August 2009

Financial Education - Volume 21, Issue 2

In this issue of Community Investments, we explore how the growing field of financial education can help people maximize their financial well-being. We discuss best practices in financial education, the role of financial institutions in delivering financial education tied to financial products, and how insights from behavioral economics can improve the design of financial education. In addition, we take a closer look at a research study measuring the effectiveness of financial education among soldiers and consider strategies to promote asset building at tax time.  You’ll also find our regular quarterly features, and timely updates on relevant community development topics, such as city-based affordable homeownership programs and mixed-income housing.

The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or the Federal Reserve System. Material herein may be reprinted or abstracted provided Community Investments is credited. Please provide our Community Development Department with a copy of any publication in which material is reprinted.

Read the full issue (pdf, 3.7 mb)

Table of Contents

CI Notebook

Financial education programs and initiatives continue to develop, along with research efforts to gauge their success, but important questions remain. How do we measure success? Which programs are most effective? Can financial education change people’s behavior?

Financial Education for a Stable Financial Future

Whether for lack of knowledge, resources, or self-control, far too many Americans are struggling with their personal finances.

An Apple or a Donut? How Behavioral Economics Can Improve Our Understanding of Consumer Choices

Generally, I wake up committed to the idea of eating healthy meals and I pack my gym bag for my afternoon workout. Then at the morning staff meeting I eat a donut, and at day’s end I’m headed home on the train with my workout clothes still folded neatly in my bag.

Learning and Growing: Lessons Learned in Financial Education

Financial security is an important concern for many Americans, and promoting financial capability is a necessary part of strengthening the safety net for all Americans. Given the current economic climate, the mission of financial education has never been more critical.

Financial Education – Does It Work and How Do We Know? Research Findings from a Study of Financial Education Among Soldiers

Financial education has risen on the agendas and priority lists of a number of agencies and organizations, including the Federal Reserve Board, as evidenced by recent hearings on financial literacy in Congress and speeches by Federal Reserve Chairman Ben Bernanke. The issue is also a “hot topic” among academics and researchers, and numerous programs have arisen to address financial education gaps, targeting a variety of topics from student loans and credit card debt to home buying and retirement planning.

Tax Time as an Asset Building Opportunity: Assessing the Potential

Tax time provides a unique opportunity for people to reflect on the past year’s income and expenses, take advantage of tax incentives, and make financial plans for the future. For low-income families in the United States, tax time is also an important window for the delivery of asset building products and services.

Banks and Financial Education: Integrating Practice, Products, and Partnerships

A number of developments have begun to underscore the growing need for financial education. Surveys indicate that Americans have low levels of financial knowledge, as well as insufficient savings and high indebtedness.

Sustaining Homeownership: The Experience of City-Based Affordable Homeownership Programs

The recent surge in mortgage delinquencies and foreclosures has sparked a renewed debate over the government’s role in promoting homeownership, particularly among low-income and minority borrowers. Increasingly, questions are emerging about the benefits of homeownership for lower-income households.

San Francisco’s New Model for Mixed-Income Housing: HOPE SF

Ambitious plans are afoot to revitalize the City of San Francisco’s oldest and most deteriorated public housing sites. Through the city’s new HOPE SF program, 2,500 units of distressed public housing will be rebuilt as components of new mixed-income developments.

Reforms to Protect American Credit Card Holders

A summary of the Credit Card Accountability, Responsibility, and Disclosure Act.

Research Briefs

Research briefs on telenovelas and financial education, the impact of the EITC on neighborhood economic development, payday loans and credit card debt, and factors affecting exits from homeownership.

Doctor CRA

My community partners have been asking more frequently about what my bank is doing to promote financial education in our community. It’s becoming a more prominent issue and quality financial education has become especially important in light of the financial crisis.

Data Snapshot: The American Recovery and Reinvestment Act

The American Recovery and Reinvestment Act of 2009 (ARRA) is estimated to cost about $787 billion over the next several years, of which about $280 billion will be administered through states and localities.