Finex Webinar: Principles for Financial Education


Welcome and thank you for standing by. At this time, all participants are in a listen
only mode. At the end of today’s presentation. we will conduct a question-and-answer session. To ask a question, please press star one. Today’s conference is being recorded. If you have any objections
you may disconnect at this time. I would now like to turn the meeting over
to Ms. Irene Skricki. You may begin. Great, thank you very much and welcome everybody
to the FinEx monthly webinar today. I’m very excited that today our topic is a
newly released set of principles for effective financial
education that we’re very happy to share with everybody. And I am joined today by Janneke Ratcliffe,
who’s the assistant director for the Office of Financial Education, along with Maria Jaramillo,
Gen Melford, and of course myself, who will all be telling
you about these principles. So as we get started, we’ll do our usual disclaimer,
which is that this presentation is being made by CFPB representatives but it does not constitute
legal interpretation, guidance, or advice by the CFPB and any opinions or views stated
by the presenter are the presenters own and may not represent the
Bureau’s views. I think probably most of the folks on this
call know who we are, but I’ll just say a couple words to get us started about the CFPB. We’re a federal agency
that helps consumer finance markets work by making rules more effective, consistently
and fairly enforcing those rules, and empowering consumers to take
more control of their financial lives. And it’s that last part around helping consumers
manage their own financial lives, which is why we are here today
and why FinEx exists to help consumers. We do a number of tasks around that. Quickly, on our consumer facing side of the
Bureau, the consumer education and engagement division, we have several special population
offices, such as Students, Servicemember affairs, Older Americans,
and Financial Empowerment, dealing with economically vulnerable consumers and then Office of Financial
Education, who work on educating and empowering all consumers to make better informed financial
decisions. Probably most of you who are on this call
are part of the CFPB Financial Education exchange or FinEx. This is our mechanism to get our information
out to all of you who work with consumers on financial
decisions and to learn back from you through surveys, convenings, and other things what
you’re all learning and what’s working and not working
out there. So if you are not part of FinEx, and you would
know that if you are not getting the monthly FinEx news and updates email, through which
probably many of you learned about this webinar, to sign up all you need to do is email the
inbox [email protected] That’s [email protected] That will be up on the screen again later. So if any of you who are on this call do not
currently get the FinEx newsletter and want to get a monthly newsletter with information
about things like these principles, please do sign
up. We’d be thrilled to have you and what we do
is essentially we have webinars. Again, we have
convenings. We have a number of other opportunities for
you to learn from us and from us to learn from you. We have an inventory with all of our
tools and materials in one place, the Resource Inventory for Financial Educators, just a
screen shot up there on the screen. And then we also have a
webpage, which again has just about everything all in one place, consumerfinance.gov/adult-financial-education. And lastly, we have a LinkedIn discussion
group where we post our things and you can also post your materials as well, and so we
encourage people to join that. Again, there’s information about that on the
website. So that’s our usual starting point, just to
make sure everybody knows who we are and what we do. I’m very excited about today’s topic. Now, I start off every FinEx webinar by staying
I’m very excited about today’s topic but this time I really, really
mean it. And I’ll say why. This is actually our 25th webinar. We’ve been doing one very month for the last
two years, since May 2015. And our very
first one was on the definition of financial well-being, which you’ll hear a little bit
about today as well, which was a signature piece that then led to
a measurement tool around financial well being. And this is a kind of bookend on principles
to help people improve their well being. So this is how to implement the concepts underlying
financial well being. So I feel like our first and our current webinar
really nicely capture some of the things that we’re trying to do and we hope that a lot
of you are trying to do as well. The second reason I’m excited is that any
of you who were at the FinEx National Conference last September, and even those of you who
didn’t come but emailed us, may remember that we actually
listed strategies on how to implement these principles when they were still in a draft
form from people at that conference and then had practitioners,
hopefully some of you on the phone, actually vote on what they thought were the most important
or most promising of those strategies. And all of that is in the report that we’re
going to talk about today. So this is building on the work that we learned
not just from broader research, but also from directly talking to many of
you, and so we’re very excited to share this practitioner-derived work today. So those are my two reasons for
excitement and I will now turn it over to our assistant director, Janneke Ratcliffe,
to walk you through the principles and the goals — or at least start
us off and then we’ll move through the principles individually later. Great. All right, well thanks everyone for being
here. Thanks for that great setup, Irene. As you just heard from Irene,
we’ve just released the new paper but as she said, many of you have already heard about
these principles and actually even helped us shape them. So I want to talk first about why we put these
principles out. First, as Irene said, we’ve done a lot of
research into financial well being because we see that as the common goal of financial
education. Many of you have seen that research and have
asked us, what does it mean to my work. Well,
these principles are here to relate that research to everyday factors. Second, the principles demonstrate how financial
education can work by laying out the specific mechanisms that help people take particular
actions to improve their financial well being. And thirdly, we want to draw attention to
actual effective approaches. I should say that we take a very broad
view of what financial education is. It can take place in classrooms, through one-on-one
sessions or online. It can be delivered through peers or
through communication technologies and even from products that teach. We’re going to draw from lessons learned from
all of these approaches and more. Before I get to the principles, I want to
highlight that these principles are not to be confused with work that many
