Special issue offers new insights on family financial well-being

A special issue of the Journal of Family and Economic Issues charts an agenda for new practice and research on financial capability, assets, and family financial well-being.

What are the most effective approaches for fostering financial capability and well-being? A new collection offers insights that will reshape practice and the direction of research.

The December issue of the Journal of Family and Economic Issues presents 16 new studies published as the Special Issue on Financial Capability and Asset Building for Family Financial Wellbeing.

“Financially vulnerable families have disproportionately suffered the negative outcomes of a prolonged pandemic, stagnant wages, high inflation, and ongoing impact of work and community uncertainty and unrest,” write Julie Birkenmaier, David Rothwell, Jodi Jacobson Frey, and Darla Spence Coffey in their introduction to the issue.

Those developments, they note, make it critically important to strengthen the assistance offered by practitioners, as well as the policy and evidence underpinning supports for vulnerable families. Rothwell, Jacobson Frey, and Birkenmaier are guest editors of the issue; Spence Coffey is the president and CEO of the Council on Social Work Education.

Rothwell is the Barbara E. Knudson Endowed Chair in Family Policy in the College of Public Health and Human Sciences at Oregon State University and a Faculty Associate of the Center for Social Development (CSD). Jacobson Frey is Professor in the University of Maryland School of Social Work, CSD Faculty Associate, and former chair of the Financial Social Work Initiative, a co-organizer of the conference from which the issue emerged. Birkenmaier, a CSD Faculty Director, is professor in the Saint Louis University School of Social Work and a co-lead of the Grand Challenges for Social Work Network to Build Financial Capability and Assets for All.

Julie Birkenmaier

“The special issue contains advances for the field—for example, how to measure financial capability, the role of context and policies in shaping financial capability, and connections to health outcomes, among others,” Rothwell said, adding that the contents “are sure to guide the next generation of financial capability theory, practice, and research.”

Inside the Special Issue on Financial Capability and Asset Building for Family Financial Wellbeing

Articles in the issue touch upon the routine financial concerns that arise in working with families and the priorities for research on family financial well-being.

Both practitioners and researchers in this area would benefit from a common understanding of what financial capability is and how it should be measured, note Birkenmaier, Rothwell, and Mary Ager, Associate Professor in the University of Georgia School of Social Work. That insight motivates a scoping review, in which they connect the disparate strands of research. Finding variation in the ways researchers have operationalized the concept of financial capability and measured financial access, they offer recommendations for standardizing constructs and measures.

Jeffrey Anvari-Clark and David Ansong also recognize broad trends in financial capability practice and research, noting that efforts commonly focus on individual education but overlook several other influences that shape well-being. Clark is Assistant Professor in the Department of Social Work at the University of North Dakota, and Ansong, a CSD Faculty Director, is Associate Professor in the School of Social Work at the University of North Carolina at Chapel Hill. Their findings show that having a savings habit and the amount one saves are strongly associated with financial well-being, more so than are financial shocks, income volatility, and the use of financial products.

For many families, a payday loan offers a path through a financial emergency or a way to get by until the next paycheck, but the high interest rates and can ensnare borrowers in debt. In a study examining how such loans affect borrowers’ financial well-being, Zibei Chen, Terri Friedline, and Catherine Lemieux find that payday borrowers are less able to make ends meet or to pay their bills on time but that the loans provide an important source of cash for emergencies.

Zibei Chen is an assistant professor in the University of Tennessee College of Social Work, Friedline, a CSD Faculty Associate, is an associate professor at the University of Michigan School of Social Work, and Lemieux is the Margaret Champagne Womack Professor in Addictive Disorders at the Louisiana State University School of Social Work.

Debt may influence financial well-being in additional ways. Seeking to better understand how it influences retirement decisions, Zibei Chen and Karen Zurlo, associate professor in the Rutgers University School of Social Work, examine the debt owed by a group of adults approaching retirement age. They find that people who own retirement accounts are more likely to estimate how much savings they will need for retirement and that people who owe unsecured debt—for example, credit card debt—are less likely to plan for retirement.

Most families in the United States do not have enough savings to weather an unexpected financial shock, and research has tied emergency savings patterns to financial capability—financial knowledge and confidence, as well as access to financial services, but how do state contexts shape those individual patterns?

A study by Rothwell, Leanne Giordano, Assistant Professor at California Polytechnic State University, and Robert Stawski, Professor at the University of Essex, finds that people are more likely to save for emergencies if they live in a state with higher rates of account ownership or in a state with a government that is more ideologically progressive.

Helping families to cultivate financial capability is about more than building savings for emergencies. The work requires choices about which components should be emphasized—whether families would be best served by building financial literacy, access to financial services, or practice in using those services. To inform helping professionals in making such choices, Sicong Sun and colleagues examine the relationships among components of financial capability, finding that access to financial services and financial literacy are both associated with financial behavior, with access being the more important of the two.

They also find that people with greater financial access and higher levels of financial literacy are less likely to experience financial hardship.

The study was coauthored by Sun, a CSD Faculty Associate and Assistant Professor in the University of Kansas School of Social Welfare; Yu-Chih Chen, Assistant Professor in the Department of Social Work and Administration at the University of Hong Kong; David Ansong; Jin Huang, CSD Faculty Director, Professor in the Saint Louis University School of Social Work, and Research Professor in the Brown School at Washington University; and Margaret S. Sherraden, CSD Faculty Director and Research Professor in the Brown School.

Sun is the lead author of another study in the special issue. That work, written with Yu-Chih Chen, examines whether financial capability and health are linked. They find that financial capability functions as an independent social determinant of health, regardless of the race/ethnicity, gender, income, education level, or employment.

The special issue emerged from a conference organized by CSD’s Financial Capability and Asset Building Initiative and the Financial Social Work Initiative at the University of Maryland School of Social Work. The National Endowment for Financial Education (NEFE), the Woodside Foundation, and the Grand Challenges for Social Work sponsored the event. Additional papers from the conference appeared in the journal Families in Society.

“These articles contribute to the ever-growing and ever-important field of family financial capability and asset building,” said Jacobson Frey.

The special issue and the conference preceding it both reflect CSD’s growing engagement in that field and in the effort to build knowledge for broadening financial well-being. Much of the center’s work though the Financial Capability and Asset Building Initiative has focused on training social workers to guide vulnerable families that turn to them with financial concerns.

“Applying a social work lens to topics including but not limited to payday loan use, emergency savings, economic hardship and connection of financial capability to health provides a foundation from which multidisciplinary researchers and practitioners can work together to further advance the field,” she said.

“The articles in this special issue highlight the critical role that social work plays in the financial wellbeing of vulnerable families, as well as the importance of interdisciplinary work across related fields,” said Birkenmaier, adding, “The research studies point to pathways for practitioners and researchers to advance financial capability for all.”