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Financial Education is not Enough: Millennials May Need Financial Capability to Demonstrate Healthier Financial Behaviors

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  • Terri Friedline

    (University of Kansas)

  • Stacia West

    (University of Kansas)

Abstract

Financial education sans opportunities for hands-on experience and knowledge operationalization may be insufficient for promoting healthy financial behaviors. Financial capability combines financial education with financial inclusion via a savings account, thereby giving an opportunity translate knowledge into practice. This study used data from the 2012 National Financial Capability Study to examine relationships between the financial capability and financial behaviors of United States Millennials (N = 6865). Compared to their financially excluded peers, Millennials who were financially capable were 176 % more likely to afford unexpected expenses, 224 % more likely to save for emergencies, 21 % less likely to use alternative financial services, and 30 % less likely to carry burdensome debt. Interventions that focus solely on financial education or inclusion may be insufficient for facilitating Millennials’ healthy financial behaviors; interventions should instead develop financial capability.

Suggested Citation

  • Terri Friedline & Stacia West, 2016. "Financial Education is not Enough: Millennials May Need Financial Capability to Demonstrate Healthier Financial Behaviors," Journal of Family and Economic Issues, Springer, vol. 37(4), pages 649-671, December.
    • Handle: RePEc:kap:jfamec:v:37:y:2016:i:4:d:10.1007_s10834-015-9475-y
    DOI: 10.1007/s10834-015-9475-y
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