others have done, very valuable work, to identify what are the features of high quality financial
education. And actually these hold true for financial
education of any type, but they’re shown in a list here. We want to be sure you understand we affirm
the importance of all of these features. The principles are just meant to rest on top
of them. They’re
focused on supporting financial action. So what we mean by effective financial education
is not just delivering information, but rather offering
knowledge, and skills, and pathways that can help people take right action, whatever is
right for them. So we hope you’ll find these principles useful
in identifying promising strategies, in holding up against your own programs to show how your
programs fit this framework, and also possibly to give you
new insights for refining your efforts. Without further ado, here is a preview of
the principles. We’ll describe each in more detail later in
the call, but I’ll just review them now. First of
all, effective financial education starts by recognizing the real goals, the real opportunities,
and the real obstacles of the people you’re trying to
serve and then determining realistically what can be accomplished through educational efforts,
and then tailoring your program and defining what success
looks like accordingly. The second one says that when it comes to
money matters, information is more likely to stick if it’s actionable, relevant to the
consumer, and given at a point in time when it could be most used. The third principle points to the importance
of skills, what we call the how to. We’ve identified a
specific set of skills that seem to matter most and could be transferable to all financial
decisions that a consumer might face. The fourth principle
talks about motivation and this is useful in those cases when a person may have all
the know-how and the opportunity to do a thing but just needs some
help strengthening that motivational muscle. And then finally, the fifth principle is one
that’s just emerging in this field. It says find ways to make it easier for people
to make good decisions and follow through on them. As a simple example, you go through a lot
of effort to help a client build knowledge, and skills, and motivation, say, about
something like paying bills. Well, signing up for automatic reminders then
can help put that know-how into action by really help supporting them in
making consistent timely debt payments even after the educational sessions are over. So that’s one example and you’ll find many
more examples later and in the paper. In this paper, you can read more about the
principles and we’ve also looked to a lot of research that provides
evidence that show how these different principles work and includes all the rich examples we
got from financial educators such as yourselves. So before I turn it over to Gen Melford, we
will continue to see and value your input and your help in getting the message
out about how fin ed can make a big difference in people’s lives and I want to thank you
for how you’ve already contributed and how you will continue
to do the great work you do. And now, turning it over to Gen. Great. And actually, this is Irene. I’m going to say one thing first, one housekeeping
item or two actually. One is that we’ve already
had requests from people who would like to see the PowerPoint deck and we can send it
out to you afterwards. We’re happy to do that but you do need to
email me at the CFPB FinEx inbox, [email protected] If you just request through the WebEx, I lose
those email addresses once the webinar is over. So just you’ll see the address again, but
email me if you want the PowerPoint. We also will be posting the recording of this. And the principles, the report that Janneke
mentioned along with the two page summary you see up on the screen are available on
our website already. The URL is there. Again, you can see it afterwards so we hope
all of you have a chance to read that as well. o now, let’s go — and by the way, we’ll hold
voice questions until the end, but if you have any other clarifying questions, we’re
checking the Q&A function on the WebEx for those of
you on the WebEx. So now, I will turn it over to Genevieve to
give us a little more background before we dive deeper into the principles. Thanks, Irene and thanks Janneke for that
lovely setup. So for the next few slides, I’m going to talk
a bit about how we developed these five principles. And as Janneke mentioned, and as Irene teed
up from 25 webinars ago, the starting point for this report is really
what we’ve learned over the past five years about financial wellbeing, what it is, what
factors allow someone to have more of it, and finally, what
those factors imply about how financial educators can help consumers, which is where today brings
us, which is so exciting. So just to tee us up super quickly, through
open ended one-on-one interviews with consumers around the United States, we learned that
financial well-being has four elements, which correspond to a person’s
sense of financial security and financial freedom of choice, both in the present and
when considering the future. So I just want to orient us to that’s the
north star for our work and certainly for these principles. But I’ve talked a lot about this work
in the past and have entire reports just on this definition, and so I will not belabor
it now. And so the next step in our project after
we talked with consumers and really got a better and more precise handle on what financial
well being is was to research the factors, both personal and
situational, that support higher levels of financial well being, and we need to know
that so that we can design and promote financial education approaches
with those factors in mind. And what we found suggests that a person’s
level of financial well being is influenced by a number of factors. Most proximally, kind of on the right hand
side of this picture that’s on the screen, it’s by what people do. The actions they take as well by what options,
opportunities, and resources are available to them. And as we move to the left of the picture,
more in the middle, behavior — what someone does — given a certain level of opportunity
is then influenced by a combination of knowledge and skill, personality and attitudes, and
decision context. And by decision context, I’m referring to
the social psychology literature on the power
of the situation to influence behavior and choices, which we’ll describe in much more
detail when we talk about principle five which Janneke did touch on
briefly. This is the how can a situation make it easier
for people to make a good decision and follow through. So kind of recognizing the power of the situation
in that. And all of these factors are influenced by
people’s current and past social and economic environment. Our research during this phase led to the
development of insights about the specific types of behavior,
knowledge, and personal attributes that seem to support financial well-being given a certain
