How do you talk about the work you do with your clients? Increasing financial literacy, boosting financial capability, expanding financial inclusion, promoting financial empowerment—the list of terminology and range of frameworks we use to guide our efforts can feel limitless. While there are certainly important differences between the various approaches, they all have a common goal at their core: equipping people with the knowledge, tools and opportunities they need to take action toward bettering their financial lives.

This common goal addresses a critical problem in the United States. According to recent research from the Center for Financial Services Innovation (CFSI), 57 percent of American households are struggling with their financial health. Financial health comes about when an individual’s daily systems help them build resilience and pursue opportunities. With the majority of Americans falling short of this standard, it is vitally important that our efforts to help households better manage their money are as effective as possible. We must ask ourselves how the financial counseling, planning and education fields can increase both the impact and reach of its work.

Understanding exactly how struggling households cope with financial challenges is the first step in uncovering new and better ways to solve them. Fortunately, the United States Financial Diaries
(USFD) project helps to shed light on the matter. USFD, a joint initiative of New York University Robert F. Wagner Graduate School of Public Service Financial Access Initiative and CFSI, used a unique research methodology involving frequent in-person interviews with over 200 low- and moderate-income (LMI) households across four geographic regions, over the course of a year. This approach allowed researchers to collect detailed financial data from participating families, covering items such as assets and debts, cash flow, use of financial products, financial goals, and attitudes about money. In short, USFD provides a view into hard-to-see financial challenges and strategies that a one-off survey would miss.

The USFD project paints a vivid and complicated picture of the types of financial challenges LMI families can face. Perhaps most notably, many of the participating households found their ability to manage their finances was hindered by significant volatility in both income and expenses. Households in which members held multiple jobs, supplemented their income with part-time work, or did odd jobs for extra money saw their monthly income fluctuate significantly and, often times, lacked an ability to predict exactly how much money they would take in. At the same time, households faced unexpected emergencies, health problems, and changing family dynamics that resulted in swings in monthly household expenses. How can a family budget and manage their finances if they can’t be sure of how much money they make or how much they need? It’s the financial equivalent of trying to hit a moving target—possible, but very difficult.

USFD saw families using a variety of strategies for coping with financial management challenges. Many households created a “system” of formal and informal financial practices they could rely on to get by. Their struggles highlight the need for financial counselors, planners and educators to think innovatively about how they can create new tools to help people adopt behaviors that can improve their financial health.

Since 2010, CFSI has sought to uncover new strategies to impact financial behavior for the better through the Financial Capability Innovation Fund. The Fund has provided nearly $5 million in grant funding for innovative nonprofit-led projects that seek to promote the financial capability of low-income and underserved households. These organizations have employed a number of strategies aimed at driving improved consumer behavior—closely linking actionable financial guidance with high-quality products, leveraging technology to reach clients with timely advice, and tapping into social networks to provide motivation for those pursuing financial goals. These groups have succeeded in boosting clients’ savings rates, encouraging clients to pay back debt on time, and helping clients become more mindful about their spending.

No matter how we talk about what we do—education, planning, counseling, coaching—we must continue to push ourselves to figure out how we can have the biggest impact to help clients succeed financially. With the problem of poor financial health affecting so many in such complicated ways, the stakes are simply too high to do anything else.

Leadership support for USFD is provided by the Ford Foundation and the Citi Foundation, with additional support and guidance from the Omidyar Network. For more information on USFD, visit

The Financial Capability Innovation Fund is supported by a collaborative of funders led by the Citi Foundation and also including Capital One Foundation, NYSE Euronext Foundation, Charles Schwab Bank, Charles Schwab Foundation and Experian. For more information on the Fund and CFSI, visit

Joshua Sledge is a Director at the Center for Financial Services Innovation.  As a Director, he manages and advises on initiatives designed to support innovators working on solutions to improve financial health. He works with diverse stakeholders to explore different approaches, strategies and products that can move the financial services industry further toward helping Americans make the most of what they have. See more here.

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