Full report. - Social Research and Demonstration Corp

learn$ave Project: Final ReportChapter 6Impacts on budgeting, savings, net worth, and hardshipThe previous chapter discussed the ways in whichparticipants used their learn$ave accounts to makedeposits and withdrawals of their own funds and matchedcredits. The program design assumes that the depositswould be made out of the income flows of participantswho otherwise would have had modest incomes and lowassets. However, if participants in fact only shifted moneyfrom other assets into their learn$ave account, then thedeposits into the account would not be real “saving” outof income, as the project design intended. This chapterexamines changes in the overall financial wealth andnet worth (all wealth less all debts) of participants todetermine whether or not in fact any growth in learn$aveaccounts was from new savings.In addition, because the project was also heavilyinformed by the theoretical constructs of asset-building,the project offers an important opportunity to examinewhether or not there were any persistent changes inthe financial behaviour of participants. Specifically, thischapter presents evidence on whether or not the projectled to any changes in budgeting and savings, and whetheror not participants had to incur hardship to meet theirlearn$ave goal.Impacts on financial goal setting and budgetingAs described in Chapter 2 (see Box 2.2), much of the priorresearch on changes in financial attitudes and behaviourssuggests that people often learn best about money bydoing. Consistent with this finding and with the theoryof asset-building that informed much of learn$ave, weshould expect the offer of matched saving credits toincrease financial goal setting and budgeting becauseparticipants would need to deposit money regularlyinto their learn$ave accounts to qualify for and earn thematched credits. Furthermore, the addition of financialmanagement training was expected to increase theproportion of participants who set financial goals andbudgeted since those in the learn$ave plus group receivedexplicit instruction and assistance with goal setting andbudgeting on top of the matched savings credits. It wasexpected that the enhanced case management wouldalso reinforce participants’ savings goals by identifyingand providing referrals for participants experiencingdifficulties.The results in Table 6.1 show that the matched credits,both alone and in combination with the added services,had some modest positive impacts on setting financialgoals. At month 54, the learn$ave-only group was morethan 5 percentage points more likely to have set financialgoals than the control group and the learn$ave-plus groupwas about 9 percentage points more likely to have doneso. These positive impacts were broadly similar to thoseat 18 and 40 months.Positive budgeting impacts were also observed. Thelearn$ave credits and services combined resulted in a7 percentage point increase in the proportion of peoplewho said they had a household budget at 54 months.This impact was about the same as it was at 40 monthsbut less than it was at 18 months, again suggesting thatthe impact decreased over time. In contrast to what wasobserved at 18 and 40 months, however, the matchedcredits alone had no statistically significant effect onbudgeting at 54 months. Given that new matched creditswere no longer available to participants after month 36Figure 6.1 Stages of learn$ave Program ParticipationPhase 1:entry(