Description of the programme:
UK households have a well-documented lack of financial resilience. A third of UK adults (16 million people) are ‘living on the edge’ – spending just within their means but with no capacity to save or to deal with unexpected income shocks. This project attempts to design and test whether a simple and practical financial education tool can ‘nudge’ adults into living within their means, building financial resilience and preventing them from falling into future financial difficulties. The intervention is aimed at working aged adults who are ‘just about managing’ financially. The tool focuses on budgeting, using findings from behavioural research to attempt to implement small changes in peoples’ everyday spending decisions, that subsequently build resilience and help them to optimise their money.
The people targeted by this programme are likely to:
- Have little or no savings;
- Not have planned for their financial future;
- Have little interest in finance or making financial decisions;
- Have debts in some cases;
- Be slightly younger than the average UK population and ‘skew’ towards the lower end of the income scale.
- The main research question was: what impact does (this) targeted, behaviourally-informed, online financial education intervention have on the financial behaviour and outcomes of working age adults who are not yet in significant financial difficulty but are living close to the edge and have little resilience to any financial shocks?
The evaluation employs a mixed methods approach to analyse the success of the freely available online money management tool, called ‘Managing my money’.
- The quantitative evaluation uses six controlled field trials with various partner delivery organisations, testing the causal impact of the tool in a number of real-world settings to provide more robust and generalisable findings about the success of the tool and the type of people it works for. The trial use survey data on behaviour and outcomes regarding budgeting, saving and spending, as well as data on participants’ savings balances.
- Baseline data was collected from both treatment and control groups before the intervention. Follow-up data was collected from participants between 2-8 weeks following the intervention. In total, there were 4,155 participants. Participants were incentivised to maximise response rates.
- In-depth interviews and focus groups are used to develop deeper insight into how well the tool works, and the wider impacts it may have.
- The qualitative research included 30 participants from two of the six programmes that formed part of the evaluation. As with the quantitative research, participants were incentivised.
The results from both approaches were combined, to see what themes emerged and what implications they may have for financial capability policy and practice, as well as future financial capability research.
- The theory of change model suggests that the tool will cause participants to increase their use of budgeting, make better financial decisions and have more money left over to increase or start their savings.
- The findings show strong evidence to support this theory of change model, suggesting the tool can improve budgeting, spending and saving behaviour for those who are ‘just about managing’.
- However, the impacts are not consistent across all trials, and the impacts on saving appear to be determined by those who already have pre-existing savings.
- There was little evidence of impact on reducing missed payments or increasing financial confidence.
- The data suggests that the tool works best for those in the ‘squeezed’ segment (as defined by MaPS), but to an extent also for those in the ‘struggling’ or ‘cushioned’ segments.
- The findings support themes from existing behavioural change research that focus on the importance of targeting interventions at changing specific behaviours, being short and practical, and highlighting the benefits of social elements.
- The key implication of this research was that low-cost and relatively easy-to-implement financial education can significantly improve the day-to-day behaviours and financial resilience of people who are ‘just about managing’.
- The researchers also note it is important to move away from more traditional notions of education and towards relevant, targeted information, delivered to those most in need and at the time when they most need it.
Points to consider:
Methodological limitations :
- The authors note that the response rate was less than expected, though overall the numbers appear to be sufficient for the findings to be viewed as fairly robust.
- The authors also note that the project had a relatively short timescale, so it was not possible to collect longer-term data and assess lasting change.
Generalisability/ transferability :
- The evaluation is of significant interest to people concerned with enabling or evaluating financial education interventions, and particularly to those looking to use online tools.
- While these results are from research conducted in England, the overall implications and findings are relevant throughout the UK.