In honor of 2015 Military Spouse Appreciation Day, AFCPE is proud to honor the incredible work of the FINRA Foundation Military Spouse Fellows. Since the program’s inception in 2006, military spouses have provided hundreds of thousands of hours of financial counseling and education to our military service members, military families and veterans.
Through one-on-one counseling, group counseling and educational trainings, the work that they do positively impacts the financial readiness of the military community at military installations around the world.
Today we say pause to say thank you for all of your incredible work and your commitment to serving our country!
Sometimes we just need to get back to the basics. What is your definition of a need? How do you define a want? A popular movement in America is the minimalist approach. By their lifestyle and desire to be free from debt, many are getting rid of all but the basics to live a simpler life. On the other hand we have people laden with heavy debt because they’ve over-indulged in acquiring things. In fact, we’ve lost a sense of what we need in life versus what we think we need. It is so easy to grasp onto the extreme way of handling finances rather than being diligent in finding a right balance. So what constitutes a genuine need?
A NEED is:
Necessary for survival:
Eating- Food is necessary to survive. In America we have an overabundance of convenient, rich, succulent foods. However, most cultures around the world can survive on simple grains, vegetables, legumes, and fruits. Meat is a luxury, unless you don’t mind eating hunted foods. It is possible in hard financial times to eat inexpensively if you exercise the self discipline to plan ahead and prepare less convenient foods.
Ensemble- We all need clothing to shelter our bodies, keep us warm, and make us presentable. Visit thrift shops and discount stores to find the clothing you need. In our culturewe often let fashion define who we are. But in reality you could get by with undergarments, socks, one or two pair of shoes (depending on your job), bottoms and tops.
Dwelling- You need a place to live. So many people get into a bind by renting or purchasing a home far outside of a logical and reasonable budget. Find a clean, safe place that serves the purpose of keeping you and your family out of the elements that fits into your budget.
So what constitutes a want? Here are some popular things that our modern society will often say are needs, but in reality, if someone wants to be honest, a person could live without.
Wheels- If you don’t have the money for a vehicle or for the basic upkeep of a vehicle, research your alternatives. Can you walk, ride a bike, use public transportation, ask for a ride, carpool, etc? We recently heard of James Robertson, a Detroit man who walked 21 miles to and from work every day since 2005. He came to everyone’s attention because a college student heard of his plight and started a crowdfunding campaign to raise money for him. He is a modern day example of working hard and surviving without a vehicle.
Activities- “I need to do stuff.” Think about ideas to engage in free and appropriate activities. Libraries, parks, playgrounds, and community events are a few ideas that offer alternatives with vast opportunities.
Network: Internet, phone, etc. Everyone needs to be accessible right? Use a prepaid cell phone plan. Utilize the free Wi-Fi offered at most public places. Don’t pay unnecessarily “for home use” if you need to find ways to save money. Or stay at the cheapest tier possible. It might be a little slower but at least you have access when you want it.
Television- I remember hearing in an education setting that every child needed to have a television to stay in touch with society. But if you can’t afford a basic access, don’t overextend yourself for entertainment. You and your kids have plenty of interaction with society. Most schools have educational videos they play during class. Newer TVs are usually programmed so you can use antennae to get local content. Save up for a one time purchase of a TV antennae and still access TV in your home.
The bottom line is: If you cannot afford it, you might not truly need it. Once you’ve managed your debts and paid them down you might be able to reincorporate your wants back into your lifestyle comfortably. Work to get back to the basics!
Guest Blogger: Ester Johnson, AFC®
As we say goodbye to April and Financial Literacy month, we reflect on numerous wonderful events that many of you probably participated in to promote this topic so dear to us. These events have all grown out of one special event, Financial Literacy Day on Capitol Hill. The event began in 2003 as a small gathering sponsored by the Council for Economic Education, Junior Achievement, and the Jump$tart Coalition. This year, more than 60 organizations came together to promote financial literacy and share the services they provide with congressional staff and the public.
Laura Levine, president and CEO of Jump$tart Coalition welcomed the gathering and commented on the ability of the event to bring together such a diverse group of organizations to share their unique talents and services but ultimately focused on the same noble goal: financial literacy for all. This idea struck me in her remarks but even more so as the day wore on. While a few staffers came by the booth to talk to me, the majority of my day was spent discussing AFCPE® with representatives from many of the other organizations present. This is one thing that I love about our industry. While each company wants to succeed, everyone is united in a desire to help our clients achieve financial self-sufficiency. Each group may bring a different service or tackle the challenge from a different angle, but we are all part of the greater solution.