level of opportunity. We then applied all of those findings to thinking
about how financial educators can help consumers take those financial actions that will
serve the consumers’ life goals. And by the way, this diagram usually does
have lines in between those sections, but they don’t appear here, but try to picture
them. You’ll see it correctly in the report. So as a first step of going from those insights
about how do things work in consumers’ lives to what can financial educators
do with that information to support consumers. The first thing we did to try to bridge that
gap was to distill our findings down to a model that you see
on this slide of what allows a consumer to take a specific financial action. So we went from the whole big picture of someone’s
entire life and financial life down to, okay, what does that mean about supporting a specific
financial decision or action, such as taking steps toward improving their credit, or reducing
debt, or saving to buy a home. So first, a person needs
to know how to do it. That’s their knowledge and skills, which we
call know-how in the top circle there. But know-how alone is just one’s potential
to act and to make it more likely that a person
will act on that knowledge, they need both the motivation, which is related to attitudes
and beliefs about the value of taking the action, as well as
attitudes and beliefs about one’s ability to succeed at it. And also, the opportunity to actually take
the action. And in our model, opportunity may include
both the material opportunity to take an action, like whether or not someone’s employer offers
a retirement savings plan, right. That’s something that they have no control
over and either they have that option or they don’t. But also a decision context
conducive to doing so, such as how easy is it to sign up for a benefit that does exist. So that’s another way to think about opportunity. Opportunity
is both does it exist and then also how easy or hard is it to access. This is my concluding piece on how we got
here before we turn it over to the principles themselves. So the broad strokes of these five principles
came from this research I’ve just been describing
at a very high level into the factors that support financial well-being and financial
action taking. The
principles touch on knowledge, skills, motivation, and opportunity, which are all of the elements
of our model of financial action. And then to both refine and flesh out the
principles with examples of how to actually implement them, we did three things — consult
with leading financial education stakeholders. We broadly scanned existing financial education
program evaluation and related research to find implementation approaches that
have been demonstrated to be effective, and each principle you’ll hear about all the kind
research-based practices. And then just as importantly, through
a FinEx convening last fall, we invited practitioners from around the country, which probably included
many of you on the phone now, so we thank you for
that, to provide feedback on the principles and to share and vote on recommendations for
putting the principles into practice, which are included throughout
this report and in their entirety in an appendix. So that’s how we got from learning about financial
well-being, which we started to do five years ago, to really being able to offer some recommendations
about what financial educators — and how — and really to be able to communicate, as
Janneke said, about how financial education can make a really big
difference in people’s lives. With that, I’ll turn it over to Irene to start
our deeper dive into each of the principles. Great, thank you very much. So what we’re going to do now is we’re going
to go through each of the five principles. I will summarize
the principle very quickly and then Maria Jaramillo, our other staff member here, will
give a little more detail about the research behind the principle
and the practitioner strategies that we heard from our solicitation of educators at the
FinEx Conference that we mentioned a couple times. So that’s
what we’ll do for each of the five principles. So first, again, and you heard the high level
before, but financial education programs can be more effective if they are matched to an
individual specific challenges, goals and circumstances rather
than adopting a one-size-fits-all approach — so principle one. The very definition of individual financial
well-being that Gen reviewed earlier is inherently subjective. It’s going to differ from consumer to consumer
depending on their goals, their circumstances, their challenges and therefore it really stands
to reason that rather than treating financial education as
a one-size-fits-all, interventions need to be matched to an individual specific challenges,
goals, and circumstances in order to make a meaningful difference
to them. And so that’s what this principle is about
is understanding who it is that you’re serving and using this approach can also help you
really understand the right level of expectations
for the impact of financial education effort that you’re doing. So with that, I am going to turn it over to
Maria to say a little bit more about principle one. Thank you, Irene. So one way in which you can meet individuals
and families where they are is by understanding their goals
and motivations, and their barriers to take action. The model of financial action which you see
on the screen can be used as a diagnostic tool to
identify what challenges are getting in the way of your customers achieving their financial
goals. For example, you can start by identifying
what is it that your customer wants to achieve, what
are their financial objectives, and what are the actions they need to take. For example, let’s say buying
a house. You can go through the model and ask does
your customer have the knowledge they need to take the desired action? How much information it needed
and how do we link the information we’ll provide to the desired action or financial goal. We can then inquire if the customer has the
skills or if they know how to do the things or how to take the steps needed to achieve
that desired goal. You can then ask if your customer feels confident
in knowing how to take the steps or confident in how to do the things effectively and if
they believe that doing these things is valuable. Lastly, you can inquire if your customer has
the opportunity to apply their knowhow or if they will encounter a decision context
that is conducive to taking the actions or implementing the financial
behaviors they desire to have. Answers to these questions can help you identify
what gaps exist in the journey of your clients as they try to improve their financial well
being or what are the obstacles that are getting in the
way to achieve their desired financial goals. Another way in which you can understand the
goals, motivations, and barriers clients face to take financial
action is by using the financial well being scale. The scale can be used to establish a baseline
