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Special Issue on “Starting Early for Financial Success”

Journal of Consumer Affairs Vol. 49, Issues 1 (Spring 2015)

Introduction: The federal government’s Financial Literacy and Education Commission’s

(FLEC) has a strategic focus on reaching young people at the early stages of life to help them 

prepare for their financial futures. Building financial knowledge and behaviors early is 

important for young people’s long-term personal financial well-being and contributes to the 

overall economic health of the nation.

To further share information and research that can help prepare young people for their financial 

lives, the FLEC requested that the Journal of Consumer Affairs dedicate a special issue to 

financial literacy research focused on “Starting Early for Financial Success.” Ten new academic 

research papers are now published and publicly available in the Spring 2015 issue. Below are the 

research abstracts and hyper-links to the articles. 

Research Abstracts: Published in the “Starting Early for Financial Success” Special Issue

1. Foundations of Financial Well-Being: Insights into the Role of Executive Function, 

Financial Socialization, and Experience-Based Learning in Childhood and Youth...

(Pages 13-38)

Authors: Anita I. Drever, Elizabeth Odders-White, Charles W. Kalish, Nicole M. EliseQuest, Emily M. Hoagland, and Emory N. Nelms

Abstract: During childhood and youth the foundations for financial well-being later in life, are 

built, including acquiring the knowledge, skills, attitudes, and personality traits that enable the

management of our finances as adults. This article reviews literature from consumer science, 

developmental psychology, and allied fields to gain insight into moments during youthful 

development when interventions are likely to have greatest impact. Promising avenues were 

found, which influence each developmental life stage. Many present novel approaches to 

financial education—such as focusing on improving executive function in young children 

(critical despite lacking apparent “financial content”), emphasizing financial attitude 

development through dual-generation financial modeling for elementary and middle school 

students and their parents, or intentionally teaching financial heuristics and other practical skills 

to later adolescents and young adults. Overall, this article proposes a range of innovative 

strategies to improve financial education, from early childhood through young adulthood.

Read the full article here. 

2. A Developmental Perspective on Children's Economic Agency... (Pages 39-68)

Author: Terri Friedline

Abstract: Understanding children's development is critical in the midst of efforts that teach 

children about money and opening savings accounts for them early in life. These efforts are 

delivered at a time of extensive developmental change, yet with limited attention to this context. 

Through a review of research, this study unveils the ages at which children may be able to save 
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and to use savings accounts—specific aspects of economic knowledge and behavior—based on 

cognitive, social, and linguistic development. Children are developmentally capable of saving by 

age five or six. Children's developmental gains at this age may prepare them for the gains they 

make in economic knowledge and behavior. Implications are discussed with regard to policy 

efforts like Child Development Accounts (CDAs) that open savings accounts for young children 

and encourage saving behaviors. CDAs should take development into consideration if children 

are to use their accounts for their benefit.

Read the full article here. 

3. Experimental Evidence on the Effects of Financial Education on Elementary School 

Students' Knowledge, Behavior, and Attitudes... (Pages 69-96)

Authors: Michael Batty, J. Michael Collins and Elizabeth Odders-White

Abstract: As the financial landscape for consumers becomes increasingly complex, the 

importance of facilitating financial capability increases. Although most financial decisions are 

made by adults, there is a burgeoning interest in providing financial education to children in the 

hope that they will develop the skills needed to successfully manage their finances in adulthood. 

This study uses an experimental design to evaluate a set of standardized financial education 

lessons delivered to fourth and fifth graders in two different school districts. We find that even a 

relatively brief program results in knowledge gains that persist one year later. While measuring 

financial behaviors in this age group is challenging, students exposed to financial education have 

more positive attitudes about personal finance and appear more likely to save. These results 

show that younger students can learn financial topics and that learning is associated with 

improved attitudes and behaviors which, if sustained, may result in increased financial capability 

later in life.

Read the full article here.

