IDEAS home Printed from https://ideas.repec.org/a/kap/jfamec/v37y2016i4d10.1007_s10834-015-9475-y.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10834-015-9475-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10834-015-9475-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Clinton Gudmunson & Sharon Danes, 2011. "Family Financial Socialization: Theory and Critical Review," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 644-667, December.
    2. Daniel Fernandes & John G. Lynch & Richard G. Netemeyer, 2014. "Financial Literacy, Financial Education, and Downstream Financial Behaviors," Management Science, INFORMS, vol. 60(8), pages 1861-1883, August.
    3. Bernheim, B. Douglas & Garrett, Daniel M. & Maki, Dean M., 2001. "Education and saving:: The long-term effects of high school financial curriculum mandates," Journal of Public Economics, Elsevier, vol. 80(3), pages 435-465, June.
    4. Annamaria Lusardi & Daniel Schneider & Peter Tufano, 2011. "Financially Fragile Households: Evidence and Implications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 83-150.
    5. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    6. Grinstein-Weiss, Michal & Spader, Jonathan & Yeo, Yeong Hun & Taylor, Andréa & Books Freeze, Elizabeth, 2011. "Parental transfer of financial knowledge and later credit outcomes among low- and moderate-income homeowners," Children and Youth Services Review, Elsevier, vol. 33(1), pages 78-85, January.
    7. Terri Friedline & Mary Rauktis, 2014. "Young People Are the Front Lines of Financial Inclusion: A Review of 45 Years of Research," Journal of Consumer Affairs, Wiley Blackwell, vol. 48(3), pages 535-602, October.
    8. repec:ucp:bkecon:9780226081946 is not listed on IDEAS
    9. Janet Currie & Enrico Moretti, 2003. "Mother's Education and the Intergenerational Transmission of Human Capital: Evidence from College Openings," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1495-1532.
    10. Garbinsky, Emily N. & Klesse, Anne-Kathrin & Aaker, Jennifer, 2014. "Money in the Bank: Feeling Powerful Increases Saving," Research Papers 2146, Stanford University, Graduate School of Business.
    11. Mason, Lisa Reyes & Nam, Yunju & Clancy, Margaret & Kim, Youngmi & Loke, Vernon, 2010. "Child Development Accounts and saving for children's future: Do financial incentives matter?," Children and Youth Services Review, Elsevier, vol. 32(11), pages 1570-1576, November.
    12. Mark Taylor, 2011. "Measuring Financial Capability and its Determinants Using Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 102(2), pages 297-314, June.
    13. Karlan, Dean & Jamison, Julian & Zinman, Jonathan, 2014. "Financial Education and Access to Savings Accounts: Complements or Substitutes? Evidence from Ugandan Youth Clubs," Working Papers 132, Yale University, Department of Economics.
    14. John, Deborah Roedder, 1999. "Consumer Socialization of Children: A Retrospective Look at Twenty-Five Years of Research," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 26(3), pages 183-213, December.
    15. Jing Xiao & Cheng Chen & Fuzhong Chen, 2014. "Consumer Financial Capability and Financial Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(1), pages 415-432, August.
    16. Fernando Angulo-Ruiz & Albena Pergelova, 2015. "An Empowerment Model of Youth Financial Behavior," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(3), pages 550-575, November.
    17. William R. Emmons & Bryan J. Noeth, 2014. "Five Simple Questions That Reveal Your Financial Health and Wealth," In the Balance, Federal Reserve Bank of St. Louis, issue 10, pages 1-3.
    18. Cramer, Reid, 2010. "The big lift: Federal policy efforts to create Child Development Accounts," Children and Youth Services Review, Elsevier, vol. 32(11), pages 1538-1543, November.
    19. Emily N. Garbinsky & Anne-Kathrin Klesse & Jennifer Aaker, 2014. "Money in the Bank: Feeling Powerful Increases Saving," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 41(3), pages 610-623.
    20. Yunju Nam & Youngmi Kim & Margaret Clancy & Robert Zager & Michael Sherraden, 2013. "Do Child Development Accounts Promote Account Holding, Saving, and Asset Accumulation for Children's Future? Evidence from a Statewide Randomized Experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 6-33, January.
