Financial Literacy Seminars for Women Have Immediate, Positive Impact

In 2005, 1 million women declared bankruptcy—150,000 more than the number of men in the same year. Women work an average of 12 fewer years than men, get less in Social Security and retirement and live longer. Roughly 90 percent of women will be solely responsible for managing their finances at some point in their lives. Jill Foote, a lecturer of management at Rice’s Jesse H. Jones Graduate School of Management, pointed to these sobering statistics as evidence of the need to provide financial education that translates into practical application over the long term.

Rice University was commissioned in early 2006 by The Women’s Resource (TWR) of Greater Houston to conduct a pilot study to determine the effectiveness of TWR’s free financial literacy seminars. The study was done in partnership with Michael Emerson, the Allyn and Gladys Cline Professor of Sociology and director of Rice University’s Center on Race, Religion and Urban Life. The actual research was conducted by Rice undergraduate students who took Emerson’s course, Research Methods, in spring 2006. “We were looking to see if participants acquired financial knowledge from the program,” Foote says. “Preseminar and postseminar tests helped us gauge their improvement in concepts like using credit cards and calculating interest rates.”

The results of the Rice study showed that TWR’s seminars are having a measurable impact on the participants. On average, grades increased from less than 50 percent correct on the preseminar test to more than 70 percent on the postseminar test. “We think of that as going from a failing grade to a C,” Foote says. “We were impressed with that increase.”

The next step, Foote explains, is to see how participants apply the financial knowledge they gained in the classroom. “If we teach women how to do a budget, are they actually using one now?” she asks. “Will they continue to use it in three years?”

Rice researchers have recommended that TWR expand the research over time and across different groups to understand the seminars’ long-term impact on participants. They also made several recommendations to support ongoing practical application of the financial lessons, including increasing the number of hands-on experiences in the classroom, such as studying actual credit card bills and bank account applications and having institutions, like commercial banks, host and teach some of the sessions to leverage professional expertise and provide practical, real-world learning experiences.

Foote is convinced that effective, multidimensional financial learning opportunities for women will help reduce inequities in the marketplace. “Low levels of financial literacy will impact the future of this country,” Foote says, “so it’s extremely important that we highlight the gaps and do what we can to fix them.”

In another outreach endeavor to advance financial education—in this case to teens—Foote serves as director of the Jones School’s Rice Summer Business Institute. Her course, Money & Business 101, introduces high school juniors and seniors from Houston’s economically disadvantaged communities to the fundamentals of business and financial markets. In 2006, more than half the participants were female, which Foote found very encouraging. “We want to get young women interested in and excited about business,” she says, “and prepare them with a basic financial understanding, which will be important regardless of what they do.”

The Summer Business Institute is just beginning its third year, but Foote already has started collecting data on the students, with plans to track them through college and beyond. Just as with the TWR study, Rice researchers want to understand the long-term benefits of what’s being taught. “The overall goal is to give effective training to those who typically don’t have access to it,” Foote says. “Too many people are not learning about financial management at school; they’re not learning it at home. But we now know that, with systematic efforts, there is a clear short-term benefit. We believe, we hope and we ultimately will test to confirm that these efforts also will make a difference over the long run.”