Financial Stability and Career Services

The Issue

One of the hardest things about managing your money is that it’s a responsibility that never ends. Whether you are working your first job or trying to manage your retirement account, you have to make a myriad of decisions as you seek to maximize your income. Strong financial habits are key to financial well-being at all stages of life.

Managing finances is even more difficult for families in poverty. Meeting basic needs, staying out of debt, maintaining decent credit, and trying to tuck some money away for a rainy day can be a house of cards on a tight budget—an unexpected bump in life can cause everything to fall apart. The resulting crises can be detrimental not just to a family’s finances, but to their mental health as well. The stress of constantly trying to make ends meet never goes away.

Maintaining financial health is more than just keeping a tally of income and expenses, however. It requires financial literacy—an understanding of budgeting practices, savings strategies, how to match spending with family goals, and the like—and a long-term view. Low-income families—laser-focused on making sure that they stay clothed, housed, and fed today—don’t always have the luxury to dream about and invest in tomorrow.  

Catholic Charities Dallas (CCD) has been a long-time provider of financial services to its Texas community, helping families with maintaining their housing or employment, paying down debt, building a savings account, and maintaining healthy credit. CCD’s internal data shows that, with their support, clients have been able to increase savings, reduce debt, improve credit scores, and increase household income.

Recently, CCD has created an intensive, year-long program that consists of personalized coaching to help clients overcome their specific financial obstacles and reach their goals. A hallmark of the program is its bundled service model; clients can access rental assistance, for example, and then, once stabilized, can take advantage of CCD’s employment services to help them earn a better-paying job. Along the way, they may set a goal of one day being able to buy their own home. CCD’s housing counselor can step in to help with home-buying education and planning. Throughout the program, the client and his or her coach periodically revisit the client’s goals, financial situation, and refine the personalized service plan accordingly.   

Research by Braunstein and Welch indicates that intensive and personalized financial support services may be the key to helping families become more stable. However, little rigorous research exists on financial coaching in particular. It’s important for us to understand what is most effective at helping low-income families become financially stable so they can look towards and plan for their bigger, brighter futures.

The Intervention

CCD’s Financial Stability and Career Services program (FSCS) aims to help families build lasting financial habits by equipping them with the skills needed to maximize their incomes and assets, become more financially independent, and improve their quality of life. Personalized coaching allows participants to work on overcoming the particular financial barriers they face to reach their unique goals.

In addition to personalized financial coaching, the FSCS program provides clients access to a bundle of related services, such as housing and rental assistance, employment services, housing counseling, and individualized goal-setting coaching.

Research Question

What effect does an intensive, year-long financial coaching program have on a family’s credit score, earnings, savings, and debt?

Intended Outcomes

• Families who engage in CCD’s FSCS program will see improved credit score, savings, debt levels, employment, and earnings outcomes than those who do not.
• These families will also utilize government benefits at a lower rate.

Research Study Design

LEO’s evaluation of the FSCS program is a randomized controlled trial. Potential study participants are recruited from some of CCD’s other programs, such as pregnancy services, disaster relief services, or education programming.

Because CCD does not have the resources to provide this year-long, intensive financial coaching to everyone, those who express interest in the program are entered into a lottery to randomly determine who will receive services. Those randomly selected for the FSCS program become part of the treatment group and begin to work with their dedicated financial coach. Those who are not selected by the lottery receive a list of other available support services at CCD and in the area. These individuals become part of the control group.

At the conclusion of the study, LEO researchers will compare individuals’ earnings, savings, debt, and credit scores across both groups.

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