This is the first of two briefs that examine the interplay between education and skills-building programming for lower income individuals and families in the areas of marriage and relationships, financial literacy, and asset development. This brief provides an overview of existing programs and practices. It highlights opportunities for collaboration between the marriage and family-strengthening initiatives and the financial literacy and asset-building initiatives, and concludes with lessons for building the foundations of family and financial stability."
Family and finances are key sources of strength and self-sufficiency that interact in the lives of most Americans. However, many face ongoing problems and stress because of family and financial instability, especially in these uncertain times. Families in low-income communities may face greater difficulties in accessing resources to build strong finances and healthy relationships due to limited social networks, skills, and opportunities.
In the last decade, a variety of federal efforts were pioneered to build financial literacy skills among lower income populations and across the entire citizenry. These range from the Assets for Independence program at the U.S Department of Health and Human Services (HHS), which combines matched savings and financial education to foster asset development in low income families, to the Money Smart Financial Education Program at the Federal Deposit Insurance Corporation (FDIC), which provides financial education resources free of charge.
At the same time, growing recognition of the important roles that family and marital relationships play in the overall well-being of children, families, and communities—including financial well-being—has led to new HHS grants that provide skill-building and learning opportunities that will help foster healthy, stable family relationships and marriages. Some of these community-based grant programs, which target marital, family, and relationship stability, include a focus on improving communication about money issues and on encouraging joint financial planning. Many also help families connect with support services that address other barriers to relationship stability.
Research indicates that there is an interaction between interpersonal relationships and economic well-being.1 There is a well-documented correlation between marriage and better economic status; over time, married people experience a greater accumulation of wealth than do single or divorced people.2 Disagreements over money are often a major source of conflict between spouses and within families.3 Instability, be it familial or financial, can create problems and stress across income groups, but those in lower income categories are often most adversely affected.4 Finally, despite evidence that marriage can improve economic circumstances, preliminary evidence suggests that many low-income couples consider a certain level of financial stability as a precondition for marriage.5 These few examples are just the beginning; given the complexity of human relationships, both with other people and with economic systems, we clearly have more to learn about the interactions among family, marriage, income, and assets.
This is the first of two briefs that examine the interplay between education and skills-building programming for lower income individuals and families in the areas of marriage and relationships, financial literacy, and asset development. These briefs are intended for practitioners working in any of these areas and interested in learning more about the other fields and potential collaboration or idea exchange. We hope that greater understanding of the similarities, differences, and interdependencies between relationships with a partner or spouse and one’s finances will better equip educators from those fields for the task of improving the stability of American families.
This brief provides an overview of existing efforts, documenting the fundamental concepts and skills that are taught by both marriage and financial educators to help low-income families move toward stability. We begin by defining each set of programs and its objectives and main tools. Then, we discuss the common ground between the specific objectives and tools and the ways that each community can offer additional tools to the other. We highlight opportunities for collaboration between the marriage and family-strengthening initiatives and the financial literacy and asset-building initiatives, and we conclude with some lessons for building the foundations of family and financial stability. Throughout this brief there are green boxes highlighting examples of existing program curricula or related literature, chosen not to indicate an endorsement or preferred status, but instead selected to show the diversity and range of content available. There are also blue boxes that provide additional information on existing programs or suggestions from other practitioners.
In many ways, a relationship with money is akin to an intimate relationship. Learning how to make good decisions and choices in relationships involves emotion and trust, while balancing immediate and long-term planning horizons is complicated. Marriage and relationship skills educators may be able to offer ways to address the emotional context of financial decisions, and they may benefit from understanding the broad array of tools available for assisting families in financial difficulty. Financial educators may be able to give guidance to families experiencing financial crises and expand their understanding of emotional issues that couples face. In any case, family problems are a significant threat to financial stability, and financial problems are a significant threat to family stability, so let us begin the conversation.
What Do Marriage and Family Strengthening Programs Do?
Marriage and family-strengthening programs seek to develop participants’ relationship skills (e.g. communication, problem solving) in order to develop and sustain healthy relationships, marriages and families. Learning how to create and maintain a stable relationship is important especially for parents because of the higher poverty rates associated with single parenthood and divorce.6 Close to 75 percent of children in single-parent homes will experience poverty before they reach 11 years old, compared with 20 percent of children in two-parent homes.7 Economic and other disadvantages related to the absence of a parent and unhealthy family relationships can negatively affect children’s academic performance and social development8 while also limiting their long-term economic prospects.9 On average, children from married-parent families are less likely to have a teen birth,10 drop out of school,11 have health problems12 and psychological disorders,13 and commit crimes.14 They are more likely than children in single-parent homes to attain positive outcomes15 and have higher grade point averages and vocabulary test scores,16 go to college, achieve better labor market outcomes,17 and have more stable marriages.18
Due to these economic and social consequences associated with family break-up, family conflict, and absent parents, the federally sponsored Healthy Marriage Initiative (HMI) was enacted to implement broad-based marriage education programs nationwide at the local level to strengthen healthy family relationships and marriages. Over 125 grantees around the country are providing relationship skill-building services, including mentoring services, education in schools, and other marriage education classes for adults who want to strengthen their marriage or relationship, are considering marriage, or who are at risk of getting a divorce. In addition, over 100 grantees are providing services to fathers and their partners to improve family functioning through a menu of services that includes parenting and marriage education.