understanding of your clients’ current financial well-being. The scale can help you identify how safe and
satisfied the client is with the way they’re managing their money and their financial standing. Next slide. And Maria, before you do that, I do want to
note — somebody asked me if the questions you were describing, which are not on the
slides, were available somewhere. It turns out they are in the report. So those specific diagnostic questions Maria
was just speaking of, if you go to the full report you will see them. Oh, look. The person answered yay. Okay, now we’ll go to the next slide. Okay. So to further develop the principles, as Irene
mentioned, we scanned the growing body of financial education program evaluation
and related research. And based on this analysis, we identified
programs and approaches that have put the ideas ‘were presenting in the principles into
practice and that have been the most rated to be effective. So for principle one, we’ve identified that
starting with a needs assessment can lead to better results. For example, workforce financial education
program used a pre-test to assess the needs of employees. They then adapted the program content to the
identified needs and interests and the succeeded in increasing the likelihood of employees
starting or updating a budget, increasing retirement contributions, and deceasing negative
financial behavior, such as late bill payments. We also identified a personalized approaches
like financial coaching can have positive results, helping individuals improve their
financial well being based on their particular needs and goals. And also, all the studies that Maria is referencing
are also in the report fully footnoted. So you’ll be able to see all that if you like. And then through the convening of the CFPB
financial education exchange, we invited last October financial education practitioners
from around the country to provide feedback on
the principles. Some of the strategies they shared with us
for putting principle one into practice included focus on client driven goals, in one-on-one
engagements, practice active listening, avoid judgment, connect with individuals served,
and be empathetic. There’s a little bit more detail on some of
those in the report. So now, we turn to principle two, which is
provide actionable relevant and timely information, and I think all of
us would say I think that knowledge is absolutely critical to financial decisions and to financial
education. The question really is what kind of knowledge. What kind of knowledge works and how do we
best deliver financial knowledge and content in a way that can
improve actual decision making and behaviors. And so these three characteristics are the
elements that our research showed were important. First, something that’s actionable, meaning
something that people can really take action on — what people
need to take action is have specific details on what they need to do. And so information that’s delivered
to consumers is most effective when it’s highly actionable, including concrete steps needed
to achieve the goals. Secondly, information that’s relevant is important
so people are more likely to pay attention to or absorb information if it connected to
an upcoming decision or to their motivation to achieve
something. And then thirdly, timely. Financial information is often delivered in
some cases too far away from the point in time when someone is going
to use it and people forget. The information fades over time and so the
extent to which it can be delivered as close to the point where it will be implemented
is important. So that’s the essence of principle two and
I will turn it to Maria to say a little bit more about that. Great. So an example of an approach that puts this
principle into practice is housing counseling. Several studies have shown the
effectiveness of housing counseling in supporting sustained homeownership by relating knowledge
to a decision or goal, for example by providing information
about home buying, interest rates, mortgages, and repayment options at the time a person
is contemplating buying a home. Using technology can be effective to deliver
information in small, easily digestible, and timely increments. A study evaluated the impact of a text
messaging campaign aimed at decreasing the percentage of students planning to go to college
but they never actually enroll in the fall. High school
graduates that intend to go to college and their parents receive text message reminders
of college related tasks delivered right near the task deadline
and the campaign increased college enrollment. And then pointing people to concrete, actionable,
and easy to manage steps can help people translate intentions into actions. Next slide. Some of the
strategies practitioners shared with us for putting principle two into practice include
breakdown financial goals into smaller steps meet people where
they are, connect information to individual financial goals, customize or personalize
information. Thank you, Maria. Now, turning to principle three. Principle three is improve key financial skills. Again, something everybody I think
is doing in financial education is trying to help people figure out the skills they
need to move forward. Our research shows that it’s really important
that there be this action component so that people know what to do with the information
that they have. And here, the key components are really having
people know when and how to find reliable information, to know where to start looking
for the information that they need to make a financial decision. And that could come from advice from an experienced
friend, getting multiple quotes for a mortgage, getting
professional investment advice, looking at the right website, but knowing how to find
that information is important. Secondly, knowing how to process the financial
information to make sound financial decisions, so knowing how to actually work with the numbers
to figure out what the right car loan would be to fit
in their budget. People need to know how to do that. And then lastly, they need to know how to
actually execute the financial decisions and stick
to their financial plans over the long-term and adjust those plans as necessary. So all of those are types of skills, knowing
how to find the information, how to use it, and how to act on it that is key to this principle
number three. Maria, tell us more? So in our research, we identified that financial
counseling can support learning skills to successfully take or stick without familiar
or difficult actions. A study done by the World Bank Group concluded
that individualized financial counseling helped participants undertake difficult
actions or tasks they had not done before, such as regularly preparing a budget or opening
a bank savings account. Opportunities to practice financial behaviors
with specialized financial products can help build skills. Rigorous studies have found that individual
development accounts, or IDAs, have been effective in fostering savings behavior among households
