Wednesday, April 11, 2012
Nicholas Center Blog
Financial literacy is an important life skill, yet many Americans have never been introduced to basic financial concepts. The U.S. government has identified expansion of financial education as an area of critical need to ensure the financial well-being of households and, ultimately, our nation’s financial stability.
Last fall, the University of Wisconsin-Madison Center for Financial Security, with which I am affiliated, was awarded a contract from the U.S. Department of Treasury through a partnership with the Corporation for Enterprise Development (CFED). The grant’s goal is to identify effective strategies for teaching money management to schoolchildren. In partnership with Wisconsin’s Eau Claire Area School District and the Royal Credit Union (RCU), we are using this grant funding to conduct a research project with fourth- and fifth-graders in Eau Claire elementary schools.
The project consists of five main steps. First, we will verify the children’s baseline level of financial literacy by administering a basic financial assessment to all students in the research project. Second, teachers and RCU educators will receive expert training and curriculum materials on personal finance topics such as saving, banking, and money management. Third, after receiving the training, teachers or RCU educators will deliver these lessons to half of the fourth- and fifth-grade classrooms in the district (the “treatment group”). Fourth, we will measure the outcomes of the experiment by administering a second financial literacy assessment to all students. Finally, to ensure that all students have access to the financial literacy information, the personal finance topics will be taught in the remaining fourth- and fifth-grade classrooms (the “control group”).
A critical element of our research design is that some students in this study have access to school-based credit union branches. This will enable us to explore whether personal finance instruction has greater influence on children’s financial knowledge and attitudes when they are exposed to financial products and services. Bank account access provides an opportunity to apply knowledge and skills learned in the classroom, which may increase the relevance of the instruction.
This project, a combination of research and outreach, embodies the Wisconsin Idea – the principle that the university should improve the lives of people of all ages, within and beyond the classroom. Follow my updates on the Forward Thinking Blog as we complete our experiment, analyze the data to detect changes between baseline and follow‐up financial literacy assessments, and summarize our findings!