The Proven Benefits of Financial Counseling
NeighborWorks America and the Citi Foundation released a new report at the end of last month that further validates how consumers benefit from financial coaching and education.
The report, entitled “Scaling Financial Coaching: Critical Lessons and Effective Practices,” is based on results from a two and a half year project – the “Financial Capability Demonstration Project” – which found that financial coaching helps consumers reduce debt, increase savings, and gain financial knowledge.
Among the findings, the study found that 54 percent of participants who initially had no savings accumulated a median $668 after receiving financial coaching. Additionally, 55 percent of those who had unsecured debt when they began coaching reduced it by a median of $3,005.
Findings also bode well for those who are not necessarily in a dire financial situation, as 48 percent of participants who had savings at the start of the project increased their reserves over time by an average of $938; and 97 percent of participants who didn’t understand a credit report gained that knowledge after receiving financial coaching.
This report is the latest of several that validate the effectiveness of receiving third-party assistance and coaching, whether you are a consumer, distressed homeowner, or first-time homebuyer. Indeed, multiple studies have shown that after undergoing counseling, many consumers are able to regain their financial footing, homeowners are able to avoid foreclosure, and first-time homebuyers decrease their chance of becoming delinquent (see our financial coaching, housing counseling, and pre-purchase counseling posts for commentary on the latest data).
As operators of the national HOPE Hotline who offer third-party, independent counseling to distressed borrowers, we have experienced first hand how financial coaching can produce favorable results. Shedding light on its effectiveness is an important step in helping borrowers understand and utilize the resources available to them.
For more information on our housing and financial counseling services, call our HOPE Hotline at 888-995-HOPE (4673) to speak with a professionally trained counselor for free.