According to the National Financial Educators Council, financial literacy is “Possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual’s personal, family and global community goals.”

In other words, financial literacy is the ability to manage your money well enough to live the kind of life that you want to live.  That may mean taking care of yourself, your family, or your community.  Financial literacy training is one process by which people can develop these skills.

The academic literature on the effectiveness of financial literacy training is mixed.  Some meta-analyses have found that FLT has little significant effect on financial outcomes (Fernandes, Lynch, Netemeyer (2014)), while others have found that FLT does have significant effects under certain circumstances (Miller, et al. (2015)). 

Generally studies have found that financial literacy is highly correlated with positive financial behaviors and outcomes, like savings and income, but there are no proven programs or gold standards of training that dramatically improve financial literacy.  So Endowing People has created its own program based on the best practices found in the academic literature, and on the experiences of people who have high levels of success managing their own finances. 

One of the best practices we employ includes teaching principles or “rules of thumb” rather than facts to be memorized (Drexler et al. (2011)), which is particularly effective for lower income participants.  It’s more important for people to learn the principles of financial literacy than all of the details like what sort of mortgage to get.  Broad lessons like “spend less than you make” tend to stick better. 

Another is “just in time” training (Kaiser and Menkhoff’s (2007)), which shows that learning about a skill when you’re about to use it is most effective.  For example, many people have had some FLT in high school, but without the opportunity to immediately put the training to use, it’s often forgotten.  One major advantage of our program is that we give people money to practice these skills on and a supportive community to share their results with. 

Studies have shown (Letkiewicz and Fox (2014)) that people with a high level of confidence in their ability to manage money are also those who most effectively do so.  There’s also a very high correlation between people high in contentiousness and positive financial outcomes.  Part of our work is to do more to identify those who would best respond to interventions like this one.

Budgeting

Basic Finance

Debt and how to use it

Practical Ways to Save Money

Investing

Owning a Home

Attitude and the Psychology of Money

Parenting and Money

Self Growth

Professional Growth