Do Financial Literacy Classes Help? An Experimental Assessment in a Low-Income Population

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 = 17) or a wait-list control group (n = 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.