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A PHENOMENOLOGICAL STUDY TO DISCOVER LOW-INCOME ADULTS’

PERCEPTIONS AND EXPECTATIONS REGARDING FINANCIAL LITERACY

Brigid Ann Schaffer

A Dissertation Presented in Partial Fulfillment Of the Requirements for the Degree Doctor of Business Administration

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ABSTRACT

This phenomenological study explored the perceptions and expectations of low income

adults regarding financial literacy to discover ways to increase attendance in financial

literacy programs designs for this cohort. The study utilized interviews with closed-ended

questions to establish the participants’ backgrounds, then opened-ended questions to obtain

in-depth descriptions of personal lived experiences about financial literacy concepts,

educational programs, and future expectations from the 20 study participants. The data

analysis resulted in three themes (1) participant’s characteristics, (2) presentation of financial

literacy programs, and (3) access to low income adults. The sub-themes from theme one

identify participants’ characteristics of belief in self and current time-frame orientation.

Theme two, presentation of financial literacy programs, sub-themes recognized three

attributes of presentation: information wanted, presentation style, and, environment of

financial literacy classes. The third theme, access to low income adults, presented sub-

themes of access through word of mouth, and advertisement. The first two themes gave rise

to recommendations of future development and presentation of financial literacy programs.

The third theme provided advertising ideas for financial literacy programs to incorporate

information reflecting the benefits to attendees, and sites for advertisement to include

locations where the cohort socialize or look for support. The study considered the low-

income adults’ perspectives regarding financial literacy reversed the existing top down

approach of financial program development from what low-income adults need to learn to

participate in the mainstream financial sector to what low-income adults want to learn to

secure a stable financial future. The research method can be replicated to determine the

financial literacy needs of community low income adults.

DEDICATION

I dedicate this research study to my husband, Paul Schaffer, and our daughters Sarah and

Amber.

ACKNOWLEDGEMENTS

I acknowledge that without the help and support of many people during this long journey the

research would not have been completed. My first line of support came from the librarians

Joanne Elpern, Joanne White, Mary Loomis, and Xiaomei Gong, they provided guidance and

access to research materials essential during coursework and the research. My classmates;

Arlene McClurg, Wyndia Wortham, and Dr. Sheila Payne, provided the encouragement for

completion. Most importantly, my dissertation committee, Dr. Samuel Hardy, Dr. Clifford

Blizard, and Dr. Elaine Labach for their continuous input and support during the dissertation

process.

Table of Contents

CHAPTER 1 ….......................................................................................... i

INTRODUCTION ............................................................................................. i

Background of the Problem .............................................................2

Statement of the Problem .................................................................4

Purpose of the Study ........................................................................5

Significance of the Problem .............................................................6

Significance of the study. .....................................................6

Significance of the study to leadership. ...............................7

Nature of the Study ..........................................................................7

Overview of the research method. .......................................7

Overview of the design appropriateness. .............................9

Research Questions ........................................................................12

Theoretical Framework ............................................................... 13

Definition of Terms........................................................................16

Assumptions ...................................................................................17

Scope and Limitations....................................................................17

Delimitations ..................................................................................19

Summary ........................................................................................20

CHAPTER 2 ............................................................................................22

REVIEW OF THE LITERATURE .................................................................22

Title Searches, Articles, Research Documents, Journals ...............22

Historical Overview of Financial Literacy Programs ....................23

vii

Organisation of Economic Cooperation and Development ...........23

Financial Literacy Legislation in the United States .......................25

Financial Literacy Studies Influences ............................................30

Current Literature: Financial Literacy Development ....................35

Financial Literacy Studies..................................................36

Expections and Education .................................................40

Accessing the Low Income Population..............................49

Theoretical Framework for Interpretation of Data.........................56

Maslow's Hierarchy of Needs ............................................57

Prochaska's Transtheoretical Method for Change .............58

Challenges of Financial Literacy Education ..................................60

Further Research: Financial Literacy Initiatives ............................63

Conclusions ....................................................................................64

