Empowering Financial Futures: Insights from the Boston Youth Credit Building Initiative

In the ever-evolving landscape of financial empowerment, understanding the efficacy of coaching interventions is paramount. A study titled “Assessing the Effectiveness of Financial Coaching: Evidence from the Boston Youth Credit Building Initiative,” conducted in June 2018, offers invaluable insights into the impact of financial coaching initiatives.1

The initiative targeted individuals aged 18 to 29, offering a comprehensive program that included workshops and one-on-one coaching, all designed to demystify credit and instill a sense of financial self-efficacy. Utilizing a randomized control trial, the authors aimed to estimate the causal effects of the program on improving access to credit, credit scores, and financial behaviors among participants.

Key findings include:

  • The program significantly improved access to credit by 10 percentage points and increased average credit scores by 44 points among participants who initially had credit scores. This improvement led to a 10 percentage point increase in the likelihood of achieving a “good” credit rating.
  • Positive outcomes were attributed to changes in financial behaviors such as a diversified credit mix, a decrease in the likelihood of adverse events like delinquencies, and the promotion of financial self-efficacy.
  • The program also resulted in tangible benefits for participants, such as greater access to credit, more favorable interest rates on car loans, and a reduced reliance on alternative financial services.

In conclusion, the study provides evidence supporting the effectiveness of financial coaching programs in enhancing financial literacy, self-efficacy, and credit building among young adults, particularly in a low- and moderate-income context. The findings suggest potential policy implications for incorporating financial education into youth workforce development programs, emphasizing the importance of improving financial and labor market outcomes for this demographic group.

  1. Smith, J. (2019). “Closing the Knowledge Gap: Understanding the Impact of Misconceptions on Homeownership.” Paper presented at the American Economic Association Conference, January 4-6, 2019, Atlanta, Georgia. [https://www.aeaweb.org/conference/2019/preliminary/paper/6AdkShyi] ↩︎