Financial education and 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.

• Prioritize hiring high-quality coaches: Coaches are at the foundation of most financial education and counseling programs. They often deliver nearly all components of the program, from client recruitment to meeting with residents to evaluating outcomes. Conduct a broad, rigorous search for trained, professional coaches who also demonstrate a strong familiarity with the community in which the program operates.
• Integrate into existing social service operations: Partnerships with social service agencies, community-based organizations, and other nonprofits allows financial education and counseling programs to reach more potential clients, create referral networks, and reduce transit and time barriers for clients. A particularly valuable form of partnership is site co-location, which allows clients to access key services like food pantries, health clinics, and temporary housing alongside financial counseling.
• Invest in data capacity to build trust among clients and funders: Successful financial education and counseling programs include a robust data collection and evaluation component, such as tracking outcome data like debt reduction and increased savings. Doing so can have a strong impact for a range of stakeholders; for clients, the data can serve as a motivator and strengthen a relationship with their coach; for funders, such data can demonstrate success; and for the program itself, such data collection can be used to measure and refine the program for continuous improvement.
• Take creative approaches to client recruitment and engagement: Depending on the target population and delivery site, coaches can take nontraditional approaches to cultivating relationships with new clients. For instance, high school students are often more likely to respond to text messages than emails; social service recipients may prefer an in-person conversation at a community event before scheduling an individual session. Programs can also set aside funding for small incentive programs (such as Amazon gift cards), that can be used to encourage repeat visits and reaching small goals (like opening a bank account).