Summary ........................................................................................65

CHAPTER 3 ............................................................................................67

METHOD ............................................................................................67

Research Method and Design Appropriateness .............................68

Research Method ...............................................................68

Design Appropriateness .....................................................72

Research Questions ........................................................................75

Population ......................................................................................76

Sampling Frame .............................................................................76

Informed Consent...........................................................................77

viii

Confidentiality ...............................................................................78

Institutional Review Board ............................................................79

Geographic Location ......................................................................79

Data Collection ..............................................................................80

Instrumentation ..............................................................................83

Interview Questions Development .................................................84

Validity and Reliability ..................................................................87

Internal Validity .................................................................87

External Validity ................................................................88

Reliability ...........................................................................88

Data Analysis .................................................................................89

Summary ........................................................................................90

CHAPTER 4 ............................................................................................92

RESULTS ............................................................................................92

Population and Sampling ...............................................................92

Validity and Reliability ..................................................................93

External Experts .................................................................94

Pilot Study ..........................................................................94

Member Checking ..............................................................95

Data Collection Process .................................................................96

Demographic Information ..................................................96

Data Analysis Process ....................................................................98

Results ..........................................................................................100

Theme 1- Participants' Characteristics .............................100

Theme 2 - Presentation of Financial Literacy .................105

Theme 3 - Access to Low Income Adults ........................111

Summary ......................................................................................116

CHAPTER 5 ..........................................................................................118

CONCLUSIONS AND RECOMMENDATIONS ..................................118

Limitations ...................................................................................119

Conclusions for Research Question .............................................121

Theme 1- Participants' Characteristics .............................122

Theme 2 - Presentation of Financial Literacy .................127

Theme 3 - Access to Low Income Adults ........................131

Significance of the Study .............................................................132

Significance of the Study to Leadership ......................................133

Implications and Recommendations for Future Research ...........134

Recommendations to Increase Participation ................................135

Recommendations to National Leaders .......................................136

Recommendations to Community Organizations ........................136

Reflection .....................................................................................137

Summary ......................................................................................139

References ....................................................................................141

Appendix A - Key Word Searches ...............................................154

Appendix B - Flyer to Solicit Participants ...................................155

Appendix C - Individual Informed Consent Form .......................156

Appendix D - Non Disclosure Agreement ...................................157

Appendix E - Premise Consent Agreement .................................159

Appendix F1 - Interview Questions Prior to Validation ..............160

Appendix F2 - Interview Questions for Research Study .............163

Appendix G - Participants' Interview Transcripts ........................167

LIST OF TABLES

Table 1 – Sample………………………………………….……. ................................97

Table 2 – Household Population…………………….…… ............................…………97

Table 3 – Types of Bank Accounts…………………………………………… ...........98

Table 4 – Accessing Low Income Adults – Participant Suggestions..……… ...........112

Table 5 – Participant Self-Rating of Money Management…………...…… .............128

Chapter 1

Introduction

Thirty percent of households in the United States are categorized as low-income, earning less

than $30,000 annually (Federal Deposit Insurance Corporation [FDIC], 2009). Financial

literacy programs for low-income adults in the United States are designed for basic financial

management to guide participants into mainstream financial services (Curley, Ssewamala, &

Sherraden, 2009; Lyons & Neelakantan, 2008; Lyons & Scherpf, 2004; Servon & Kaestner,

2008; Zhan, Anderson, & Scott, 2009) and to decrease their vulnerability to predatory lenders

and reliance on welfare programs (Chang & Lyons, 2008; Federal Deposit Insurance

Corporation [FDIC], 2009; Lim, DeJohn, & Murray, 2012; Wilson, 2012). The literacy

programs were developed without interaction with the low-income populations, and the

programs available through government agencies and financial institutions have low levels of

participation (Chang & Lyons, 2008; Servon & Kaestner, 2008; Spader, Ratliffe, Montoya, &

Skillern, 2009).