    21. Afandi, Elvin & Habibov, Nazim, 2013. "Pre-Crisis and Post-Crisis Trust in Banks: Lessons from Transitional Countries," MPRA Paper 46999, University Library of Munich, Germany.
    22. Terri Friedline & Robert Hughes & Paul Johnson, 2014. "Toward Healthy Balance Sheets: Are Savings Accounts a Gateway to Young Adults’ Asset Diversification and Accumulation?," Review, Federal Reserve Bank of St. Louis, vol. 96(4), pages 359-389.
    23. Scanlon, Edward & Buford, Andrea & Dawn, Kenneth, 2009. "Matched savings accounts: A study of youths' perceptions of program and account design," Children and Youth Services Review, Elsevier, vol. 31(6), pages 680-687, June.
    24. Lisa Bell & Janet Gornick & Timothy Smeeding & Gary Burtless, 2007. "Failure to Launch: Cross-National Trends in the Transition to Economic Independence," LIS Working papers 456, LIS Cross-National Data Center in Luxembourg.
    25. John B. Carlin & John C. Galati & Patrick Royston, 2008. "A new framework for managing and analyzing multiply imputed data in Stata," Stata Journal, StataCorp LP, vol. 8(1), pages 49-67, February.
    26. Wheeler-Brooks, Jennifer & Scanlon, Edward, 2009. "Perceived facilitators and barriers to saving among low-income youth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 757-763, October.
    27. Patrick Royston, 2009. "Multiple imputation of missing values: Further update of ice, with an emphasis on categorical variables," Stata Journal, StataCorp LP, vol. 9(3), pages 466-477, September.
    28. David N. F. Bell & David G. Blanchflower, 2011. "Young people and the Great Recession," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 27(2), pages 241-267.
    29. Bernheim, B. Douglas & Garrett, Daniel M., 2003. "The effects of financial education in the workplace: evidence from a survey of households," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1487-1519, August.
    30. Jinhee Kim & Jaslean LaTaillade & Haejeong Kim, 2011. "Family Processes and Adolescents’ Financial Behaviors," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 668-679, December.
    31. Friedline, Terri & Elliott, William, 2013. "Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors," Children and Youth Services Review, Elsevier, vol. 35(6), pages 994-1006.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rey-Ares, Lucía & Fernández-López, Sara & Castro-González, Sandra & Rodeiro-Pazos, David, 2021. "Does self-control constitute a driver of millennials’ financial behaviors and attitudes?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    2. Sunwoo T. Lee & Kyoung Tae Kim, 2022. "A Decomposition Analysis of Racial/Ethnic Differences in Financial Knowledge and Overconfidence," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 815-831, December.
    3. Ashley B. LeBaron & Heather H. Kelley, 2021. "Financial Socialization: A Decade in Review," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 195-206, July.
    4. Julie Birkenmaier & David Rothwell & Mary Agar, 2022. "How is Consumer Financial Capability Measured?," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 654-666, December.
    5. Travis P. Mountain & Namhoon Kim & Joyce Serido & Soyeon Shim, 2021. "Does Type of Financial Learning Matter for Young Adults’ Objective Financial Knowledge and Financial Behaviors? A Longitudinal and Mediation Analysis," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 113-132, March.
    6. Youngwon Nam & Cäzilia Loibl, 2021. "Financial Capability and Financial Planning at the Verge of Retirement Age," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 133-150, March.
    7. Elena Moreno-García & Sergio Hernández-Mejía & Héctor Francisco Salazar Núñez, 2024. "Financial Literacy and Financial Fragility in Mexico," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 19(1), pages 1-21, Enero - M.
    8. Sara Fernández-López & Marcos à lvarez-Espiño & Lucía Rey-Ares, 2023. "A Comprehensive Approach to Measuring Financial Vulnerability and Literacy: Unveiling Connections," SAGE Open, , vol. 13(4), pages 21582440231, November.
