/research/
workpaper/2008/wp0803.pdf
Hilgert, M. A., & Hogarth, J. M. (2003). Household finan-
cial management: The connection between knowledge
and behavior. Federal Reserve Bulletin, 89, 309–322.
Hirad, A., & Zorn, P. M. (2001). A little knowledge is a
good thing: Empirical evidence of pre-purchase home-
ownership counseling (Working Paper LIHO.01-4).
Cambridge, MA: Harvard University, Joint Center for
Housing Studies. Retrieved from http://www.jchs.
harvard.edu/sites/jchs.harvard.edu/files/liho01-4.pdf
Hogarth, J. M., & Anguelov, C. E. (2003). Can the poor
save? Financial Counseling and Planning, 14, 1–18.
Hogarth, J. M., & Swanson, J. (1995). Using adult educa-
tion principles in financial education for low income
audiences. Family Economics and Resource Manage-
ment Biennial, 2, 139–145.
Hornburg, S. P. (2004). Strengthening the case for home-
ownership counseling: Moving beyond ‘a little bit of
knowledge’ (Working Paper 04-12). Cambridge, MA:
Harvard University, Joint Center for Housing Studies.
Retrieved from http://www.jchs.harvard.edu/sites/jchs.
harvard.edu/files/w04-12.pdf
Howlett, E., Kees, K., & Kemp, E. (2008). The role of self-reg-
ulation, future orientation, and financial knowledge in long-
term financial decisions. Journal of Consumer Affairs, 42,
223–240. doi:10.1111/j.1745-6606.2008.00106.x
Kim, J., & Garman, T. (2003). Financial education and
advice changes worker attitudes and behaviors. Jour-
nal of Compensation and Benefits, 19(5), 7–13.
Loibl, C., Grinstein-Weiss, M., Zhan, M., & Bird, B. R.
(2010). More than a penny saved: Long-term changes
in behavior among savings program participants.
Journal of Consumer Affairs, 44, 98–126.
doi:10.1111/j.1745-6606.2010.01159.x
Loibl, C., & Hira, T. (2005). Self-directed financial learn-
ing and financial satisfaction. Financial Counseling
and Planning, 16, 11–21.
Lusardi, A., & Mitchell, O. (2011). Financial literacy and
retirement planning in the United States. Journal of
Pension Economics & Finance, 10, 509–525.
doi:10.1017/S147474721100045X
Lyons, A. C. (2005). Financial education and program
evaluation: Challenges and potentials for financial pro-
fessionals. Journal of Personal Finance, 4, 56–68.
Lyons, A. C., Chang, Y., & Scherpf, E. M. (2006). Trans-
lating financial education into behavior change for
low-income populations. Financial Counseling and
Planning, 17(2), 27–45.
Lyons, A. C., Palmer, L., Jayaratne, K., & Scherpf, E.
(2006). Are we making the grade? A national overview
of financial education and program evaluation. Journal
of Consumer Affairs, 40, 208–235. doi:10.1111/j.1745-
6606.2006.00056.x
Lyons, A. C., & Scherpf, E. (2004). Moving from
unbanked to banked: Evidence from the Money Smart
program. Financial Services Review, 13, 215–231.
Mallach, A. (2001). Home ownership education and counsel-
ing: Issues in research and definition. Retrieved from
https://www.philadelphiafed.org/community-development/
publications/discussion-papers/homeowner.pdf
Mandell, L. (2006). Financial literacy: If it’s so impor-
tant, why isn’t it improving? (Policy Brief No. 2006-
PB-08). Terre Haute: Indiana State University, Net-
works Financial Institute. Retrieved from http://
papers.ssrn.com/sol3/papers.cfm?abstract_id=923557
Manzi, J. (2012). Uncontrolled: The surprising payoff of
trial-and-error for business, politics, and society. New
York, NY: Basic Books.
Marcolin, S., & Abraham, A. (2006, September). Finan-
cial literacy research: Current literature and future
opportunities. Paper presented at the International Con-
ference of Contemporary Business, Leura, Australia.
Miller, W. R., & Rollnick, S. (1991). Motivational inter-
viewing: Preparing people to change addictive behav-
ior. New York, NY: Guilford.
Morgan, R. D. (2011). If not us, then who? Presidential
address. Psychological Services, 8, 140–150. doi:10.1037/
a0023727
Muller, L. A. (2001). Does retirement education teach
people to save pension distributions? Social Security
Bulletin, 64(4), 48–65.
National Endowment for Financial Education. (2004,
May). Motivating Americans to develop constructive
financial behaviors. Retrieved from http://www.usc.
edu/dept/chepa/IDApays/publications/motivating_
americans.pdf
Richards, K., & Thyer, B. (2011). Does individual devel-
opment account participation help the poor? A review.
 Financial Literacy Classes
Research on Social Work Practice, 21, 348–362.
doi:10.1177/1049731510395609
Schreiner, M., Clancy, M., & Sherraden, M. (2002). Sav-
ing performance in the American dream demonstration
(CSD Report 02-15). St. Louis, MO: Washington
University, Center for Social Development. Retrieved
from http://csd.wustl.edu/Publications/Documents/
ADDReport2002.pdf
Servon, L. J., & Kaestner, R. (2008). Consumer financial
literacy and the impact of online banking on the
financial behavior of lower-income bank customers.
Journal of Consumer Affairs, 42, 271–305. doi:10.1111/
j.1745-6606.2008.00108.x
Shockey, S. S., & Seiling, S. B. (2004). Moving into
action: Application of the transtheoretical model of
behavior change to financial education. Financial
Planning and Counseling, 1, 1–12.
203
Thaler, R. H., & Benartzi, S. (2004). Save more
tomorrow: Using behavioral economics to increase
employee saving. Journal of Political Economy, 112
(1, Pt. 2), S164–S187. doi:10.1086/380085
U.S. Department of the Treasury, Financial Literacy and
Education Commission. (2010). Why and how: Back-
ground report developing the 2011 national strategy.
Retrieved from http://www.treasury.gov/resource-
center/financial-education/Documents/National%20Startegy
%20Background.pdf
U.S. Federal Deposit Insurance Corporation. (2010).
Money Smart instructor-led curriculum for adults: A
financial education program. Retrieved from http://
www.fdic.gov/consumers/consumer/moneysmart
Willis, L. E. (2008). Evidence and ideology in assessing the
effectiveness of financial literacy education (Paper 206).
Retrieved from http://lsr.nellco.org/upenn_wps/206