IDEAS home Printed from https://ideas.repec.org/a/kap/jfamec/v37y2016i4d10.1007_s10834-015-9475-y.html
   My bibliography  Save this article

Financial Education is not Enough: Millennials May Need Financial Capability to Demonstrate Healthier Financial Behaviors

Author

Listed:
  • Terri Friedline

    () (University of Kansas)

  • Stacia West

    () (University of Kansas)

Abstract

Abstract Financial education sans opportunities for hands-on experience and knowledge operationalization may be insufficient for promoting healthy financial behaviors. Financial capability combines financial education with financial inclusion via a savings account, thereby giving an opportunity translate knowledge into practice. This study used data from the 2012 National Financial Capability Study to examine relationships between the financial capability and financial behaviors of United States Millennials (N = 6865). Compared to their financially excluded peers, Millennials who were financially capable were 176 % more likely to afford unexpected expenses, 224 % more likely to save for emergencies, 21 % less likely to use alternative financial services, and 30 % less likely to carry burdensome debt. Interventions that focus solely on financial education or inclusion may be insufficient for facilitating Millennials’ healthy financial behaviors; interventions should instead develop financial capability.

Suggested Citation

  • Terri Friedline & Stacia West, 2016. "Financial Education is not Enough: Millennials May Need Financial Capability to Demonstrate Healthier Financial Behaviors," Journal of Family and Economic Issues, Springer, vol. 37(4), pages 649-671, December.
  • Handle: RePEc:kap:jfamec:v:37:y:2016:i:4:d:10.1007_s10834-015-9475-y
    DOI: 10.1007/s10834-015-9475-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10834-015-9475-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Clinton Gudmunson & Sharon Danes, 2011. "Family Financial Socialization: Theory and Critical Review," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 644-667, December.
    2. Daniel Fernandes & John G. Lynch & Richard G. Netemeyer, 2014. "Financial Literacy, Financial Education, and Downstream Financial Behaviors," Management Science, INFORMS, vol. 60(8), pages 1861-1883, August.
    3. Bernheim, B. Douglas & Garrett, Daniel M. & Maki, Dean M., 2001. "Education and saving:: The long-term effects of high school financial curriculum mandates," Journal of Public Economics, Elsevier, vol. 80(3), pages 435-465, June.
    4. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    5. Grinstein-Weiss, Michal & Spader, Jonathan & Yeo, Yeong Hun & Taylor, Andréa & Books Freeze, Elizabeth, 2011. "Parental transfer of financial knowledge and later credit outcomes among low- and moderate-income homeowners," Children and Youth Services Review, Elsevier, vol. 33(1), pages 78-85, January.
    6. Terri Friedline & Mary Rauktis, 2014. "Young People Are the Front Lines of Financial Inclusion: A Review of 45 Years of Research," Journal of Consumer Affairs, Wiley Blackwell, vol. 48(3), pages 535-602, October.
    7. Janet Currie & Enrico Moretti, 2003. "Mother's Education and the Intergenerational Transmission of Human Capital: Evidence from College Openings," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1495-1532.
    8. Garbinsky, Emily N. & Klesse, Anne-Kathrin & Aaker, Jennifer, 2014. "Money in the Bank: Feeling Powerful Increases Saving," Research Papers 2146, Stanford University, Graduate School of Business.
    9. Mason, Lisa Reyes & Nam, Yunju & Clancy, Margaret & Kim, Youngmi & Loke, Vernon, 2010. "Child Development Accounts and saving for children's future: Do financial incentives matter?," Children and Youth Services Review, Elsevier, vol. 32(11), pages 1570-1576, November.
    10. Mark Taylor, 2011. "Measuring Financial Capability and its Determinants Using Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 102(2), pages 297-314, June.
    11. John, Deborah Roedder, 1999. " Consumer Socialization of Children: A Retrospective Look at Twenty-Five Years of Research," Journal of Consumer Research, Oxford University Press, vol. 26(3), pages 183-213, December.
    12. Jing Xiao & Cheng Chen & Fuzhong Chen, 2014. "Consumer Financial Capability and Financial Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(1), pages 415-432, August.
    13. Fernando Angulo-Ruiz & Albena Pergelova, 2015. "An Empowerment Model of Youth Financial Behavior," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(3), pages 550-575, November.
    14. Cramer, Reid, 2010. "The big lift: Federal policy efforts to create Child Development Accounts," Children and Youth Services Review, Elsevier, vol. 32(11), pages 1538-1543, November.
    15. Emily N. Garbinsky & Anne-Kathrin Klesse & Jennifer Aaker, 2014. "Money in the Bank: Feeling Powerful Increases Saving," Journal of Consumer Research, Oxford University Press, vol. 41(3), pages 610-623.
    16. Yunju Nam & Youngmi Kim & Margaret Clancy & Robert Zager & Michael Sherraden, 2013. "Do Child Development Accounts Promote Account Holding, Saving, and Asset Accumulation for Children's Future? Evidence from a Statewide Randomized Experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 6-33, January.
    17. Afandi, Elvin & Habibov, Nazim, 2013. "Pre-Crisis and Post-Crisis Trust in Banks: Lessons from Transitional Countries," MPRA Paper 46999, University Library of Munich, Germany.
    18. Friedline, Terri & Johnson, Paul & Hughes, Robert, 2014. "Toward Healthy Balance Sheets: Are Savings Accounts a Gateway to Young Adults’ Asset Diversification and Accumulation?," Review, Federal Reserve Bank of St. Louis, vol. 96(4), pages 359-389.
    19. Scanlon, Edward & Buford, Andrea & Dawn, Kenneth, 2009. "Matched savings accounts: A study of youths' perceptions of program and account design," Children and Youth Services Review, Elsevier, vol. 31(6), pages 680-687, June.
    20. John B. Carlin & John C. Galati & Patrick Royston, 2008. "A new framework for managing and analyzing multiply imputed data in Stata," Stata Journal, StataCorp LP, vol. 8(1), pages 49-67, February.
    21. Wheeler-Brooks, Jennifer & Scanlon, Edward, 2009. "Perceived facilitators and barriers to saving among low-income youth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 757-763, October.
    22. Patrick Royston, 2009. "Multiple imputation of missing values: Further update of ice, with an emphasis on categorical variables," Stata Journal, StataCorp LP, vol. 9(3), pages 466-477, September.
    23. David N. F. Bell & David G. Blanchflower, 2011. "Young people and the Great Recession," Oxford Review of Economic Policy, Oxford University Press, vol. 27(2), pages 241-267.
    24. Bernheim, B. Douglas & Garrett, Daniel M., 2003. "The effects of financial education in the workplace: evidence from a survey of households," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1487-1519, August.
    25. Jinhee Kim & Jaslean LaTaillade & Haejeong Kim, 2011. "Family Processes and Adolescents’ Financial Behaviors," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 668-679, December.
    26. Friedline, Terri & Elliott, William, 2013. "Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors," Children and Youth Services Review, Elsevier, vol. 35(6), pages 994-1006.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jfamec:v:37:y:2016:i:4:d:10.1007_s10834-015-9475-y. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.