This phenomenological research study was designed to discover low-income adults’

perceptions and expectations of financial literacy to provide information for financial literacy

curriculum designs that could attract low-income participants (Buckland, 2011; Servon &

Kaestner, 2008). Financial literacy is defined for this research study as: “the ability to make

informed judgments and to take effective actions regarding the current and future use and

management of money” (FLEC, 2010a, p. 2). Chapter 1 provides a synopsis of the

phenomenological research study including a background of the problem, statement of the

problem, purpose of the study, significance of the problem, nature of the study, research

question, theoretical framework, definition of terms, assumptions, scope, limitations,

delimitations, and summary.

Background of the Problem

Financial literacy at the end of the 20th century emphasized one dimensional financial

knowledge (Huston, 2010; Remund, 2010). Financial literacy research undertaken during the

first decade of the 21st century determined that financial literacy encompasses two

dimensions: financial knowledge and financial behavior that creates financial capability (U.

S. Financial Literacy and Education Commission (FLEC), 2010a; Huston, 2010;

Organisation of Economic Cooperation and Development (OECD), 2008; Remund, 2010).

Financial literacy is defined by the United States Financial Literacy and Education

Commission (FLEC, 2010a) as “the ability to make informed judgments and to take effective

actions regarding the current and future use and management of money” (p. 2). Financial

education was defined by the Organisation of Economic Cooperation and Development

(2008) as follows:

Financial education is the process by which financial consumers/investors improve their

understanding of financial products and concepts and, through information, instruction and/or

objective advice, develop the skills and confidence to become aware of financial risks and

opportunities, to make informed choices, to know where to go for help, and to take other

effective actions to improve their financial well-being and protection. (p. 13)

Individual governments, the World Bank, and the OECD promote financial literacy because

the financial environment has changed for individuals from reliance on defined pensions and

social retirement funding to personal long-term financial responsibility (OECD, 2008; U. S.

Treasury Department, 2008).

Financial literacy behaviors in the United States as measured by an individual’s use of

mainstream financial institutions have three classifications: banked, unbanked, and

underbanked (FDIC, 2009). Research by the FDIC (2009) on the use of mainstream financial

depository institutions found that 7.7% of the United States population is unbanked and that

17.9% of the population is underbanked. A large subset comprising nearly 30% of the United

States population is classified as low-income. Approximately seven million low-income

families are unbanked and are reported to have limited financial literacy (Birkenmaier &

Curley, 2009; FDIC, 2009; Lusardi, Mitchell, & Curto, 2010; Mandell & Klein, 2009).

Traditionally, low-income adults had access to financial literacy programs that focused on

financial activities, such as savings and budgeting (Chang & Lyons, 2009; Servon &

Kaestner, 2008). A study conducted by Lusardi, Mitchell, and Curto (2010) pointed to the

benefits of financial literacy educational programs for individuals before they entered

financial contracts and also indicated that parents have a significant influence on their

children’s financial literacy. Other research and governmental policies have attempted to

increase low-income adults’ involvement in the financial mainstream environment of banks

and investment firms, hoping to decrease this population’s vulnerability to predatory lenders

while increasing the need for financial mainstream services (FDIC, 2009; Lenzner, 2012;

Lumpkin, 2010; Lim, DeJohn, & Murray, 2012; Wilson, 2012). Another statistic

highlighting the need for financial literacy is that the number of people living in poverty in

the United States has increased by 12.5 million people since 2000 and that 6.3 million of

these have crossed the poverty line since the beginning of the 2007 recession (DeNavas-

Walt, Proctor, & Smith, 2011).