Our booth this year was situated next to the representative from the CFP Board. Throughout the day we had a great conversation about how our certifications complement each other and provide for talented practitioners throughout the spectrum of financial education. I would overhear my neighbor plugging AFCPE and the AFC® in his discussions with other represented organizations and I did the same for him.
Throughout the day I was able to speak with representatives from universities, financial service providers, financial service foundations, non-profits, government agencies, and private companies. I talked to students and staffers as well as people from Jump$tart, Junior Achievement, the USDA, Vanguard, National Credit Union Foundation, and Nerd Wallet among many others. Some were personally interested in our certifications, some the research our members are doing. Some wanted to tap into our wealth of member knowledge, and some were hoping our members may utilize the tools they offer. But at the end of the day, they were all interested in hearing about how AFCPE supports financial literacy and how they or their organization may be able to join us in that mission.
As we look forward to next year’s financial literacy month, I encourage you to seek out or reach out to other organizations in your area that are promoting financial education. See what they are offering, how you can utilize their expertise, and how AFCPE, your AFC experience, or other organizations you are affiliated with can benefit them.
Guest Blogger: Kira Dentes is a 2013 FINRA Foundation Military Spouse Fellow and AFC® candidate.
Initial Results and Continuing the Discussion
As Financial Literacy Month comes to an end, we are excited to share the results of AFCPE’s Field Research Survey. The survey results represent the collective ideas and insights from practitioners, researchers and educators in the field of personal finance. AFCPE Members were eager to share the research and resources that they find valuable in their work, but what is also clear is that there are areas of opportunity for expansion and enhanced knowledge.
The top research categories you expressed the most interest in included:
- Behavioral Economics
Within these categories and among others, the research and resources listed below were repeatedly cited (in no particular order):
Many respondents included various articles by Albert Bandura and James Prochaska that provide insight to help determine a person’s readiness to change and how they might affect change. While various follow-up studies have been done, below are two of their early impactful studies:
- Albert Bandura “Self-Efficacy: Toward a Unifying Theory of Behavior Change” 1977
- James Prochaska and Carlo Di Clemente “Transtheoretical Therapy: Toward a More Integrative Model of Change” 1982
A popular question in retirement discussions is “How much do I need to retire?” William Bengen provides insight to answering this question and more specifically to identifying the amount retirees could historically withdraw from their retirement accounts without running out of money. Below is a link to Bengen’s initial work. Wade Pfau and others are doing further research in this area.
Financial Counseling Theory
While most financial professionals are not focused on the use of financial counseling theory in their daily work, when applied theory can guide the work being done in education and in practice.
- Albert Ando and Franco Madigliani “The Life-Cycle Hypothesis of Saving” 1963
- Sharon Danes and Yunxi Yang “Assessment of the Use of Theories within the Journal of Financial Counseling and Planning and the Contribution of the Family Financial Socialization Conceptual Model” 2014
Financial Capability and Wellness
Many respondents found reports that shed light on the current state of Americans and how they manage their personal finances to be informative and valuable. Links are provided below for two specific sources.
- FINRA “Financial Capability in the United States” 2012 and FINRA “Financial Capability in the United States Report of Military Findings” 2012
- CFPB “Financial Well-Being: The Goal of Financial Education” 2015
Behavioral Economics is an increasingly popular and influential area of personal finance. While few specific articles or studies were sited in our survey, the field in general was referenced repeatedly. Below is one article that was cited along with a few of the leading researchers in this area:
- Daniel Kahneman and Amos Tversky “Prospect Theory: An Analysis of Decision under Risk” 1979
- Leading Researchers Include: Dan Ariely, BJ Fogg, Malcom Gladwell
Financial Literacy & Outcomes
It is important that we measure the work being done in financial counseling, literacy and education, in order to provide project managers and policy makers with the information needed to affect change. Below are some articles recommended that discuss outcomes and how to measure them:
- Mandel and Klein “The Impact of Financial Literacy Education on Subsequent Financial Behavior.” 2009
- Hastings, Madrian & Skimmyhorn “Financial Literacy, financial education and economic outcomes” 2013
- Sandra Huston “Measuring Financial Literacy” 2010
- Collins & O’Rourke “Finding a Yardstick: Field Testing Outcome Measures for Community-based Financial Coaching and Capability Programs” 2013
This is just a preliminary look at what you shared with us. We believe that the information you provided in this survey represents the foundation of AFCPE membership. It illustrates the diversity of our members and by building upon this feedback and continuing these conversations, together we can build a bridge that:
- Links practitioners and educators with resources that can positively impact the work that you do and the way you approach your clientele.