with little prior history of formal savings. We also
found that teaching people to use if then plans and to piggyback desired behaviors on
existing routines can improve follow-through and instill new habits. In and if then plan, an individual identifies
likely opportunities or obstacles and then specifies what they will do when the opportunity
or obstacle arises. This makes it more likely that the person
will seize opportunities and not be deterred by obstacles. Simplified memorable and actionable guidelines
can help people learn new ways of managing money. A study performed under contract with the
CFPB sent catchy email messages to people who carried
debt on their credit card from month-to-month encouraging them to use cash instead of credit
for purchases under $20. The simple messages were found to modestly
reduce the participants’ revolving debt on their credit card at a very low cost to implement. If anyone wants to know more about that, our
January webinar was on that managing credit card spending topic that Maria just mentioned. And then some of the strategies that practitioners
shared with us for putting principle three into practice included provide opportunities
to practice and experience, use technology like expense trackers, goal trackers, or online
coaching, to help build skills, deliver information, and
maintain intention and follow through. Use simulation and experiential learning. Let people practice making financial choices
and experience consequences in a safe environment and help
people learn about how and why to do research. Demonstrate the value proposition of comparison-shopping,
for example, that the time that people use to compare products will result in savings. Okay, now we’re up to principle four, gaining
momentum here. Principle four is build on motivation. So personal characteristics and
traits, which we collectively refer to here as motivation also influence behavior. They influence it both directly but also play
a role in mediating the connection between knowledge and behavior. Our research points to specific types of motivation
that programs, financial education programs can help
to build in order to effectively improve financial well-being. These include internal frame of reference. So how do you judge your own success? Do you compare yourself to others or measure
yourself by your own yardstick? And here’s where you can help consumers focus
on making financial decisions in light of their own standards and values rather than
in comparison to others. It is important to mention too that one’s
internal frame of reference comes from people’s own values, which are influenced by their
families, communities, and culture. That’s all part of that. Secondly, another trait or aspect of this
motivation principle is perseverance. Are you able to weather challenges and stay
focused on goals? And here’s
where you can help consumers to stay motivated and stay on track in the face of obstacles
and carry on when you are running into problems. And then lastly, the confidence to take action,
also known as financial self-efficacy. Here’s where you can support consumer’s belief
that they are capable of influencing their financial outcomes
and achieve the goals they set out for themselves. And that the actions necessary to do so are
appropriate and possible for them to carry out. So you’re more likely to try to do something
if you believe you can be successful at it. I know I’ve heard a lot of financial educators
talk about that financial confidence. So that’s what goes into principle four and
Maria will say a few things about the research behind that. So what we have identified is that framing
financial decisions to highlight its connection to a personal goal can help inspire people
to take action. A study had social workers seal a targeted
amount of savings in an envelope to encourage participants saving for the long-term. The
social workers put the savings of some households in blank envelopes and the savings of other
households in envelopes that had the pictures of the
household’s children. Those who had savings in an envelope with
pictures were less likely to open and spend the money than those who had savings in a
blank envelope. Financial coaching helps people tap into their
own strengths and work towards their goals while building self-efficacy. A rigorous evaluation of financial
coaching programs contracted by the CFPB found that coaching can help improve various aspects
of financial wellbeing. For example, on average, people
offered access to coaching increased savings, reduced debt, increased credit scores, and
were more likely to pay bills on time. Successive small victories with tangible results
can keep people motivated for the long haul. In the case of paying off debt, for example,
there is some evidence that people may be more successful
in becoming debt free if they pay off debts from smallest to largest rather than focusing
on paying all debt simultaneously or paying off higher interest
rate debts first. The strategies believed to work by giving
people a greater sense of accomplishment and progress on their way to reaching a larger
goal. Implementation planning can help people take
the steps needed to accomplish a goal by spelling out in advance the when, where, and how of
what they will do to reach that goal. A study found that self-employed individuals
who engage in implementation planning such as filling out a tax preparation worksheet
before going to a tax preparation session, received substantially larger refunds on average
than those in a control group. And finally, peer support programs connect
participants to a peer group in which members are encouraged to share their experiences
and challenges with one another. Participants may derive support from the group
setting, while also feeling a certain degree of accountability for results. Next slide. Then talking about what practitioners shared
with us in terms of strategies for putting principle four into practice is included — celebrate
success. Find out what motivates the person you’re
serving. Start with one thing. Get one thing done in the first interaction
with a participant such as getting the person’s credit report because
it helps the person feel the satisfaction of accomplishing something, taking the first
step. And finally,
use reminders.. Great. And here we are on principle five, make it
easy to make good decisions and follow through. This one is really in some ways the
hardest to describe. We’ve referenced it a couple times before,
both Janneke, and Gen, and I think possibly Maria have mentioned it, and we’ve — but
it’s really, really important and so we wanted to make sure that this stayed part of our
principles. And this is the idea that the situations that
people encounter really influence what they actually do. So our actions are driven not only by our
own goals and behaviors, but also by the conditions
under which we make decisions, often referred to as the decision context. It’s a term some of you may
