Report No. 1 of the Opportunity and Ownership Project. Financial services have become more free and accessible, but also increasingly complex. For new financial options to help most people, they must understand their options. Unfortunately, Americans have a weak grasp of basic finance. This paper emphasizes the importance of financial literacy and examines current financial education strategies. We explore two methods of financial education—broad financial curriculums and "teachable moments." After examining each, we suggest that a combination of the two perspectives, with the topics and strategies varying by target audience. We conclude by calling for a more rigorous evaluation of the effects of existing programs.

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.

Many financial education providers still do not have a basic level of evaluation capacity and are unable to identify program outcomes and design effective evaluation instruments. It is difficult to propose a national evaluation strategy without a basic understanding of current evaluation capacity and of the critical gaps in program evaluation. In addition, there has been little discussion about the challenges facing financial professionals and educators who are on the “front lines” delivering and evaluating programs. The purpose of this survey article is to address these critical gaps in the literature and to provide an overview of the current state of financial education and program evaluation. Using qualitative and quantitative data collected from financial professionals and educators nationwide, this study provides insight into what can be done to build national evaluation capacity and conduct more effective program evaluations.

Using the Surveys of Consumer Finance from 1989 to 2001, this study explores households' reasons for not having a checking account. Reasons have changed over time, shifting away from account features and toward human capital and institutional reasons. We also find that reasons for not having an account are related to income, race/ethnicity, marital status/gender, planning horizon, education, previous account experience, and credit history. We suggest potential responses for community educators, firms, and policy makers.

While interest in financial management training programs for low-income persons has grown in recent years, the specific training needs of low-income consumers have not been well articulated. This article describes needed training content for such audiences, based on review of previous research and the authors' experiences in evaluating the Financial Links for Low-Income People (FLLIP) program. We also illustrate how the choice of financial management training models can seriously impact the subgroups of the low-income population who attend training, as well as the success of programs in recruiting and graduating participants. The implications of these findings both for financial management curriculum development and for the selection of program models are presented.

angela lyons money smart evaluation

A previous issue of FYI analyzed the recent revolution in consumer lending and the implications for financial education; it also introduced Money Smart, the FDIC's own financial literacy curriculum.² This issue of FYI continues the discussion of financial literacy, focusing on the development and delivery of financial education programs from both a theoretical and practical perspective. Money Smart is presented as a case study, and the results of a new survey of Money Smart instructors are assessed.

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