Some ways of teaching financial literacy work better than others

Efforts to make us smarter about money don't seem to be working. A Harvard Business School study found that personal-finance classes taught in high school had no effect on "financial outcomes" such as how much people saved or how likely they were to miss payments on debt.

A report for Management Science found that even intensive instruction had "negligible effects" on behavior.

Other research, however, has found methods that show promise in teaching financial literacy. If you want to improve your relationship with money or teach your children about personal finance, these findings may help do that.

For adults, one approach that moves the needle is the Sharpen Your Financial Focus program, launched by the National Foundation for Credit Counseling (www.nfcc.org) three years ago and studied by researchers at Ohio State University.

Participants start with a quiz, called MyMoneyCheckUp, to assess their financial health in budgeting, saving, debt management, and retirement. A financial counselor reviews the results, helps the participants identify which areas they want to improve, and sets up targeted education, such as in-person workshops or one-on-one financial coaching.

Researchers who studied the program created a control group of people who had not been coached to compare how their finances changed over 18 months. The Sharpen Your Financial Focus clients reduced their debt significantly more than the control group, and the reductions held even after researchers accounted for bankruptcies, foreclosures, and charge-offs.

Controlling for those factors, the Sharpen clients lowered credit-card and other revolving debt by $2,700 more than their peers with similar debt, and reduced their overall debt by $7,600 more. The clients also reported they were managing their finances better, paying their debts more consistently, and feeling more financial confidence.

Having people set goals and create action steps seems to improve behavior far more than a brochure or class, says researcher Stephanie Moulton, an associate professor at Ohio State's John Glenn College of Public Affairs.

"With the counseling, they are actually getting an action plan that is directly oriented to them," Moulton says. The plans include "specific actionable steps like, 'Within the next three weeks, I am going to enroll automatic deposit of my paycheck into my savings account.' "

Moulton and her colleagues found similar results in another study comparing people who received financial coaching when they bought a home with those who hadn't. The coached buyers were less likely to miss payments or incur more debt.

If you want to improve your own financial behavior, start with the MyMoneyCheckUp quiz, which looks not only at your current financial state, but also your grasp of the basic concepts behind building wealth and taking on debt. You can connect with one of the nonprofit foundation's counselors or proceed on your own.

For children, what seems to work is having actual standards for what constitutes financial education, rather than letting bankers drop in for an hour or having untrained teachers try to figure it out, says Annamaria Lusardi, a professor at the George Washington University School of Business.

Previous research lumped together many different approaches to financial literacy, including states that merely suggested it be offered in schools and those that didn't provide any guidance about what to teach. Past studies also typically did not distinguish between states that had just-approved financial-literacy mandates and those that had well-developed standards.

A study last year that used those distinctions found they made a difference. Researchers tracked young people in three states (Georgia, Idaho, and Texas) that required high school students to take a financial-literacy course with a model curriculum.

The graduates had higher relative credit scores and were less likely to be 90 days late on debt payments than peers in neighboring states who didn't get the education, say researchers from the Federal Reserve Board, Montana State University, and the Center for Financial Security at the University of Wisconsin-Madison.

National standards, developed three years ago by the Council for Economic Education (councilforeconed.org/resource/national-standards-for-financial-literacy) established which concepts should be taught at each grade level.

For example, an eighth grader should comprehend and be able to explain the value of compound interest.

NerdWallet.com provided this column to Associated Press.