have heard before. The environment can both in some cases influence
you to make decisions that might not be the one you want to make, and in other cases
the environment can make it easier for people to make a sound choice that will serve them
well, even if they don’t necessarily proactively choose that
choice. And so what’s important here is that financial
educators can help consumers to act in support of their goals and learn to navigate those
influences or forces that are actually in their surroundings. While some of those situational forces are
of the decision context, as we say, lie outside of a person’s
control, there’s some that can be adjusted or titled to help the consumer. For example, an educator can help set up a
savings account that is harder to pull money out of if the consumer is trying
to save and wants to do that. They can help people line up due dates of
recurring bills with someone’s paycheck. You can set up automated reminders, help people
setup automatic deductions to save towards the goal. Those are ways in which people can help
manage their own decision context to make things easier. So we’ll say a couple more things about this. For a financial educator, the things that
you can do is you can also use it to make your own program easier
to access. You can make it easier to get financial education. It could be as straightforward as choosing
convenient times and locations for people, lowering any sort of barrier, making it easier
to get into the program initially, better understanding what challenges people are facing
when they drop out, and understand how to help keep people
in financial education. So those are things you can do within your
own program. Secondly, as I mentioned earlier, you can
help people be aware of and navigate the environment. So even if there is aspects of the decision
context that someone can’t directly change, being aware
and understanding how the context is helping or hurting you can help a consumer better
make their way through it and find out ways to overcome challenges
in that regard. And then lastly, you can also build financial
education into the offering and use of products for those of you who might be at, say, a finance
institution or in some other way involved in products. The financial transactions themselves can
present opportunities for learning, whether it’s sending an email about homebuyer counseling
to someone seeking a mortgage, or teaching someone how to manage
their first bank account, you can bundle financial education with use of products. It’s another way to
build it into the very decision context. And even the very small things can make a
difference, changing the way options are presented, or how they’re framed arranged, no cost to
that but it may actually impact how people make a decision,
removing obstacles that get in the way, and offering other support that can help people
bridge the gap between their intentions and actions. And I’ll just say one more thing on the next
slide — there’s a lot of interesting literature out here about this, but it helps for you
as an educator to understand the tendencies that people have
and the way people respond to the environment around them that can influence how they make
choices. So
understanding things like how people are easily derailed by hassle. Giving someone a long form to fill out may
cause them to not do it and not show up at your program. Or people may stick with the easiest decision
because it’s difficult to make a proactive decision and so defaults matter, what happens
when someone doesn’t decide matters. Present bias, where people are more focused
on the present than the future. Mental accounting where you may see money
differently depending on how you planned to spend it and attention to salient
information. It took me years to learn what salient meant,
but it means what is really in front of you, what’s the most obvious. And so people may miss disclosures buried
in small print. Knowing all of these things can help you structure
programs and help people navigate that going forward. So that was a long introduction but Maria
will say a few more things about this and we’ll
have gone through all the principles. So in regards to what we know about what works
in the decision context, we have found that studies of programs that embed financial
education into mandatory training for army enlistees into the workplace and into programs
for employment training and income assistance for low income
job seekers. They have demonstrated positive financial
outcomes when compared to similar groups that did not receive financial education as part
of the training or service delivery. Making it easy to access products that support
the person’s goals can also be effective. A Washington, DC youth employment program
made it simple for youth participating in the jobs program
to open accounts and set up automated savings transfers. An important percentage of participants opened
new accounts, signed up for the direct deposit of their paychecks, and for the automatic
savings feature. A study compared enrollment rates in a 401(k)
plan for employees who were given the option to sign up for the program when hired that
is the program was presented as an opt-in option with those
employees who were automatically enrolled in the program and instead could choose to
opt out of the program. Taking advantage of the tendency toward inertia,
the status quo bias, which Irene mentioned, automatic enrollment resulted in significantly
higher participation rates. The Save for Tomorrow or Smart program gave
employees the option to commit in advance to allocate some of their future pay increases
toward retirement savings. The average savings rate for the program participants
increased substantially. By not reducing employee’s current income,
the Smart program avoided present bias. It also helped employees overcome hassle factors
and inertia by enabling them to sign up in advance immediately after learning
about the program and three months before their next paycheck increase. With regards to presenting information to
promote healthier financial decisions, we identify that heightening the salience of
key information can have a positive impact. For example, by presenting different information
about payday loan costs prominently to different borrowers on a randomly assigned
basis, researchers found that certain information such as the total dollar cost can add up over
time, reduce borrowing. A different study also found that simple text
message reminders were as effective as financial incentives at helping consumers make their
loan payments on time. And then onto the next slide, the strategies
practitioners shared for putting principle five into practice included — make it simple
and automatic. Embed financial education with other programs,
products, or services. Change the perception of financial education
training to make it valuable. For example, reframe the incentives or financial
rewards people will receive when participating in a program so that this would be more likely