The literature review on financial literacy studies found the studies involving low-

income adults show a lack of inquiry of low-income adults’ perceptions and expectations

regarding financial literacy (Allen & Miller, 2010; Birkenmaier & Curley, 2009; Buckland,

2010, 2011; Cho, Gutter, Kim, & Mauldin, 2012; De Sousa, 2010; Gutter et al., 2012; Lim,

DeJohn, & Murray, 2012; Servon & Kaestner, 2008; Sherraden & McBride, 2010; Soman &

Cheema, 2011; and Zhan et al., 2009). This study focused on exploring the life experiences

of low-income adults with respect to financial education to discover low-income adults’

expectations for their financial future, consequently increasing the knowledge base for

financial literacy educational development opportunities. The theoretical framework for the

research study was based on Maslow’s (1948) hierarchy of needs to establish motivation, and

to investigate participants’ attitudes toward change based on the theoretical model of change

developed by Prochaska (1979).

Statement of the Problem

The need for financial literacy in the 21st century on an individual basis grows with

increasing financial complexity, the shift of public policy toward individual fiscal

responsibility, and the expanding percentage of the United States population living in poverty

(Arthur, 2011; Buckland, 2011; Cory & Pickard, 2008; DeNavas-Walt et al., 2011; Gallery &

Gallery, 2010). Financial literacy programs in the United States directed toward low-income

populations have had limited success as measured by research on low-income adult financial

literacy and by the number of low-income adults unbanked or underbanked (FDIC, 2009;

2012). The general problem is a measured lack of financial literacy within the low-income

population of the United States (FDIC, 2009; Mandell & Klein, 2009; National Foundation

for Credit Counseling (NFCC), 2010). The emphasis of this study was to explored the low-

income adult population’s experiences in developing their financial knowledge, to discover

their perceptions and expectations of financial literacy programs and to increase participation

by this cohort in financial literacy programs.

The phenomenological qualitative study design was used to record and analyze the

life experiences and expectations of financial literacy for low-income adults through open-

ended questions during face-to-face interviews (Creswell, 2012; Buckland, 2011). The data

collection method allows participant confidentiality for members of a population not given to

trusting outsiders (Weiss & Bailar, 2002). Access to the low-income population in Danbury,

Connecticut, was gained through a local nonprofit community organization through the use

of a gatekeeper (Creswell, 2012). Exploring the underlying attitudes, environmental

conditions, and behaviors of low-income adults identified trends which led to

recommendations that could be beneficial to the future development of financial literacy

programs.

Purpose of the Study

This qualitative phenomenological study’s purpose was to explore the lived financial

literacy development experiences and the future financial expectations of low-income adults.

The analysis of the data uncovered trends and themes reflecting on the financial behaviors

before and after the research participants attended a financial literacy program (FDIC, 2010).

These trends and themes produced novel information to aid in the development of financial

literacy education materials and could increase participation in financial literacy programs to

support low-income adults to establish a stable financial future. The qualitative

phenomenological structure was appropriate for this study because this investigator

attempted to understand the experiences of the participants as well as their perceptions,

perspectives, and expectations of financial literacy (Leedy & Ormrod, 2010). The study

employed interviews with semi-structured open-ended questions to obtain personal life

experiences about financial literacy concepts, educational programs, and future expectations

from the study participants (Creswell, 2012; Leedy & Ormrod, 2010).

Voluntary interviews of 20 low-income adults provided the opportunity for data

saturation. Initial closed-ended questions confirmed criterion demographic data available in

the nonprofit organization’s documentation. The second section of the interview with

opened-ended questions uncovered themes that could influence the development of financial

literacy education. Themes that emerged from the study, therefore, could aid in determining

predictor variables affecting financial behaviors, and produce novel information to help

develop financial literacy education materials to increase the participation of low-income

adults.

Significance of the Problem

Significance of the study. Financial literacy within the United States has not

increased significantly during the first decade of the 21st century (Lusardi, Mitchell, &

Curto, 2010; Mandell & Klein, 2009; Yates & Ward, 2011; Yilmaz, 2011). An increase in

the size of the population, however, living below the poverty level, combined with the

complex financial environment of decreasing social security expectations, defined pension

plans, and changing welfare terms affirms the need for financial literacy education for low-

income adults in the United States (DeNavas-Walt et al., 2011; FDIC, 2009; Lenzner, 2012;

Lusardi, 2012). This phenomenological study of how low-income adults approach financial

literacy increased the understanding of how low-income adults manage their finances thereby

increasing the knowledge base to develop financial literacy programs that actively engage the

cohort under study. Considering low-income adults’ perspectives reversed the existing top

down approach of program development to what low-income adults need to learn to

participate in the mainstream financial sector and what low-income adults want to learn to

secure a stable financial future. The study results identified conceptual foundations on which

financial literacy programs that reach out to low-income adults could be further developed to

support the population cohort’s preparation for a sound financial future.

