Society for Social Work and Research 17th Annual Conference: Social Work for a Just Society: Making Visible the Stakes and Stakeholders

January 16 - 20, 2013

In the current economic conditions of increasing financial instability and growing wealth inequality, learning about the factors that influence financial capability in domestic and international contexts is increasingly important. Financial capability, the combination of financial knowledge and skills, and access to appropriate financial products and services, is vitally important for individuals and families to act in their best financial interest.    

Financial knowledge and skills are required to manage personal finances.  The low level of financial literacy in the US, paired with an increasingly complex set of financial choices, significantly impairs people’s ability to make sound financial decisions. Working poor individuals and families’ abroad struggle to make sound financial decisions due to their low-incomes and lack of quality, affordable saving and investment mechanisms.  While all populations need financial capability, low-income families are especially vulnerable to the impact of uninformed or poor decision-making, due to their narrow margin for error.  People learn about finances and gain skills in a variety of ways, to include through economic socialization (cognitive, behavioral, and environmental influences that shape their learning about personal finance), and through financial education, advise, counseling, and coaching (Sherraden, 2010). However, knowledge alone is not enough; access to high quality, appropriate financial products is also needed to make optimal financial decisions. 

This symposium will address research questions about the factors that influence financial capability.  Specifically, the presentations focus on key areas of financial capability: financial socialization, and the combination of financial education and access to tools for saving and investing.  The first presentation examines the association between receiving explanations from parents about financial decisions and youth’s financial behaviors in Ghana, Africa. Supporting the theory of financial socialization, results indicate that parents who explain their financial decisions to their children appears to be a strong predictor of youth’s money management behaviors. The second, third, and fourth presentations address the question of financial education combined with increasing access to financial services.  The second presentation focuses on the impact of the combination of financial education and access to appropriate financial products in Individual Development Account (IDA) programs on financial credit.  Results support the hypothesis that the program has a positive effect on participant credit, particularly for those that complete the program within one year. The third presentation examines the extent to which IDA programs influence financial planning and behavior of South Korean study participants.  Empirical findings indicate that program participants make increasing efforts toward savings and financial planning. The fourth presentation examines the interaction between individual ability and external conditions on individual financial functioning through families’ use of 529 College Savings Plan in Oklahoma as a mechanism to encourage families to accumulate assets for children’s future.  Results of the experiment indicate that there are interactive effects between financial knowledge and the policy changes created by 529 program.

The results of the studies provide evidence about key factors concerning financial capability that are important both domestically and internationally for low- and moderate-income families.