Does Financial Education Affect Soldiers’ Financial Behavior?

Abstract

Financial education does seem to have an effect on specific financial management behaviors. Simple bivariate analyses revealed several behavior impacts. With more robust mulitvariate analysis, soldiers taking the financial education program were more likely than the comparison group to report using informal spending plans and less likely to report using formal spending plans. We also found that high school financial education programs made a difference in selected behaviors: those who had a high school financial education course were more likely to have a savings account for short-term savings goals and to save regularly. Having taken a high school course was also associated with having paid an overdraft fee in the past six months. Early financial management experience also seems to matter: soldiers who had a high school savings account were more likely to have an emergency fund, more likely to read money management articles, and less likely to never pay off their credit card balances. Limitations of this study are noted at the end of this report. About the Authors: Catherine Bell is a senior research assistant at the Federal Reserve Board in the Division of Consumer and Community Affairs and is pursuing an MA in Applied Economics at Johns Hopkins University. She holds BAs in political science and economics from Muhlenberg College. Her current research for the Fed includes analysis of electronic banking usage and adoption, the effectiveness of financial education efforts, and financial literacy. Jeanne M. Hogarth is Manager of the Consumer Education and Research Section in the Division of Consumer and Community Affairs at the Federal Reserve Board. She is responsible for research and outreach initiatives for consumer financial services. She has authored numerous scholarly research papers as well as consumer education resources on financial management. Both her research and her consumer education programs have received awards for their excellence. She received an M.S. and Ph.D. in Family and Consumer Economics from The Ohio State University. Daniel R. Gorin is a Senior Community Affairs Analyst, Community Affairs Section, Division of Consumer and Community Affairs, Federal Reserve Board. His areas of specialization include urban, rural and regional economics, public economics and consumer finance. He is A.B.D. in economics from the University of Oklahoma. Prior ot his current appointment with the Federal Reserve Board, he was Chief Economist for the Oklahoma Department of Commerce.