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UNITED STATES DEPARTMENT OF LABOR

An evaluation of the impacts and implementation approaches of financial coaching programs (Theodos et al., 2015)

Review Guidelines

Causal Evidence Guidelines

Absence of conflict of interest.

Citation

Theodos, B., Simms, M., Treskon, M., Stacy, C P., Brash, R., Emam, D., Daniels, R., & Collazos, J. (2015). An evaluation of the impacts and implementation approaches of financial coaching programs. Washington, D.C.: Urban Institute. [New York City]

Highlights

  • The study's objective was to examine the impact of financial coaching on financial behaviors. This profile focuses on the intervention based in New York City. The authors investigated similar research questions for an additional contrast, the profile can be found here.  
  • The study was a randomized controlled trial. The data sources included baseline and follow-up surveys and credit report data. The authors used statistical models to analyze differences in outcomes between treatment and control group members.  
  • The study found that program participation was significantly related to the number of deposits into savings, paying bills on time, having a budget, and credit score.  
  • This study receives a high evidence rating. This means we are confident that the estimated effects are attributable to financial coaching, and not to other factors. 

Intervention Examined

Financial Coaching

Features of the Intervention

Financial coaching is a strength-based approach focused on behavior change that is tailored to an individual's financial goals. Financial coaching was provided by The Financial Clinic, a non-profit organization in New York, New York using a curriculum developed in-house. Clients and coaches worked together to create a plan to accomplish goals such as building credit and savings. Initial sessions typically included an intake and assessment, and the subsequent sessions focused on client goals. Participants met with a coach for an average of 3.1 sessions and sessions lasted 60-90 minutes. Coaches were professional financial coaches as well as recent college graduates participating in a fellowship. There were no eligibility requirements. 

Features of the Study

The study was a randomized controlled trial. Recruitment took place between January 2013 and March 2014. Individuals were recruited during the tax season through their free income tax filing program as well as through credit, debt, and budgeting workshops. A total of 431 individuals participated (222 in treatment group and 209 in control group). The study sample were 45% male, 15% married, 40% Black and 41% Hispanic/Latino, with 43% employed. The average age was 41. The treatment group was eligible to receive financial coaching sessions, whereas the control group was not able to participate in financial coaching sessions until the study was over. Data sources included baseline and follow-up surveys and credit report data. The authors used a statistical model to compare the outcomes of treatment and control group members. The analysis included all members assigned to the treatment and control groups, which included participants assigned to the treatment group that did not participate in coaching.  

Findings

Knowledge and skills for money management 

  • The study found that participants in the treatment group made significantly more deposits into savings and had significantly higher mean credit scores as compared to the control group. 
  • The study also found that participants in the treatment group were significantly more likely to pay bills on time and have a budget as compared to the control group.  
  • The study found no significant differences in total account balance, total debt, having emergency funds, or borrowing money from family/friends between the treatment and control group. 

Considerations for Interpreting the Findings

The study reports a less stringent statistical significance level, considering p-values of less than 0.10 to be significant, though it is standard practice to consider statistical significance if the p-value is less than 0.05. Only results that demonstrate a p-value of less than 0.05 are considered statistically significant in this profile. Also, the authors used multiple imputation to impute income because 32 percent of applicants failed to report their income in the baseline survey. All models were robust to the inclusion or exclusion of imputed income.

Causal Evidence Rating

The quality of causal evidence reported in this study is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to financial coaching, and not to other factors.  

Reviewed by CLEAR

April 2024

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