- Provides our researchers with practical implications for future research.
As we compile the comprehensive results of our survey, to be released prior to the 2015 AFCPE Symposium in November, we hope you will utilize some of the broader resources and research that was shared. But our larger hope is that this valuable conversation will continue.
We invite you to comment in the notes section below and join us for the 2015 AFCPE Research & Training Symposium this November. The symposium is a unique opportunity where researchers, educators and practitioners come together to continue these valuable dialogue, share ideas and resources and work together to advance our field. Additional questions or comments, email Thomas Duffany at email@example.com.
What research do you think is missing? Are there topic areas that should be added?
Supporting the implementation and dissemination of the student driven savings app, SaveIt!
Each year AFCPE® awards the Mary O’Neill mini-grant of $2,500 toward the implementation of an innovative, high-impact financial education project. In 2014, the grant was awarded to Clinton Gudmunson, an assistant professor in the department of Human Development and Family Studies at Iowa State University, to support the implementation and dissemination of a student driven savings app, SaveIt!
SaveIt! is the focus of a current project funded through the Council of Graduate Schools (CGS). The app, which is entirely student driven, was developed during a weekend competition called Money Game Jam. Once selected, it went through further development by a professional programmer and is now in the testing and pilot phase.
With the generous support of the Mary O’Neill mini-grant, Dr. Gudmunson is working with graduate student, Emily Sorenson, to write an implementation guide that discusses how to obtain, use and integrate the savings app into common university financial literacy initiatives and then disseminate the implementation guide to financial literacy focused departments at universities throughout the country.
In the spirit of Financial Literacy Month, we checked in with Dr. Gudmunson and Emily Sorenson for an update on SaveIt!’s progress:
This past Fall, SaveIt! was scheduled to be piloted and tested by both undergraduate and graduate student groups and selectively launched via targeted student organizations, departments, and advisers at ISU. How is the pilot going?
We introduced Saveit! in an undergraduate personal and family finance class, using a variation of the app that permits simulations of bank accounts, without transfers of actual money. We have learned some important lessons about getting students connected and working to integrate the app into lesson plans. The app will become an official part of the next iteration of a service course that is designed for all majors to teach college students, especially freshmen, how to manage their finances while in school.
Thus, the first version of Saveit! is testable and beginning to be used. We want to have a few rounds of testing, in our classes, to the ISU student body, and soon after, everywhere. Our key programmer had the opportunity to present the app to students in this undergraduate personal finance class about the development of SaveIt! and is now reviewing the feedback as we work with instructors on implementation with curricula and fit with a game-playing pedagogy (in the upcoming iteration of the course).
Can you share some innovative highlights of the Saveit! app?
The app allows you to set any number of goals such as saving for textbooks, a spring break trip, and/or buying a gym membership. The app provides a unique “alternative currency” feature that allows you to see what your choice to save is actually worth. The amount you have saved can be quantified in terms of pages, days, or another parameter that can measure the progress appropriately. The app also allows you to set reminders to save money. Two examples of ways to save include ordering water instead of a drink the next time you go out to eat and giving up your morning coffee. You can set the reminder to ask you “Did you buy a drink at lunch today?” “Did you buy coffee?” and it gives you the option to put the amount you saved on those other expenses into your goal fund.
Once you have determined your goal(s), how much you want to save, and when you want to reach your goal(s), you are on the path to achieve success. You can transfer money between goals and into your personal checking or savings account easily. This app allows you to have as many goals as you want without creating another bank account as long as you stay within the $999 parameter.
How do you feel that Saveit! will make an impact on University financial literacy?
SaveIt! will impact university financial literacy by allowing students to see how far saving their money can take them. It will help the majority of students become aware that they cannot purchase all of their wants and needs each month and will help them to recognize the need to prioritize their savings for items they want to purchase. The app will help to instill that instant gratification can have detrimental effects on the pocket book. By being able to easily transfer money from a personal account to a goal account, set numerous goals, and visually see how much they are saving and have the ability to track their process, students will be better equipped to manage their finances after they graduate college.
Learn more about Saveit! and the progress of this project in Jacksonville this November. Dr. Gudmunson will join financial educators, researchers and practitioners at the 2015 AFCPE Research & Training Symposium in Jacksonville, FL where he will present a breakout session on Saveit!