Prior to this report, the Money and Pensions Service had for several years been compiling an evidence base on what works in the field of developing financial capability. In addition, the research relating to children and young people in particular had been evolving rapidly, with new research that would supplement the database. This report provided an opportunity to synthesise the existing research, bringing together the main findings. In turn, this report was used to inform future commissioning for interventions in this area, based on what is most effective in addressing the financial capability needs of children and young people.
This main aim of this review was to give a clear picture about which financial capability/education approaches are likely to be optimal for children and young people (CYP), based on a synthesis of the available evidence. The specific aims were:
- To gain a clear understanding of what is known to be effective in improving CYP financial capability and in what circumstances.
- To understand the limitations of the current evidence base, so that efforts can be focused on building evidence and filling gaps in knowledge.
- To interpret the evidence and determine the implications of it for the MaPS’ Commissioning Plans - regarding what approaches could be used, in what circumstances and for who - in newly commissioned projects.
- To establish a new position on the effectiveness of financial education in improving CYP financial capability, both in the UK and more widely.
The review included work published between 2008 and 2018. Using key search terms, a total of about 150 items were identified as potentially relevant. After screening, around half were discounted due to either not being studies relating to specific interventions, being opinion pieces, or being larger reviews/meta analyses rather than single studies. The review then maps all the relevant pieces of evidence, categorising it using the characteristics of the intervention, the outcomes delivered, and the robustness of the evidence gathered.
Ten key themes emerged from the review:
- Train-the-trainer approaches seem effective in building financial capability.
- Workshops and face-to-face training help enhance ability and mindset.
- Combining face-to-face with learning-by-doing encourages behavioural changes.
- Parental improvement appears to be effective in influencing behaviour.
- Timing and context are hugely important, for example ‘just-in-time’ education delivered in the right context at the appropriate moment.
- The role of cognitive factors (such as intelligence, memory, reasoning etc) is important in determining future financial behaviours .
- Interventions at a young age (from as young as four) can be very impactful.
- The long-term effects of financial education on financial behaviours appears to be weak.
- Some mainstream interventions are not yet well evidenced.
- Return on investment analysis is universally lacking among the studies considered.
The review then suggests a blueprint for future programmes, suggesting they should:
- Be delivered by trained and skilled/accredited practitioners, supported by an up-to-date knowledge base.
- Focus on relevant, just-in-time and practical advice such as handling money and opening a bank account.
- Adapt to different cognitive, non-cognitive and socio-demographic needs.
- Address key drivers of future financial behaviours rather than focusing on building knowledge.
- Actively engage and involve parents/carers with learning and practical activities.
- Respond to what CYP need both now and in the future (for example, cashless, app-based, smartphone led technology).
- Follow up on impacts and outcomes of interventions.
- Use a consistent and comparable methodology to track impact and where possible also cost-effectiveness.
The review concludes by saying more research is needed to:
- Develop a robust approach to measuring return-on-investment from interventions.
- Enhance understanding of the key influencers for young people.
- Increase focus on collecting evidence for the impact of early interventions among young children.
- Understand the impact of cashless transactions on young people.
- Understand the outcomes delivered by digital tools, such as apps and games.
Points to consider
Methodological strengths/weaknesses: There appears to be a robust methodology employed, with key search terms consistently applied to find items that meet the parameters of the review. However, the authors note a number of limitations, including:
- Some of the studies that were selected had problems such as small sample sizes, lack of control groups and an inability to attribute causality.
- Many of the evaluations followed up with participants after a relatively short time period, so it was hard to assess the extent of long-term change.
- Importantly, the authors note that some evaluations are provider driven, which can lend itself to potential competing interests and publication bias.
Generalisability/ transferability: This report is relevant to all stakeholders, academics and policymakers with an interest in financial capability interventions among children and young people, and particularly to those looking to commission interventions in this area.
Relevance: Much of the research is generalisable to the UK though readers should note that some of the evidence is based on studies from other countries, and take care when applying the findings to a UK context.