Significance of the study to leadership. The United States and countries around the

world support financial literacy at the individual level because of deficiencies in financial

literacy within the populations of many countries (OECD, 2010; Yilmaz, 2011). The United

States Treasury Department’s Financial Literacy Education Commission’s (FLEC, 2010a)

stated vision is: “Sustained financial well-being for all individuals and families in the United

States” (p. 6). Access to low-income adults, however, is difficult and participation in

programs directed toward low-income persons is low (Servon & Kaestner, 2008; Spader et

al., 2009; Weiss & Bailar, 2002; Zhan et al., 2009). The significance of a phenomenological

study of low-income adults’ perceptions and expectations of financial literacy to leadership is

that the information collected provides knowledge for program development. The

knowledge could increase access and participation by low-income adults; subsequently,

create a foundation of long-term financial success for individuals, and cause a positive ripple

effect on global economic stability.

Nature of the Study

Overview of the research method. Typically, qualitative, quantitative, or mixed

methods of research can be employed to answer social science questions (Creswell, 2012).

The research method deemed appropriate for this study has the characteristics of a qualitative

study. These characteristics include: (a) the researcher as the instrument, (b) data collection

at a field site (natural setting), and (c) interpretation of data to understand a complex issue

and identify factors that influence behaviors (Creswell, 2012). Qualitative research of soft

data follows a nonlinear path to relate authentic interpretations of a specific issue. The

nonlinear path provides focus and data richness, texture, and thoughts requiring the

researcher to use inductive reasoning to develop insights and generalizations from the data

collected. Qualitative research data collected from a small sample size allows the

examination of data for nuances that may help in understanding the issue in context (Leedy

& Ormrod, 2010).

Quantitative research applies deductive reasoning focusing on planning research

design, measurement, and sampling (Creswell, 2009). Data collections through large

statistical samples are reflective of frequency of actions and progress through linear research.

The data analysis based on predetermined variables and stated hypothesis tests the theory

(Leedy & Ormrod, 2010). The mechanical techniques used for statistical analysis in

quantitative research stress objectivity and statistical projection through standardized

procedures and principles of replication (Leedy & Ormrod, 2010). The data predominantly

collected through surveys for statistical analysis of the hypothesis will ultimately confirm or

refute the theory. Data collection can take place without researcher interpretation and does

not provide an opportunity to change methods as could happen in qualitative research.

A mixed method combines elements from both qualitative and quantitative methods

to allow the determination of more details than either method could provide alone (Leedy &

Ormrod, 2010). Qualitative research studies might quantify some answers and quantitative

interview questions might be incorporated into some open-ended questions to solicit insights.

Teddlie and Tashskkori (2009) suggested that the development of a mixed method research

design begins with a research question, which when broken down results in both quantitative

and qualitative sub-questions. The option of either quantitative or mixed method involves

confirming or disconfirming a hypothesis. The hypothesis represents the researcher’s

prediction as to the outcome of the research. This study intended to ascertain the financial

literacy perceptions and expectations of low-income adults without any preconceived

conjectures. There are, therefore, no developed hypotheses. The inquiry of low-income

adults’ perceptions and expectations of financial literacy fits the selected qualitative

phenomenological research method.

