At LISC, we are always looking at what works to spur economic opportunity and strengthen neighborhoods. That’s why we teamed up with Duke University’s Common Cents Lab to find out what motivates people to engage in long-term coaching relationships at our Financial Opportunity Centers. LISC’s Laura D’Alessandro talks about what we learned and what it means for our efforts to help people build a stronger financial future.
This April, we’re highlighting our financial stability work to celebrate National Financial Literacy Month.
Why do some people connect with financial coaching while others drop off? And what does it take to keep clients engaged so they can achieve their financial goals?
Those are some of the questions LISC has been asking about our Financial Opportunity Centers, which offer an integrated set of financial, employment, education and other services that help people stabilize their financial outlook. Data from our 80 FOCs around the country prove that the program helps increase incomes, improve credit, boost job retention and support higher standards of living. But success correlates with the scope and tenure of engagement; clients who access more services and continue in a long-term coaching relationship are more likely to succeed.
With generous support from MetLife Foundation, we teamed up with Duke University’s Common Cents Lab to analyze the behavioral science behind those dynamics. Duke talked to clients at 20 FOCs and unearthed a laundry list of potential deterrents, from public transportation woes and scheduling conflicts to feeling guilty at not completing a budgeting exercise. In all of that, one issue consistently rose to the top: The feeling that the participant’s goals were so far in the future that they were unattainable.
It can take years to achieve goals like buying a home, or saving for a child’s education. Progress can be both slow and intangible, and participants sometimes lose sight of the gains that they are making along the way. Many said they felt discouraged by near-term setbacks, even when they weren’t insurmountable. Their long-term goals seemed beyond reach.
In response, Common Cents Lab tested and designed a simple intervention based on the concept of visual goal-setting: postcards with pictures on them of things like the beach, keys, or a plane flying through a blue sky. Coaches asked their participants to pick a postcard and then describe why it represented his or her financial goals. Some participants then took a second step of writing a short letter to themselves describing the goal’s importance.
Even though many selected the same pictures, the goals they represented to the individual varied, e.g. to some, a beach represented a vacation, and to others a fresh start. On subsequent sessions, many coaches would use pictures as a reminder of why their financial goals were important to themselves and their loved ones. Ultimately, this small nudge led to increased retention rates in FOC programs. Participants both increased the number of sessions they attended, and reduced the amount of time between sessions.
This kind of visual goal-setting might seem simple, but the impact could be substantial. As Duke points out in its report on the research, as many as one-third of all Americans are struggling to make ends meet every month. We think even modest gains in retention could lead to significant gains for participants.
The results demonstrate that behavioral science offers new ways to approach these efforts. LISC is working with local FOC partners to scale the use of visual goal-setting tools like postcards and is continuing to work with Common Cents Lab on a financial coaching app that further improves the client-coach relationship. We’re excited about what they might mean for the future.
Do you employ behavioral science in your work? Please share it with us, and your colleagues, on Twitter.
ABOUT THE AUTHOR
Laura D'Alessandro, Director of LISC Financial Health
Laura provides technical assistance and support to LISC’s network of over 100 Financial Opportunity Centers. Prior to coming to LISC, she worked with Helen Keller International and has a breadth of experience in program design, non-profit financing and grants management. Laura has a special interest in integrating asset building programs with workforce development initiatives and manages LISC’s Twin Accounts credit-building and savings program. She holds a B.A. from the University of Washington and a master’s in public administration from New York University.
More Financial Literacy Month Stories:
Accounting for a Family’s Financial Future
An Electrician Plugs into a Promising Career, With Room to Shine
Financial Education is a Key to Success—for Our Youth, and Our Economy
Moving From Plans to Progress to Help Families Thrive
The Science Behind Success: Duke Eyes LISC Financial Opportunity Centers