Marriage and family-strengthening programs provide families and individuals with the support, knowledge, and skills necessary to build stable families so that they can achieve their goals, both financial and otherwise. These programs focus on skill-building and address important issues, such as conflict management, communication skills, developing and maintaining fun and friendship, understanding commitment and trust, and developing shared long-term goals as a couple or family. Relationship skills educators recognize and address expectations about relationships that come from families of origin and early experiences, and are adept at recognizing hidden barriers to stability. One example of a family-strengthening curriculum, Family Wellness, is provided in Figure 1.
It is important to note that marriage and relationship skills education programs provide a different set of services than marital or family counseling. Counseling includes treatment of couple-specific issues and conflicts whereas marriage and relationship skills education provides a skill-building curriculum geared toward prevention of family problems. While marital counseling by definition occurs with a married couple, marriage education programs may work with individuals to develop their relationship skills in anticipation of future relationships or with couples that are considering marriage or recently married.
One primary goal of the HMI is to broaden the target group receiving marriage education services and reach out to families that may otherwise might not know about, or have access to, marriage education and family-strengthening programs. Marriage education services for low-income couples, as well as diverse ethnic groups and families, are being widely funded by Federal grants. Programs that target a specific ethnic group have been established, including the African-American Healthy Marriage Initiative and the Hispanic Healthy Marriage Initiative. These programs are culturally adapted to better understand issues unique to the populations being served. Programs that teach about marriage and building healthy relationships serve all types of people: unmarried or married couples, individuals who are not married who want to learn about what it takes to develop a successful relationship and marriage, and even young people who want to learn more about healthy relationships and how to identify a good partner.
What Do Financial Education and Asset Building Programs Do?
Financial education programs seek to equip individuals with the information, knowledge, and skills to manage their household finances and navigate the financial services marketplace. Financial literacy skills taught in these programs include money management, goal setting, budgeting, and retirement planning. Investment and savings, bank products and services, home ownership, and personal credit are common financial education topics.
As discussed in the introduction, many federal agencies have programs or initiatives related to financial education. To coordinate these efforts, the Financial Literacy and Education Commission (FLEC) was formed in 2003. Led by the Office of Financial Education at the U.S. Department of Treasury, the FLEC is composed of 20 federal agencies, including HHS. A key venture of the FLEC has been the creation of the MyMoney.gov website, which provides free financial information and resources for individuals and families. One of the resources available is the FDIC’s Money Smart curriculum (mentioned in the introduction), which is used to help adults outside the financial mainstream enhance their financial literacy skills and create positive banking relationships. Figure 2 provides more information on this free curriculum.
While surveys indicate that many Americans, regardless of income, have much to learn about basic financial management, HHS is particularly interested in building the knowledge and skills of low-income families and couples in order to improve their economic stability and overall wellbeing. Community groups working with low-income families and special populations found that financial education programs needed to be tailored to address issues such as predatory lending practices or to specific immigrant groups who may mistrust financial institutions. Some programs also found that they needed to help families understand the financial and tax implications of complex family situations.
In response to the demand for financial education content tailored to low-income families, specialized financial education curricula have been developed, often for use in conjunction with asset building programs (discussed further below). One such curriculum, Finding Pathways to Prosperity, is described in Figure 3.
While financial education is focused on knowledge and skill development, asset building goes further, seeking to build wealth for low-income and economically vulnerable individuals and families. While these two areas can and do intersect, as with asset building programs that include financial education requirements, they are separate fields.
After families learn the basics of financial management, asset-building programs take the next step of helping families use what they have learned to build wealth. Asset building efforts are focused on the goal of building wealth to alleviate poverty and economic hardship. A variety of asset-building strategies, programs, and initiatives currently exist, through the efforts of federal, state, and local governments as well as non-profits and community-based organizations.
One asset-building approach is the individual development account (IDA), a short-term, limited use; goal-oriented, matched savings account bundled with financial education and other services into a program. Participant savings are matched by the program. IDA programs generally have eligibility requirements that target lower income or other vulnerable populations.
