The effectiveness of financial education is controversial and calls have been made to change its delivery methods. Still, more recent studies show benefits of financial education for consumer financial capability and well-being. This study takes advantage of new information available from the 2018 FINRA Foundation’s National Financial Capability Study to examine how financial education attributes, such as requirement, hours, and quality, can enhance the financial capability of emerging adults aged 18-25. Financial capability is defined as the ability to apply financial knowledge and perform desirable financial behavior for achieving financial well-being and measured by both objective and subjective factors. Results suggest that different financial education attributes may have different impacts on financial capability factors. When financial education is required and more hours of instruction are received, the financial knowledge of emerging adults could be improved. Further, as the quality of the financial education improves, emerging adults could gain more confidence in their financial knowledge, perform more desirable financial behaviors, and feel more capable to handle their own finances. The findings emphasize the importance of financial education quality in improving financial capability of emerging adults.
Author: Nilton Porto, MBA, PhD, is an associate professor of consumer finance in the department of Human Development and Family Science, University of Rhode Island. He received his doctorate from the University of Wisconsin-Madison and his master’s degree from Case Western Reserve University.
Author:Jing Jian Xiao, PhD, is a full professor of consumer finance in the department of Human Development and Family Science, University of Rhode Island. He also serves as the editor of Journal of Financial Counseling and Planning.
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