Financial counseling

Before making investments in this strategy, city and county leaders should ensure it addresses local needs.

The Urban Institute and Mathematica have developed indicator frameworks to help local leaders assess conditions related to upward mobility, identify barriers, and guide investments to address these challenges. These indicator frameworks can serve as a starting point for self-assessment, not as a comprehensive evaluation, and should be complemented by other forms of local knowledge.

The Urban Institute's Upward Mobility Framework identifies a set of key local conditions that shape communities’ ability to advance upward mobility and racial equity. Local leaders can use the Upward Mobility Framework to better understand the factors that improve upward mobility and prioritize areas of focus. Data reports for cities and counties can be created here.

Several indicators in the Upward Mobility Framework may be improved with investments in financial education and counseling. To measure these indicators and determine if investments in these interventions could help, examine the following:

• Opportunities for income: Household income at 20th, 50th, and 80th percentiles. These data are available from the Census Bureau’s American Community Survey.

• Financial security: Share of households with debt in collections. These data are available from the Urban Institute’s Debt in America website.

• Opportunities for wealth-building: Ratio of the share of a community’s housing wealth held by a racial or ethnic group to the share of households of the same group. These data are available from the Census Bureau’s American Community Survey.

• Defining outcomes and a clear service delivery model: Successful financial education and counseling programs develop a clear, data-driven service delivery model that links services to measurable, targeted outcomes, such as credit score improvement, debt reduction, and increased savings. Programs aim for observable behavioral changes, like enrolling in loan or debt repayment plans or opening a savings account. Many communities have adopted the Financial Empowerment Center (FEC) model of government-led financial counseling created by the Cities for Financial Empowerment Fund (CFE Fund), which focuses on building financial stability rather than just financial literacy. Robust data systems tracking standardized outcomes (e.g., credit scores, debt reduction, banking status) are crucial for program monitoring, demonstrating impact to leadership, securing funding, and helping counselors improve sessions.
• Engaging community members and key partners in program design: It is crucial to design a financial counseling program with input from the individuals and communities being served. Generally, clients are lower income individuals with a source of income, but programs can also be designed to meet the needs of specific populations, such as people at risk of homelessness, individuals with a history of incarceration, or those unable to meet basic needs. Include community members who represent potential clients to help program leaders identify needs and refine the curriculum to a community’s context. Engaging community members in a program’s inception also presents the opportunity to cultivate champions who can serve as trusted messengers. Similarly, engaging community organizations in program planning can develop referral networks to related services such as legal aid providers, workforce development programs, or financial institutions.
• Providing evidence-based strategies to encourage behavior change: Counseling sessions will often prioritize five key outcomes: establishing or improving credit scores, reducing non-mortgage debt, promoting saving, opening and using a safe and affordable bank account, and legacy planning. Within these five domains, counselors should instruct clients on evidence-based approaches like creating debt repayment plans or reporting rent payments. To encourage greater savings, counselors can assist clients in establishing automatic set-aside transfers and creating budgets for expenses. Counselors can also refer clients to trusted financial institutions and prepare the paperwork to open a bank account or to start legacy planning. Financial counseling incorporates behavioral economics strategies (e.g., nudges, goal-setting prompts, default savings mechanisms) to support habit-building and behavior change.
• Increasing impact through co-location and referrals: Counseling should not be a standalone service, and services are more effective when integrated into existing social services like housing, workforce development, or public benefits. Co-locating services in trusted community spaces like libraries or the offices of existing community organizations can help establish trust and facilitate integration with other social services. In designing an impactful financial education program, identify city agencies or nonprofit service providers the financial counseling program will engage with (like legal aid or utility assistance).
• Prioritizing one-on-one counseling: While classes offer awareness, individualized one-on-one support is more effective for changing client behavior because it enables counselors to build stronger relationships with clients over time. Often, the first session is focused on building rapport, identifying clients’ needs, and setting goals. Subsequent sessions focus on developing action steps and incorporating practices to make progress towards goals, like reducing credit card debt. The continuity of the counselor-client relationship encourages clients to return for additional sessions, and this sustained engagement is a key driver of outcomes. Evidence from the Consumer Financial Protection Bureau (CFPB) indicates that regular follow-up and repeated engagement are associated with stronger improvements in financial behaviors and overall financial well-being.
• Providing accessible and flexible financial education services: Programs should offer flexible meeting formats (such as in-person, phone, WhatsApp, and/or Zoom) and operate during the evening and on weekends to remove barriers to access. Programs can also be flexible with where they offer services, such as at libraries, community centers, or schools. While community spaces offer more accessible services, counselors should conduct sessions in private rooms to maintain confidentiality.
• Partnering with financial institutions: Effective financial counseling programs should forge relationships with financial institutions to help people open bank accounts and access other trustworthy financial products and services (such as loans, credit cards, and retirement accounts). Programs can partner with banks or Community Development Financial Institutions (CDFIs) that are engaged in local communities. The CFE Fund’s Bank On initiative includes standards for safe and affordable transactional checking accounts at banks and credit unions, including no overdraft fees and robust functionality.
• Professional, standardized training: Successful programs rely on full-time, professionally trained counselors rather than volunteers, which ensures quality and consistency. Prioritize individuals with interpersonal skills necessary for counseling rather than individuals with a technical, financial services background. It’s important to create a culture of understanding and empathy with clients. Given the needs of many clients, individuals with a social work background are ideal and can learn financial counseling. The CFE Fund provides an industry standard for training counselors for financial counseling programs. In addition to training, it’s crucial to support professional development through certification programs like HUD Housing Counseling Certification, the National Foundation for Credit Counseling, or others.