    9. Stephen Roll & Olga Kondratjeva & Sam Bufe & Michal Grinstein-Weiss & Stephanie Skees, 2022. "Assessing the Short-Term Stability of Financial Well-Being in Low- and Moderate-Income Households," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 100-127, March.
    10. Susnaningsih Muat & Nurul Shahnaz Mahdzan & Mohd Edil Abd Sukor, 2024. "What shapes the financial capabilities of young adults in the US and Asia-Pacific region? A systematic literature review," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    11. Hoffmann, Arvid O.I. & Plotkina, Daria, 2020. "Why and when does financial information affect retirement planning intentions and which consumers are more likely to act on them?," Journal of Business Research, Elsevier, vol. 117(C), pages 411-431.
    12. Casey J. Totenhagen & Melissa J. Wilmarth & Joyce Serido & Melissa A. Curran & Soyeon Shim, 2019. "Pathways from Financial Knowledge to Relationship Satisfaction: The Roles of Financial Behaviors, Perceived Shared Financial Values with the Romantic Partner, and Debt," Journal of Family and Economic Issues, Springer, vol. 40(3), pages 423-437, September.
    13. Manuel Salas‐Velasco & Dolores Moreno‐Herrero & José Sánchez‐Campillo, 2021. "Teaching financial education in schools and students' financial literacy: A cross‐country analysis with PISA data," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4077-4103, July.
    14. Man Yao & Tori I. Rehr & Erica P. Regan, 2023. "Gender Differences in Financial Knowledge among College Students: Evidence from a Recent Multi-institutional Survey," Journal of Family and Economic Issues, Springer, vol. 44(3), pages 693-713, September.
    15. Manuel Salas-Velasco, 2022. "Causal Effects of Financial Education Intervention Aimed at University Students on Financial Knowledge and Financial Self-Efficacy," JRFM, MDPI, vol. 15(7), pages 1-16, June.
    16. Catherine P. Montalto & Erica L. Phillips & Anne McDaniel & Amanda R. Baker, 2019. "College Student Financial Wellness: Student Loans and Beyond," Journal of Family and Economic Issues, Springer, vol. 40(1), pages 3-21, March.
    17. David W. Rothwell & Leanne Giordono & Robert S. Stawski, 2022. "How Much Does State Context Matter in Emergency Savings? Disentangling the Individual and Contextual Contributions of the Financial Capability Constructs," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 703-715, December.
    18. Mathieu R. Despard & Terri Friedline & Stacia Martin-West, 2020. "Why Do Households Lack Emergency Savings? The Role of Financial Capability," Journal of Family and Economic Issues, Springer, vol. 41(3), pages 542-557, September.
    19. Gentjan Çera & Khurram Ajaz Khan & Jaroslav Belas & Humberto Nuno Rito Ribeiro, 2020. "The Role of Financial Capability and Culture in Financial Satisfaction," Economic Papers, The Economic Society of Australia, vol. 39(4), pages 389-406, December.
    20. Sam Bufe & Stephen Roll & Olga Kondratjeva & Stephanie Skees & Michal Grinstein-Weiss, 2022. "Financial Shocks and Financial Well-Being: What Builds Resiliency in Lower-Income Households?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 161(1), pages 379-407, May.
    21. Kyoung Tae Kim & Somer G. Anderson & Martin C. Seay, 2019. "Financial Knowledge and Short-Term and Long-Term Financial Behaviors of Millennials in the United States," Journal of Family and Economic Issues, Springer, vol. 40(2), pages 194-208, June.
    22. Christi R. Wann & Lisa A. Burke-Smalley, 2023. "Attributes of Households that Engage in Higher Levels of Family Financial Planning," Journal of Family and Economic Issues, Springer, vol. 44(1), pages 98-113, March.
    23. Cwynar Andrzej, 2020. "Financial Literacy, Behaviour and Well-Being of Millennials in Poland Compared to Previous Generations: The Insights from Three Large-Scale Surveys," Review of Economic Perspectives, Sciendo, vol. 20(3), pages 289-335, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Terri Friedline & Mary Rauktis, 2014. "Young People Are the Front Lines of Financial Inclusion: A Review of 45 Years of Research," Journal of Consumer Affairs, Wiley Blackwell, vol. 48(3), pages 535-602, October.
