MyMoney Resources - MyMoney Five

This article presents best practices and lessons learnt from on the experiences of the National Endowment for Financial Education® (NEFE), a private, nonprofit, nonpartisan and noncommercial foundation committed to increas- ing access to financial education and to empowering in- dividuals to make positive and sound financial decision. These lessons include tailoring programs to the needs of different market segments; delivering education continuously through different life stages and at "teachable moments"; recognizing the importance of partnerships; paying attention to the repetition and targeting of messages and focusing on evaluation and behavioral change.

This short article briefly summarizes and provides a link to the final report on the FDIC Survey of Bank Efforts to Serve the Unbanked and Underbanked. The survey was conducted in 2008 and the report was released in 2009. The FDIC retained Dove Consulting to help administer the survey of banks during 2008. The voluntary survey consisted of mail-in questionnaires administered to a stratified random sample of about 1,300 banks. The nationally representative sample was selected from the population of federally insured banks and thrifts with retail branch operations. In all, 685 complete surveys were returned, including 24 of the 25 largest banks. The survey finds that while most banks are aware that their market areas include significant unbanked and underbanked populations, relatively few have made it a strategic priority to target these market segments. In addition, while a number of banks are trying to reach the unbanked and underbanked, relatively few participate in the types of outreach that are thought to be particularly effective. The survey findings also indicate that although banks recognize the challenges associated with doing business with unbanked and underbanked individuals, they are making some progress in improving the accessibility of banking services.

This article provides a plain-language description of behavioral economics and the role of common biases in financial decisionmaking, and reviews ways in which the findings of behavioral economics can help structure financial education and public policy.

The State of Minnesota’s Emerging Markets Homeownership Initiative (EMHI) seeks to boost homeownership rates among Minnesota’s “emerging markets,” defined as households of color, non-English speaking households, and households in which English is a second language. Many of the implementation strategies in the EMHI Business Plan address general barriers to homeownership and should increase the number of emerging market households that become first-time homeowners. EMHI doesn’t stop there, however. It also recognizes the need to sustain homeownership after initial purchase, in keeping with growing evidence that the cliché “once an owner, always an owner” is far from true, especially for minority and low-income households. In particular, the EMHI Business Plan includes a strategy for developing and implementing a post-purchase services network that will enhance their prospects for successful, sustainable homeownership. As a foundation for the implementation effort, this report explains why Minnesota is in a good position to use post-purchase support programs to pursue EMHI’s goals.

The Community Development Department of the Federal Reserve Bank of San Francisco (FRBSF) commissioned this study to explore the feasibility of passing a financial education mandate in California. Specifically, we sought to understand the key barriers related to passing a mandate in California and to identify strategies to implement financial education in the current environment, despite the absence of a state mandate. The study explores multiple options for expanding personal finance training among youth in California, including statewide legislation or education code changes for financial education, professional development and training for teachers on personal finance concepts, and school district adoption of financial preparedness curriculum.

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.

In a small a financial education pilot at Oh Day Aki Charter School in Minneapolis involving one teacher and about 100 middle and high school students, results suggest that that standard financial education materials can be adapted to benefit Native students in an urban setting, despite pre-existing educational challenges that are typical of inner-city schools, such as high turnover and low reading skills. The pilot's sponsoring partners hope to build on the lessons learned in order to further promote financial education for Native youth.

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.

This descriptive analysis examines the importance of personal financing sources, especially mortgages secured by residential property, to small businesses from 1998 through 2007. About 80 percent of the total debt owned by small business-owning house-holds is held in mortgages and installment loans. The likelihood of holding a residential mortgage increased from 64.7 percent in 1998 to over 73 percent in 2007, and the share of total debt held in residential mortgages increased from 67.3 percent in 1998 to 70.6 percent in 2007 for small business-owning households. After controlling for owner characteristics, small business-owning households did not hold a larger share of total debt in residen-tial mortgages than other households from 1998 through 2007. However, small business-owning households did hold a larger share of total debt in other loans secured by residential property and line of credit loans secured by residential property than other households. These loans comprise less than 18 percent of the value of total debt held by small business-owning households in 2007, suggesting that while financial intermingling does occur, it repre-sents a relatively small share of total debt.

This article reviews research on the effectiveness of general financial literacy training to draw implications for literacy training related to predatory lending. The article concludes that training offered by high schools and workplaces is associated with improved financial knowledge and behavior, especially for low-income or less-educated recipients. Although evidence on homeowner education and counseling is less clear cut, the article concludes that financial literacy training has the potential to curb predatory lending.