4. Increasing Youth Financial Capability: An Evaluation of the MyPath Savings 

Initiative... (Pages 97-126)

Authors: Vernon Loke, Laura Choi, and Margaret Libby

Article: Although there has been mixed evidence from research on the efficacy of financial 

education efforts for youth, there is an emerging consensus that focusing on financial capability 

may be a more effective approach. This article examines the impact of the MyPath Savings pilot 

on 275 economically disadvantaged youth participating in a youth development and employment 

program. MyPath Savings targets youth earning their first paycheck—a critical “teachable 

moment” to promote savings and connect youth with mainstream financial products. The results 

indicate that MyPath Savings is highly relevant to participants' needs. In addition, youth 

experienced significant increases in financial knowledge, financial self-efficacy, and the 

frequency with which positive financial behaviors were carried out. Participants also saved an 

average of $507 through MyPath Savings. Gains in financial capability were mostly independent 

of the youths' race, gender, household income, and public benefits receipt. Possible factors for 

the promising results are discussed.
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Read the full article here.

5. Financial Capability and Asset Accumulation for Children's Education: Evidence 

from an Experiment of Child Development Accounts... (Pages 127-155)

Authors: Jin Huang, Yunju Nam, Michael Sherraden and Margaret Clancy

Abstract: On the basis of theoretical framework of financial capability, this study investigates 

the roles of financial access and financial knowledge in savings and asset accumulation for 

children's postsecondary education. Data from SEED for Oklahoma Kids (N =2,704) was used. 

This is a statewide policy experiment offering Child Development Accounts (CDAs) to treatment 

participants. This study employs quantile regressions with two dependent variables: savings 

amount (net deposits made by caregivers of children) and total asset amount (the sum of savings, 

financial incentives offered by the experiment, and investment earnings). Results identify 

positive and statistically significant interactions between treatment status and financial 

knowledge, suggesting that access to CDAs moderates the association between financial 

knowledge and asset accumulation. Providing empirical support for the theory of financial 

capability, the findings call for interventions that enhance financial knowledge, expand financial 

access, and improve asset accumulation for all children.

Read the full article here.

6. Financial Education and Savings Outcomes for Low-Income IDA Participants: Does 

Age Make a Difference? ... (Pages 156-185)

Authors: Michal Grinstein-Weiss, Shenyang Guo, Vanessa Reinertson and Blair Russell 

Abstract: This study considers the impact of financial education dosage on savings outcomes of 

participants in Individual Development Account (IDA) programs. It analyzes data from a sample 

of approximately 2,000 participants in the American Dream Policy Demonstration, disaggregates 

outcomes by age, and uses propensity score modeling to control for endogeneity and selection 

bias. Results shows that relative to counterparts who did not complete educational requirements, 

IDA participants who completed program requirements for financial education had higher 

average monthly savings, saved a higher portion of their income, and deposited savings more 

frequently. Notably, data revealed that participants aged 36 or older experienced increasing 

returns on investment in financial education, and the best outcomes are found among those with 

more than 200% of the required dose of financial education. However, younger participants with 

more than 100% of the required dose are found to experience a diminishing return on their 

investment in financial education.

Read the full article here.

7. Revaluing the Role of Parents as Financial Socialization Agents in Youth Financial 

Literacy Programs... (Pages 186-222)

Author: Geert Van Campenhout
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Abstract: This paper reviews the role of parents in young people's financial socialization 

process. Despite robust evidence illustrating the key role of parents in this process, parental 

involvement in financial education programs is not well-developed. Hence, this study advocates 

a revaluation of their role in such programs and shows how this fits in with the development of 

youth financial literacy programs that are more proactive and aimed at raising adaptable financial 

consumers. Guidelines are provided for the design of such proactive financial literacy programs, 

which take into account the role of parents in the financial socialization process. In addition, 

consequences for the role of teachers are discussed. In conclusion, a number of suggestions for 

future research are formulated that are necessary in order to develop more effective delivery 

methods and to increase the effectiveness of financial education programs.

