Could Coaching Improve Consumer Credit Use Behavior? Evidence From a State Program

Financial coaching, a hands-on financial wellness approach, has emerged as a go-to strategy to help clients establish and reach their personal financial goals. We analyzed the borrowing and repayment behavior of 1,790 clients who received financial coaching through a program sponsored by the state o...

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Published inFinancial counseling and planning Vol. 34; no. 3; pp. 309 - 324
Main Authors Theodos, Brett, Teles, Daniel, Docter, Benny
Format Journal Article
LanguageEnglish
Published New York, NY Springer Publishing Company 01.11.2023
Association for Financial Counseling and Planning Education
Subjects
Aging (Individuals)
Behavioral Sciences
Coaching
Community Services
Consumer credit
Counseling
Credit (Finance)
Credit cards
Credit scoring
Debt (Financial)
Delinquency
Employers
Empowerment
Financial counseling
Fund raising
General Counseling
Government agencies
Labor Force Development
Leadership
Lessors
Marriage and Family Counselling
Meta Analysis
Nonprofit organizations
State Agencies
State Programs
Well Being
Workforce
Delaware
United States > US
consumer finance
financial coaching
personal finance
credit
financial capability
financial well-being
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Summary:Financial coaching, a hands-on financial wellness approach, has emerged as a go-to strategy to help clients establish and reach their personal financial goals. We analyzed the borrowing and repayment behavior of 1,790 clients who received financial coaching through a program sponsored by the state of Delaware. Relative to a matched comparison group, financial coaching clients cure 0.24 more delinquent accounts, reduce credit card utilization by 5 percentage points, reduce the number of debts in collections by an additional 0.37 accounts, and have $422 less in credit card debt. Findings also show a 7 percentage point increase in the share of clients with a credit card and a 6 percentage point increase in the share of clients with a student loan. We do not see consistent differences in personal installment loans or mortgage holding. These estimates provide evidence that financial coaching can provide benefits for clients while being provided on a state-wide scale, illustrating the potential of public-private programs to provide services.
ISSN:1052-3073
1947-7910
DOI:10.1891/JFCP-2022-0022