Federal funding for IDA programs is available from two HHS programs, the Assets for Independence grant program and the Office of Refugee Resettlement IDA program. The larger of the two is the AFI program, established in 1998. The AFI program makes five year grants directly to community-based nonprofits and state, local, and tribal government agencies of up to $1,000,000. Currently, almost 400 AFI projects are in operation, and, since the program began, close to 60,000 participants have saved earn income in AFI supported IDAs. The ORR IDA grant program, which restricts program participation to refugees, has 22 grantees. Other sources of funding for IDA programs include state and/or local government, banks and other financial institutions, and/or private foundations. While some IDA programs may have single source funding, many combine funding sources, in part due to a requirement of the AFI program that applicants must secure non-federal funds in an amount equal to or greater than the grant amount requested from AFI.
Depending on funding sources, IDA programs offer various match rates and have different allowable uses for match funds. For example, IDA programs funded by an ORR grant cannot offer a match higher than one-to-one, but participants can use their savings and the match money to purchase a vehicle. IDA programs funded by an AFI grant can offer up to an eight-to-one match rate (every dollar deposited by the account holder gets eight dollars of match), but vehicles are not an allowable use of match funds. The most common allowable uses are buying a first home, starting or expanding a small business, and obtaining post-secondary education or training. Some IDAs allow matched savings for home repair, adaptive equipment, and retirement.
While IDA programs allow participants to save for their own education or training, there are also asset-building programs that focus on saving for one’s child (or children’s) higher education. Qualified Tuition Programs, commonly known as 529 plans because they were authorized by Section 529 of the Internal Revenue Code, are tax-advantaged savings plans intended to encourage savings for future college costs. There are currently two types of 529 plans, college savings plans and pre-paid tuition plans. With a college savings plan, an adult creates an account to save for a child’s college expenses. Account-holders must decide what type of account to create, taking into consideration investment concepts like risk and return. Withdrawals can be used for qualified higher education expenses at most colleges and universities. Pre-paid tuition plans essentially allow a parent to make tuition payments over time and in advance of their child actually beginning college. One benefit of this type of plan is that it locks in tuition expenses, protecting against future increases. A downside is that these plans also lock a student into a particular college or university system (often a state system).
While 529 plans are available to any family regardless of income and often require a low initial investment, the main incentive these plans offer is that of a reduced federal income tax burden, which is less of a benefit for lower-income families that pay little or no income tax than for those families that earn more. To encourage college savings among the low income, some states—Louisiana, Michigan, Maine, Minnesota, and Rhode Island—will match 529 deposits for families that meet eligibility rules established by the respective state.
As a third example, the Earned Income Tax Credit (EITC), a refundable federal income tax credit for low-income working individuals and families, is considered to be an asset building tool by practitioners in the field. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. This can result in a large amount of money coming into a low-income household every year, which provides an opportunity to save, invest, or purchase an asset. However, individuals must file a tax return in order to receive the EITC, and IRS estimates indicate that many eligible persons miss out on this opportunity every year. Thus, increasing awareness of the EITC through targeted campaigns has been another focus of organizations and practitioners working on asset building among the low income.
Additionally, asset building policy advocates have worked with the IRS to make it easier for tax filers receiving a tax refund to split the refund into two accounts, e.g. a transaction account and a savings account. Others see tax refunds and the receipt of the EITC lump sum as an opportunity to encourage lower-income individuals to purchase US savings bonds. Interest continues in looking at EITC-related initiatives and programs to not only ensure that eligible families receive the EITC, but to encourage the use of these funds to build assets.
Federal Programs Across the U.S.
Federally funded healthy marriage, relationship skills, fatherhood, and asset building programs are located across the United States. The map below displays all of the healthy marriage and family-strengthening programs that have Healthy Marriage or Responsible Fatherhood grants (purple triangles) as well as the Assets for Independence (AFI) grantee programs (blue dots). Opportunities for collaboration and referrals may exist in your community, or they may already be occurring.
Map of Office of Family Assistance Grantees (Healthy Marriage and Responsible Fatherhood) and Assets for Financial Independence Grantees
Making the Case: Common Ground between the Marriage and Financial Fields
Research suggests that those that have healthy and stable relationships are more likely to have healthy stable finances and vice versa. Stability in one area seems to reinforce stability in the other, and familial and financial stability share a common foundation.
Both the level and the stability of family income differ depending on family composition. For example, single parents, on average, have lower family incomes and experience greater financial instability for several reasons: they have only one potential earner in the household and at times face unpredictability of financial support from non-custodial parents; find it difficult to recover from economically destabilizing events such as unemployment; can suffer downward mobility following divorce; accumulate lower levels of wealth across the life course; and have access to social networks that provide short-term financial help but more limited access to those that foster long-term economic mobility.
