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American parents, teachers, and policymakers generally express strong support for personal financial education for high school students, despite a need for further research to determine if such education is effective in improving long-term decision-making capabilities. However, research in related fields such as child development and behavioral economics suggests that personal financial learning begins at an early age and encompasses a broad array of general decision-making skills rather than just narrowly financial topics. This research suggests that educators should take a broad perspective on where and how personal finance is taught and learned and make use of findings in psychology and behavioral economics to enhance instruction. The research also supports the thrust of Minnesota’s proposed new social studies standards, which call for personal finance lessons from the early grades through high school but with flexibility on where and how they are taught.

This report examines the utilization of a state earned income credit by current and former welfare recipients using two measures: receipt among all current and former welfare recipients and among only those eligible for the credit. Both measures may be useful, depending upon which groups policymakers hope to target. The authors further characterize utilization by examining how receipt varies with earnings and by demographic group, the length of time current and former welfare households receive the state earned income credit, and whether recipient households respond to changes in the parameters of state earned income credit programs.

About 10 million American households do not use any aspect of the banking system. A large body of research provides evidence that limited involvement in the mainstream financial sector is most common among low- and moderate-income (LMI) households. Although their income may be relatively low, these individuals hold assets and regularly conduct financial transactions, frequently with nonbank financial companies. Estimates of nonbank financial company transaction volume as high as $250 billion annually suggest a reasonable business case for insured institutions trying to attract the banking business of low- and moderate-income consumers. A relatively low-risk way for banks to introduce low- and moderate-income households to the banking system is through a particular type of savings account—the Individual Development Account (IDA). This article explains how IDAs operate, discusses banks’ experience with IDAs, and provides resources for bankers who want to know more about these programs.

This study examines the relationship between bank account ownership and student knowledge of personal finance. To assess financial knowledge, the study relies on national data collected every two years by the JumpStart Coalition for Personal Finance. Using test scores from the 2008 JumpStart survey, I assess whether scores are significantly higher among students that have bank accounts, relative to those students that have no formal banking relationship, controlling for demographic and socio-economic variables that might influence financial knowledge. The underlying research question is whether student experience with “real world” financial products is associated with higher levels of knowledge in personal finance. I find that student bank account ownership is significantly associated with higher scores on the test of financial knowledge, even after controlling for significant factors such as race, educational aspirations, and parental education. While the findings do not suggest causality, the results are informative for financial education delivery, particularly the importance of providing interactive opportunities for the application and practice of skills and knowledge.

This study used the 1992–2006 waves of the Health and Retirement Study (HRS) to investigate changes in risk tolerance levels over time in response to stock market returns. Findings indicate that risk tolerance tends to increase when market returns increase and decrease when market returns decrease. Individuals who change their risk tolerance in this manner are likely to invest in stocks when prices are high and sell when prices are low. Researchers, employers, financial educators and practitioners should help investors overcome the bias of overweighting recent news of market performance.

The importance of investment portfolio allocation has become more apparent since the onset of the late 2000s Great Recession. Individual willingness to take financial risks affects portfolio decisions and investment returns among other factors. Previous research found that people of different ages have dissimilar levels of risk tolerance but the effects of generation, period, and aging were confounded. Using the 1998–2007 Survey of Consumer Finances cross-sectional datasets, this study uses an analytical method to separate such effects on financial risk tolerance. Aging and period effects on financial risk tolerance were statistically significant. Implications for researchers and financial planning practitioners and educators are provided.

Explains various gold products and investments, and offers tips to help people investigate before they invest. Offers resources for additional information.

This special edition of Consumer News is a Buyer's Guide to Finding the Right Loan, Credit Card or Deposit Account.