Can Personal Financial Management Education Promote Asset Accumulation by the Poor?

Abstract

This paper asks whether personal financial management education is an effective mechanism for helping lower-income households accumulate financial assets and improve credit histories. The paper argues that the best existing studies of the effectiveness of financial literacy initiatives suggest that such initiatives might help lower-income households build savings and improve credit records, but the results are only suggestive due to the limitations of the studies. The paper concludes that a high research priority should be to gathering more robust evidence on whether teaching personal financial management skills to lower-income households can be an effective means to improve their financial situations.

Keywords: personal financial management education, financial literacy, impact evaluation, poverty, asset accumulation