Description of the programme

The 'managing your personal finances' programme was conducted at the Business School of the University of Western Australia in 2013, and delivered by two experienced financial educators who had designed the course plus a third course tutor.

The course is targeted as a second semester unit for students in their first year of study (but can be taken at any time).

The course included 11 weeks of classes, plus exams and a review week. Weekly lectures were 105 minutes plus a 45-minute tutorial. The unit assessment included tutorial participation (10 per cent), a weekly reflective journal (10 per cent), group assignment (15 per cent) and two exams (20 per cent and 45 per cent).

Tutorials allowed participants to prepare personal financial plans (a key objective of the programme but not assessed), facilitated by a weekly reflective journal. The group assignment involved evaluating the financial position of a young couple using financial ratios introduced in the course, plus the application and analysis of time value of money principles.

The book 'Your Money Milestones' by Moshe Milevsky was required reading because of its strong thematic approach set around key money milestones and simple mathematics to illustrate application of personal financial principles.

The study

• The study is an evaluation of a university programme using pre- and post-measurement with a control group. It is supported by a comprehensive review of international evidence which informed the design of the study.
• A total of 384 students commenced the unit with 374 receiving a grade; a comparison group of 501 students also participated to provide objective evaluation. Administrative records were used to analyse the characteristics of those who enrolled relative to those who did not. Pre- and post-surveys were conducted relating to demographic characteristics, ownership of financial products and financial attitudes.
• The full report includes in-depth data tables in the appendices.

What are the outcomes?

• Basic, advanced and applied measures of financial literacy / knowledge, including objective and subjective measures.
• A set of five positive financial behaviours were measured: (1) carefully considering the affordability of something before purchase, (2) timeliness of paying bills, (3) keeping close watch on personal financial affairs, (4) setting financial goals and striving to achieve them, and (5) consulting independent sources of information/advice before committing to a financial decision.

Key findings

• • Compared with the control group, those enrolling in the course had lower knowledge scores, lower objective financial literacy, lower self-assessed financial literacy, did not display positive attitudes as often, were less aware of financial products and displayed some evidence of less successful financial behaviours. This contrasts with the contention identified by other sources (Willis, 2011) that those who enrol in financial education courses have better financial knowledge and attitudes.
  • Those enrolling in the course reported significantly lower satisfaction with managing their personal finances compared to the control group, suggesting that this could be an underlying motivation for enrolling. However, there was no difference between these groups with regard to their intention to perform a number of financial behaviours that might improve satisfaction.
  • The baseline comparison supports conclusions from previous empirical literature that those with more resources (income and assets) and those with prior business/finance/economics study have higher financial literacy scores.
• • The study identified significant outcome effects for those completing the course, including positive financial behaviours and intentions to perform positive financial behaviours.
  • After controlling for an extensive set of social, demographic and psychological factors, the analysis concludes that there is a significant positive course effect on objective financial literacy.
  • The same is true for subjective financial literacy: those who completed the course significantly increased their ability to make day to day decisions, their knowledge of investing in financial assets, their knowledge of superannuation and their satisfaction with their ability to manage their personal finances.
  • Female students demonstrated greater measured improvements in performance across five positive behaviours, compared to male students - and may therefore be a better target for financial education courses than males.
  • Numeracy appears to be a major indicator of financial literacy, and commerce students clearly outperform others, followed by engineering, maths and computer science students.
  • The analysis found no evidence that completing the course might give rise to overconfidence in financial decision-making.

Points to consider

• The evaluation uses a robust quasi-experimental approach with a comparison group, so the conclusions drawn can be stated with some confidence. The full report includes detailed data tables, which gives further confidence in the transparency of the findings.
• The number of students is large, but the generalisability may be limited to the format of delivery, those delivering the material and the student cohort; the cost of delivery is significant, particularly in the development of the materials.
• Effects occur over a relatively short time and there is a challenge to track financial behaviours and outcomes over the medium to longer term; the study is based on the Australian personal finance system, so it may have limited application in other domains.

Full report

The University of Western Australia's Managing Your Finances programme- full report