• Staffing from communities served: Hire staff directly from communities being served, ensuring staff share the lived experiences, languages, and cultural backgrounds of their clients. Language representation is especially important in staffing considerations, as is training in cultural competency, for assisting immigrant and refugee clients.
• Recognizing structural constraints: Staff should understand that individuals cannot budget their way out of poverty. Program leaders should create a culture of empathy for clients. Staff should be trained to understand that clients' financial situations often stem from structurally constrained choices and historic injustices rather than just poor individual choices.
• Connecting clients to safe and trustworthy financial products: Reducing disparities requires access to safe, transparent financial products. Many households use high-cost services like payday loans due to mistrust of banks, negative experiences, or complex fees. Financial counseling can help transition clients to reliable, lower-cost products while building confidence in navigating financial systems. Partnerships with financial institutions and CDFIs are essential to expanding equitable access.
• Supporting vulnerable populations: Financial counseling can be a powerful service to support vulnerable populations like youth aging out of foster care, individuals returning from prison, survivors of domestic violence, veterans, refugees, or others who face unique and complex financial challenges. Financial counseling programs can partner with organizations serving vulnerable populations such as foster agencies, parole offices, domestic violence shelters, or veterans organizations to make counseling more accessible. 

• Individuals served: Involve the population served in the design phase to accurately define community needs. Clients can also provide feedback on services that can be incorporated into the model.
• Local government leadership: Government support for financial education and counseling programs provides legitimacy, funding, and the ability to integrate counseling into city-wide referral systems.
• Financial institutions: Banks and credit unions are necessary partners for providing safe, affordable financial products. These partners can also potentially serve as funders or as referral partners.  
• Nonprofit service providers: These partners often manage day-to-day operations and provide the expertise and deep-rooted community connections needed to reach residents. In many communities, nonprofits help recruit counselors or deliver financial counseling.
• Legal aid: Service coordination should include legal aid providers, particularly for clients facing issues such as eviction, debt collection, or identity theft.
• Community-based referral partners: Financial counseling programs should establish partnerships with organizations that provide services related to financial stability, like workforce training or housing support organizations. Mutual referrals can increase the impact of all related services. Programs can engage with organizations that serve vulnerable populations such as organizations or local agencies serving seniors, refugee resettlement agencies, or parole offices/re-entry organizations.
• Faith-based organizations: Faith-based organizations can be important outreach partners for low-income communities, and faith leaders can be powerful champions for financial education programs. Faith-based facilities can also serve as trusted locations to deliver services because they are already places where people already go to receive assistance.
• School districts and community colleges: Partnering with these institutions can help reach young adults, including lower-income students, to provide them with early, accurate information and support on critical financial decisions like student loans and navigating the workforce.