to be valued, such as present missed opportunities as a loss. And finally, do a process map of your program
and of your program decision points to figure out where there is participant drop off. Analyze what could
be changed to maintain engagement and follow through. Great. So that was the five principles. You’ve been very patient. You’ve been listening for a long time. We’re going to do two other things
very quickly and then we’ll open up to your questions. But I just want to note again, if you have
questions or thoughts you can send them through the
Q&A function if you want to do that now or we’ll open up for voice questions in just
a minute. We just wanted to really quickly show you
some of the Bureau resources that support these principles. Many tools will cut across different principles. But just to give you a flavor of how you can
think about tools that support the principles, first, for principle one, know the individual
to be served. We have several things particularly to help
immigrant populations and people of limited English proficiency, and newcomers to the
financial system. It could be newcomers to the country, it could
be young workers. Our newcomers guides, of which there are four
up on the screen there along with our paper on financial education program serving
immigrants, are both examples of tools that are targeted to particular needs and challenges
of specific populations. For principle two, provide timely, relevant,
actionable information, we would just note things we have include the explore interest
rates tool, which gives people real-time, updated daily, mortgage
interest rates for people in their approximate situation and ZIP code, again, to help people
understand if they’re getting a mortgage rate that sounds
like it’s like what other folks like them are getting. And also for someone, for example, who might
have a credit issue, want to improve their credit we have a number of one pagers like
the one you see here, how to rebuild your credit, that can give
very actionable steps on how to improve your credit history. For principle three, improve key financial
skills, we have things like the comparing auto loans worksheet, which actually helps
people to compare different car loan choices through a worksheet
the emphasizes total cost and different terms of different loans to help people make an
informed choice and practice the skills of comparison shopping. And also, we have a budgeting worksheet called
My New Money Goal, which helps people figure out how they can actually meet a savings goal
or other money goal through their budget and that worksheet
helps people to do that. Again, it’s a skill building opportunity For build on motivation, we have resources
for financial coaches. Coaching is a classic way of motivating people
by holding them accountable and working with them on their individual goals. We have resources for how to implement financial
coaching through a report on that topic, as well as things like
the financial rules to live by worksheets, which is a suite of currently four worksheets
that consumers can use to set a goal for themselves around
spending, or savings, or checking their credit report, write out an action plan and sign
on it. It’s on the back of the sheets. You can’t see it here. Again, to motivate and then hold yourself
accountable to meeting your own goals. And then for principle five, make it easy
to make good decisions and follow through principle. Our managing spending worksheet provides suggestions
for consumers on how to get real-time feedback
or close to real-time feedback on their spending so they can know in the moment whether the
next purchase they want to make fits into their spending. And so that’s understanding the context of
their decision in the moment and that worksheet has thoughts on that. And then lastly, we have tax time savings
resources. That’s a moment in time when people are getting
money, making money decisions. They have money
coming in, in some cases, if you’re getting a refund. And we have worksheets to help encourage people
to put some of that refund into savings if it
meets their goal. That’s another example of making a decision
easier by allowing you to save automatically. So those are just quick examples of how our
tools fit. There are many other things out there that
we have, as well as lots of other organizations, things
you all use that would probably fit well into these different principles. Just quickly, someone asked via the Q&A that
these forms or worksheets look great. Are they available on your website? And the answer is absolutely. Absolutely everything you see today is available
on our website. Someone else asked for the link to report. We’ll put up the link to the website in just
a minute. So we just wanted to show you those tools
to see how some of the things we have map onto the principles. We’re going to have one more slide by Genevieve
about how to measure all this and then we will open it up to questions and comments. So Genevieve? Thank you, yes. Our last content slide here. Hi, everyone. So before we conclude the presentation and
get into the Q&A, I did just want to say a quick word about advancing
effectiveness in our field through measurement and this is the concluding section of the
report too. So I’m
going to talk about this at a really high level and if any of this intrigues you, feel
free to ask questions in the Q&A but also there’s more detail on
all of these approaches in the report as well. The whole purpose of this report and these
principles that we’ve been talking about today is to promote and help us all communicate
about effectiveness in financial education. And if we as a field are going to continue
to advance our collective understanding of what works, we need to have a way to measure
and communicate the effectiveness of different programs and approaches going forward. So we wouldn’t be able to be presenting you
with all of these tested and demonstrated strategies today if someone had not already
gone to the trouble of doing the measurement and doing the research
to demonstrate that it works and we’re grateful to everyone who’s ever done that, which is
probably many of you as well. In the report, we lay out three potential
approaches to this type of measurement. They’re shown here on the screen labeled 1,
2, 3 and also the possibility of integrating all three approaches to describe
and measure a full programmatic theory of change. So the approaches are first, focusing on measuring
the specific effects a given program is intended
to have related to the model of financial action, such as changes to know how, motivation,
or opportunity to take a specific action. And that’s very program specific. That would be very much thinking about my
particular program is explicitly trying to support
action through changing strengthening the motivation muscle through teaching new and
timely, relevant, actionable information, et cetera. Whatever it is