    2. Geert Van Campenhout, 2015. "Revaluing the Role of Parents as Financial Socialization Agents in Youth Financial Literacy Programs," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 186-222, March.
    3. Sinha, Gaurav & Tan, Kevin & Zhan, Min, 2018. "Patterns of financial attributes and behaviors of emerging adults in the United States," Children and Youth Services Review, Elsevier, vol. 93(C), pages 178-185.
    4. Bucciol, Alessandro & Veronesi, Marcella, 2014. "Teaching children to save: What is the best strategy for lifetime savings?," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 1-17.
    5. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," The World Bank Economic Review, World Bank, vol. 31(3), pages 611-630.
    6. Minchao Jin & Zibei Chen, 2020. "Comparing Financial Socialization and Formal Financial Education: Building Financial Capability," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(2), pages 641-656, June.
    7. Terri Friedline & Ilsung Nam & Vernon Loke, 2014. "Households’ Net Worth Accumulation Patterns and Young Adults’ Financial Health: Ripple Effects of the Great Recession?," Journal of Family and Economic Issues, Springer, vol. 35(3), pages 390-410, September.
    8. Terri Friedline, 2015. "A Developmental Perspective on Children's Economic Agency," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 39-68, March.
    9. Saeed Pahlevan Sharif & Ashraf Sadat Ahadzadeh & Jason James Turner, 2020. "Gender Differences in Financial Literacy and Financial Behaviour Among Young Adults: The Role of Parents and Information Seeking," Journal of Family and Economic Issues, Springer, vol. 41(4), pages 672-690, December.
    10. Elise Frølich Furrebøe & Ellen Katrine Nyhus & Andrew Musau, 2023. "Gender differences in recollections of economic socialization, financial self‐efficacy, and financial literacy," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 69-91, January.
    11. Mathieu R. Despard & Terri Friedline & Stacia Martin-West, 2020. "Why Do Households Lack Emergency Savings? The Role of Financial Capability," Journal of Family and Economic Issues, Springer, vol. 41(3), pages 542-557, September.
    12. Margaret Miller & Julia Reichelstein & Christian Salas & Bilal Zia, 2015. "Can You Help Someone Become Financially Capable? A Meta-Analysis of the Literature," The World Bank Research Observer, World Bank, vol. 30(2), pages 220-246.
    13. Sigrid Luhr, 2018. "How Social Class Shapes Adolescent Financial Socialization: Understanding Differences in the Transition to Adulthood," Journal of Family and Economic Issues, Springer, vol. 39(3), pages 457-473, September.
    14. Julie Birkenmaier & David Rothwell & Mary Agar, 2022. "How is Consumer Financial Capability Measured?," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 654-666, December.
    15. Fuzhong Chen & Jingxin Lu & Jiaying Li & Wenting Wang & Horlane Bissielou, 2020. "Sustainable Financial Education and Consumer Life Satisfaction," Sustainability, MDPI, vol. 12(3), pages 1-21, February.
    16. Sholevar, Maryam & Harris, Laurence, 2019. "Mind the gap: A discussion paper on Financial Literacy, Financial behaviour and Financial Education : Is there any Gender Gap?," OSF Preprints b7zd6, Center for Open Science.
    17. Hyesun Hwang & Hyung In Park, 2023. "The relationships of financial literacy with both financial behavior and financial well‐being: Meta‐analyses based on the selective literature review," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 222-244, January.
    18. Ashley B. LeBaron & Heather H. Kelley, 2021. "Financial Socialization: A Decade in Review," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 195-206, July.
    19. Grohmann, Antonia & Kouwenberg, Roy & Menkhoff, Lukas, 2015. "Childhood roots of financial literacy," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 114-133.
    20. Kaiser, Tim & Lusardi, Annamaria, 2024. "Financial Literacy and Financial Education: An Overview," IZA Discussion Papers 16926, Institute of Labor Economics (IZA).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jfamec:v:37:y:2016:i:4:d:10.1007_s10834-015-9475-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.