• Securing mayor/executive buy-in: Mayors or county executives that champion financial counseling programs can bolster awareness of services, secure funding sustainability, and  facilitate cooperation between city agencies. To ensure long-term program sustainability, programs can cultivate support among agency staff and leadership or political candidates, securing leadership alignment for maintaining financial counseling as a public service through changes in administration.
• Investing in counselor recruitment and retention: Offering prospective counselors living wages, health benefits, professional development opportunities, and clear career paths facilitates recruitment and can reduce staff turnover. Effective counselors often have a social work background and have lived experiences relatable to their clients. Counseling should be delivered by full-time professionals. Due to exposure to client financial stress, counselors may experience vicarious trauma and burnout. To support staff well-being and retention, programs should provide manageable caseloads, empathetic supervision, opportunities for professional development, and mental health resources.
• Sharing data to create smooth transitions between services: Financial education and counseling programs can work with city agencies and other social service providers to implement data sharing agreements, as clients are often accessing similar services across different programs. This allows service providers to track people's progress while avoiding duplicative work, such as repeatedly filling out intake forms. This can also improve the client experience by streamlining access to services.
• Data-driven messaging for program longevity: Using robust data on client outcomes helps demonstrate to funders and the public that financial counseling is a high-impact public service. Data collected by financial counseling programs also provides insight into how difficult poverty is to overcome in many communities. This data can help drive investments in other policies that reduce poverty such as workforce development or education programs.
• Establishing responsible AI use and data governance protocols: As programs adopt AI tools to support service delivery and data management, they should establish clear protocols to ensure ethical, transparent, and secure use. This includes protecting client privacy, minimizing bias, and providing staff training and oversight. AI should enhance, not replace, trusted counselor-client relationships by supporting tasks like outreach, reminders, and data tracking while maintaining human-centered counseling and equitable outcomes.

• Standardized financial metrics: Most programs track four primary areas: credit score increases, debt reduction, savings increases, and moving from unbanked to banked status. Programs can also utilize additional metrics related to the use of predatory products and services, such as the number of payday loans taken out in a given time period, as well as the frequency of money order and pawn shop usage. Some programs also track metrics related to legacy planning and asset protection, such as organizing assets, adding account beneficiaries, or completing estate planning documents. The National Endowment for Financial Education provides free online resources to design program evaluations.
• Engagement, retention, and population served: Tracking how many people attend sessions and persist through programming is a key indicator of program health and the likelihood of achieving long-term outcomes. Analyzing when and why people disengage from the program provides insight into ways to strengthen services and ensure clients’ needs are met. Program leaders should also track client demographics to ensure programs have a client base representative of the catchment area.
• Access to services and successful referrals: Programs should measure how effectively clients are connected to financial products and supportive services, including the number of successful referrals to legal aid, housing support or public benefits. Tracking whether clients access and utilize these services provides insight into how well programs are addressing systemic barriers.
• Client well-being: Evaluators should measure changes in a client's financial self-confidence and their ability to navigate financial decisions. Programs can measure client satisfaction through feedback surveys. Nationwide tools like the Consumer Financial Protection Bureau (CFPB) Financial Well-Being Scale can help program leaders understand their clients' feelings of self confidence based on a nationwide standard.
• Behavioral change: Rather than just testing knowledge (pre/post-tests), programs should look for real-world changes, such as adopting automatic savings, reducing the use of predatory payday loans, adopting an appropriate student loan payment plan, or opening savings or retirement accounts.
• Long-term impacts: Larger, long-term evaluations should look at home ownership and financial stability as long-term positive impacts of financial counseling. Programs or evaluators should specify outcomes based on the population served; for example, student loan debt for young adults.