that very specific program is doing, this would be an approach to kind of tracking that
in a very specific way around interim changes and is that supporting
consumer action-taking. The second approach would be measuring a common
set of core outcome metrics that be designed for use across a range of different programs
and strategies, and several different ones have been proposed
over the last few years. You may have heard of the financial capability
scale. You may have heard of CSFI’s
financial health work. The CFPB actually very recently, just last
month from our Office of Financial Empowerment, put out a recommended set of five core
outcomes that could be broadly relevant across all kinds of financial empowerment programs
with suggested metrics. So all of those citations that I just said
are in the report, but those are all examples of rather than focusing on the really specific
details of one intervention, thinking more about what’s a
common set of metrics across programs. Personally, I would recommend doing both and
combining it with the third. That’s my preferred approach but these are
all options. And then the final one would be measuring
the ultimate and common goal of all financial education strategies, which we believe to
be improvement in financial well-being. And we think at the CFPB have developed a
short and simple tool to measure individual financial well-being, which is available on
our website. So you
could do the full theory of change from I’m helping strengthen the motivation muscle,
the downstream effect on financial health and capabilities, the
following, then ultimately, improvements in financial well-being. You could do all of those things or choose
one or more of those approaches. So I will leave that there and happy to discuss
any of those later and I will turn it to Irene now for the Q&A. Thank you. Great. Well, thank you everybody. That was a lot of listening. We appreciate all of you who have stayed with
us through all of this. So what we’re going to do now is turn to — we’ve
got a few minutes for questions, comments, thoughts. I’ll just note that I put up on the screen
now, in particular the middle line there, sign
up for FinEx. But also, if you want the slides, again, email
[email protected] and I can send you the slide
deck after the webinar so you can see all that. Also almost all the resources we put up today
you could get on the adult financial education page. That URL is up there. I will admit, though, that the
principles paper is not there yet because it only came out last week and we haven’t
yet gotten it up onto that page. So you may have to just go to our
main page and put into the search function “principles” and it will come up. But it will get up there eventually. So let’s open up for questions. Operator, can you tell people how to ask voice
questions and then I’ll also be reading a couple questions we’ve gotten
via the Q&A function. Yes, at this time if you would like to ask
question, please press star one. Please unmute your phone and record your first
and last name clearly when prompted. Your name is required to introduce your question. To withdraw your question you may press star
two. Once again at this time,
if you would like to ask a question please press star one. Great. Okay, so what I’m going to do is read the
one question we’ve gotten through Q&A while people potentially are requesting to do a
voice question and this is a very interesting question and not an easy one. Selma has asked, is there any research done
by the CFPB around limiting beliefs. Given the population we serve, we find that
limiting beliefs is choking all the motivations, inspirations, and incentives we offer. Wow, powerful statement. So people having beliefs, I assume that they
can’t succeed or don’t have access or whatever. So do we have anything to say on that? Everyone is shaking their heads very hard. It’s a very interesting and valuable question. What we’re doing is looking at a little bit
about the emotions around money and how family and friends influence your financial
decisions but we haven’t looked at limiting beliefs. I think it’s a really good point. This is Gen. The only thing I’ll add that I think might
be related is that a number of our kind of research scans indicate that
helping people experience success, sort of the ability of simulations or real world experiential
learning to help people increase their financial self-efficacy may be a good strategy. So options could include kind of showing people
that people like them have accomplished these things. That might
make it seem more feasible, these peer group settings where people’s peers talk about how
they have accomplished these things and then it can seem like
oh, well, these people are like me. They did it. Maybe I can too and then the other option
being helping — sort of holding their hand through actually
successfully completing a financial action could be a way to boost their self-efficacy
as well. I think also this idea of small gains and
then rewarding success, even if it’s small and they’re little steps. Great. Okay, let me ask, operator, do we have any
voice questions? I’m currently showing no questions on the
phone line. And any of you who see the chat, I of course
had a typo in my attempt to send out the link to somebody so I’m sending out the correct
link now. There was something missing. There, if anyone is looking at that. That should work hopefully. I don’t have any other Q&A questions and we’re
two minutes to close. So I want to thank everybody — again, I know
this was an unusually content heavy webinar. I hope it was useful. Just to add to what
Janneke had said at the beginning, we really hope that this is something that these principles
and all the research and practitioner strategies — and
there’s actually more practitioner strategies in the appendix of the report than even was
shown in the webinar — we hope that all of that is useful to you. It’s a starting point for us. We are eager to get feedback on the principles,
to hear what you have to say, to think about additional strategies, to
think about how to add to all of this. Someone says that link didn’t work either. Okay, my final suggestion is go to our consumerfinance.gov
website and put in effective financial education in
the search bar. Apparently, I cannot type in the link correctly. My apologies. I know it is up there. I printed it out today. But we really hope that this is a starting
point for everyone. We’re very eager to hear more. So feel free to email the FinEx inbox, [email protected]
to get the PowerPoint or to ask any questions. We urge you to read the whole report. There’s actually a lot of interesting stuff
in there. I re-read it last night and I was like this
is pretty darn interesting. So I want to thank all
the speakers, Genevieve, Maria, and Janneke and everyone who has been on the call, and
we will end right now. Thanks again everybody. Thank you for participating in today’s conference. All lines may disconnect at this time.

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