Not only do family structure and processes influence finances, but lower levels of financial resources and greater economic uncertainty beget less marriage.19 Financial instability is associated with higher stress levels20 and presents challenges to effective communication and long-term planning.21 Of course, marriage does not automatically guarantee financial stability or high quality relationships. Even within marriage, financial issues such as budgeting, spending, debt, savings and asset-building have been identified as major sources of conflict.22 Thus, enhancing low-income couples’ communication, problem-solving, and conflict management skills in conjunction with providing support for financial planning and economic development could increase both family and financial stability.
In addition to offering synergies in service delivery, coordination of services in the relationship skills and financial education fields offers opportunities to reinforce and build upon similar skills sets. Marriage and family-strengthening education and financial literacy and asset-building education require similar foundations and skill development for families to achieve successful outcomes. Programs in each area generally include such topics as setting goals and self-awareness about deeply held expectations. Participants learn that stability, either financial or familial, requires a commitment to working hard and investing in relationships, jobs, or savings accounts.
Another similarity between financial and relationship skills education is that both require participants to consider short-term versus long-term choices and outcomes. The most immediately attractive option, whether it is a partner, a consumer good, or a financial service, may not be the best option for achieving one’s long-term goals. The ability to pass up immediate rewards to wait for a better opportunity is a key theme in both family strengthening and finances. Saving money for retirement or a house may be less attractive than buying something today, or turning down an individual you find attractive because he or she has different long-term aspirations can be a hard skill to implement and teach, but is emphasized in both successful relationships and finances. P.I.C.K. a Partner is a curriculum that focuses on teaching youth how to make relationship decisions and is described in Figure 4.
Planning for the long-term also relies upon common expectations. Practitioners in the marriage field report that correcting couple’s expectations about marriage and the challenges they are likely to face is an important element. Similarly, practitioners at financial education and/or asset building programs help individuals understand what they can realistically achieve and what steps they must take to meet their savings and economic development goals. Individuals prioritize different aspects of their finances and relationships. Good decision-making and long-term planning requires an understanding of underlying priorities in both financial and romantic matters.
Today’s attitudes, behaviors, and priorities are generally shaped by one’s past. Bad (and good) habits formed from previous experiences or behaviors learned from one’s family can affect current romantic relationships and financial circumstances. While early patterning and beliefs about family, relationships, and the role of money can be challenging to discuss, understanding how couples differ in terms of sharing responsibilities, expectations, priorities, commitment, and cultural ideals is important in successfully addressing issues in relationships and finances. Power and control of money is a challenge to navigate when a couple has reliable employment and surplus income; this can be an even larger challenge for low-income or financially unstable couples. Fear, shame, anxiety, and conflict avoidance are issues couples face in relationships with families and finances.
Openly and honestly discussing relationship and financial expectations is no simple task. As circumstances change, there are opportunities to revisit joint expectations. For example, the birth of a child or the loss of a job may lead to shifts in the roles and responsibilities within the family. These opportunities may be disguised by fear, shame, and anxiety that the role changes may involve, and thus are difficult topics of conversation. In addition, deception in relationships can be a problem. The dangers of infidelity are a main topic of some marriage education curricula, but secrets in the realm of financial decision-making can be equally destructive and are sometimes overlooked.
Shared Goals of Financial Education and Marriage Education
Financial and marriage educators share the following goals for their participants in their work with couples and families, but have different tools at their disposal for attaining these goals (see Figure 5).
As we have outlined above, educational curricula in financial literacy and relationship education cover many of the same topics, such as how to plan, how to communicate, how to resolve differences, and how to set attainable goals as a family. These skills are placed in the context of learning to improve our lives as families. Although the common ground shared by these programs may seem obvious now, in fact many financial education programs do not address family and relationship issues with their participants, who are usually individuals, not couples. Without working out couple and family goals in financial education programs, other family members could undermine even the best taught financial lessons. Relationship education programs typically do include some discussion of financial issues, but practitioners in these programs may not have the experience and subject-area expertise of financial educators. Similarly, without a common set of financial goals, a couple will have difficulty negotiating their relationship in marriage education classes. As the common goal of both fields is to improve the lives of low-income families, collaboration is a clear next step. Through collaboration, both fields can be strengthened and their work made more effective, leading to greater stability for low-income families.
Existing Collaborative Efforts
Take Home Lessons
Joining expertise through collaboration can sometimes be as simple as getting family and financial practitioners together to come up with a top-10 list that communicates the joint message about healthy families and finances (Figure 6.) For example, programs can choose healthy financial practices that are relevant to the population they serve or adapt each practice to think about couples and families.