Financial Coaching: A Strategy to Improve Financial Well-Being
These two briefs present the findings of a rigorous evaluation of financial coaching programs commissioned by the CFPB which found that coaching can help increase financial well-being.
The study used a randomized control trial design to look at the impact of two different coaching programs that serve low and moderate-income consumers. The research brief summarizes the evaluation, which shows that that access to financial coaching resulted in measurable gains for the low- and moderate- income consumers served in three areas: money management; objective financial health metrics like savings, debt levels, and credit score; and subjective feelings of financial confidence and financial well-being. The study also showed that coaching is a flexible approach that can work for many types of clients with a wide range of financial goals.
The second brief shares implications from the study for financial education practitioners. The study suggests that clients will have varying levels of engagement in coaching, depending on individual needs and other demands on their time and attention. Coaching practitioners can set their expectations accordingly and develop a service delivery model that is based on the needs of clients, the capability of the organization, and the strengths of the financial coach. Other kinds of financial educators can incorporate some of the elements of the coaching model into their service delivery. Financial coaching is customized to meet each person’s goals, and the study found that coaches can help people achieve financial outcomes that are most relevant to their own situation.