Read the full article here.

8. Does “Banking the Unbanked” Help Families to Save? Evidence from the United 

Kingdom... (Pages 223-249)

Authors: Katie Fitzpatrick 

Abstract: An electronic transfer mandate was used in the UK Child Benefit program, a transfer 

received by virtually all families with children, to estimate the effect of bank account ownership 

on the savings behavior of less educated families with children. Compared to similar families 

without children, the mandate increased account ownership by 9 percentage points (12%) for 

families with children. Using this exogenous increase in account ownership, examination 

revealed the causal effect of transaction account ownership on the accumulation of financial 

assets. Evidence indicated a small but significant increases in financial assets for families that 

transitioned into account ownership. These estimates suggest that a policy to increase bank 

account ownership may have spillover effects that improve family economic well-being.

Read the full article here.

9. Evaluating a Financial Education Curriculum as an Intervention to Improve 

Financial Behaviors and Financial Well-Being of Survivors of Domestic Violence: 

Results from a Longitudinal Randomized Controlled Study... (Pages 250-266)

Authors: Judy L. Postmus, Andrea Hetling and Gretchen L. Hoge

Abstract: The Allstate Foundation and the National Network to End Domestic Violence created 

a financial education curriculum to improve individual financial management skills and, 

ultimately, to improve domestic violence survivors' financial well-being. This study, guided by 

the reasoned action approach, evaluates their curriculum using a longitudinal randomized control 

study, with data collected over four time periods spanning 14 months. The analyses 

demonstrated that the treatment group had an average improvement between a half point to over 

a full point on self-reported financial knowledge, financial intentions, and financial behavior and 

a decrease in financial strain. Moreover, the impact of the curriculum persisted over time. The 

notable and lasting impact of participation in the curriculum for this study sample has critical 

implications for other agencies serving domestic violence survivors as well as other programs 

aimed at improving financial well-being among their clientele.
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Read the full article here.

10. A Balance Sheet Perspective on Financial Success: Why Starting Early Matters... 

(Pages 267-298)

Authors: Ray Boshara and William R. Emmons

Abstract: This paper offers four ideas. First, a balance sheet perspective on financial success is 

constructive, and that a meaningful measure of the success of financial capability efforts is the 

health of one's balance sheet. Second, given relatively weak balance sheets among younger 

Americans before and after the Great Recession, and given that economically vulnerable families 

assumed greater balance sheet risk heading into the recession, efforts to build healthy, diversified 

balance sheets early in life should be strongly considered. Third, policies that establish savings 

accounts at birth or when entering kindergarten, which have been enacted or proposed at the 

local, state and national levels, hold particular promise and thus merit further consideration by 

policymakers, researchers, and others. Fourth, efforts to build savings and assets early in life are 

likely to yield benefits to children, families, and the economy. Further research and 

demonstration efforts are critical to moving this agenda forward.

Read the full article here.

Special Issue Editors:

Margaret S. Sherraden (sherraden@umsl.edu) is the Founders Professor at University of 

Missouri-St. Louis, and Research Professor at Washington University in St. Louis. 

Michal Grinstein-Weiss (michalgw@wustl.edu) is an Associate Professor in the Brown School 

of Social Work and the Associate Director of the Center for Social Development at Washington 

University in St. Louis. 

Citation:

SHERRADEN, M. S. and GRINSTEIN-WEISS, M. (2015), Creating Financial 

Capability in the Next Generation: An Introduction to the Special Issue. Journal of 

Consumer Affairs, 49: 1–12. 

doi: 10.1111/joca.12067

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Editor: 

Sharon Tennyson (sharon.tennyson@cornell.edu) is a Professor of Policy Analysis and 

Management and the Director of the Institute for Public Affairs at Cornell University, Ithaca, NY 

Disclaimer: All research articles can be downloaded free from the Journal of Consumer Affairs

website. If there is a change in policy, these articles may not continue to be accessible free of 

charge.