Overview of the design appropriateness. Creswell (2012) explained the

appropriateness of qualitative research when a problem needs to be explored. Leedy and

Ormrod (2010) explained, “The data dictate the research method” (p. 94). The research

question collected data to ascertain the participants’ perceptions and expectations regarding

financial literacy to increase participation in financial literacy programs. The

phenomenological method gave the low-income adult participants an opportunity to have

their voices heard (Creswell, 2012). The research question, therefore, revealed the necessity

for a qualitative phenomenological research method rather than other qualitative methods. A

review of the other qualitative research methods follows below acknowledge design

methodologies inconsistencies to stay within the boundaries of this phenomenological study.

Case study research involves studying a program or individuals to discover the paths

taken to understand the outcome of a particular issue (Creswell, 2012; Leedy & Ormrod,

2010). The emphasis of this study was to discover information to increase participation of

low income adults in financial literacy programs, which would be limited when considering

the perspective of these individual. Therefore, case study research was not selected to

support this study’s emphasis on understanding the perceptions and expectations of financial

literacy for program development.

Content analysis is a qualitative approach that merges quantitative aspects and

generally will become part of a mixed method study. This is done through a systematic

examination of characteristics of material to identify themes, bias, or patterns (Leedy &

Ormrod, 2009). The proposed study involved interviews to extract data with no preformed

expectations from the individuals, rather than analyzing for expected characteristics required

for content analysis. Content analysis was therefore inappropriate for this study.

Ethnography requires researchers to immerse themselves in the culture of the

population to become a trusted member of the society covering a lengthy period to discover

and understand the population. The grounded theory approach utilizes data to develop theory

when theories have not been developed (Creswell, 2012; Leedy & Ormrod, 2010). This

study’s data analysis applied Maslow’s (1948) hierarchy of needs and Proschaska’s (1979)

transtheoretical model of change theories to develop recommendations for financial literacy

programs to improve on curriculum and increase participation. Both the qualitative study

designs of ethnography and the grounded theory would not work for this study because of the

limited access to participants outside of the community organization because of the transitory

and suspicious nature of the low-income population (Weiss & Bailar, 2002).

The selection of the phenomenological approach, therefore, was deemed best suited

for the research question’s purpose and focus in comparison to the other qualitative

approaches. Phenomenology studies fall into either hermeneutic or transcendental modes

(Creswell, 2009). Hermeneutic phenomenology sanctions the researcher freely interacting

with the participants and interpreting the participants lived experiences (van Manen, 2007).

Transcendental phenomenology follows Moustakas’s (1994) protocol in which the researcher

focuses on the descriptions of the participants’ lived experiences and brackets out all

personal experiences of the phenomenon. Selecting participants with a common experience

increases the ability of the researcher to analyze the interview transcriptions both textually

and structurally through interpretative analysis reducing experiences to their essence.

This study’s topic of financial literacy explored a personal subject often considered

taboo for discussion (Atwood, 2012; Lowrance, 2011; Trachtman, 2008), but that underlies

many behaviors nonetheless. The low-income adult population for the study was challenging

to access. To overcome the barriers of the topic and population access, the study researcher

worked with a gatekeeper. The gatekeeper was a liaison between the study participants and

the researcher. The presence of a gatekeeper helped the researcher obtain lived experiences

and future expectations in a perceived nonjudgmental way (Creswell, 2012).

Financial literacy educational programming has been designed to increase the low-

income population’s use of mainstream financial services (Curley et al., 2009; Lyons &

Neelakantan, 2008; Lyons & Scherpf, 2004; Servon & Kaestner, 2008; Zhan et al., 2009).

The study explored the participants’ reactions to a financial literacy program regarding

whether the financial literacy program provided the knowledge and skills to meet personal

financial literacy needs. The unique perspective of understanding the financial literacy

program participation of low-income adults from a community nonprofit organization in

Danbury, Connecticut, provided insights to develop financial literacy programs, discovered

new measurements of financial literacy education effectiveness, and uncovered possible

methods for increasing participation.

Research Question

The purpose of this phenomenological study was to ascertain the perceptions and

expectations of low-income adult participants regarding financial literacy in order to

understand their perspectives and to make recommendations that could help improve the

financial literacy programming curricula to increase participation by low-income adults.

Studies concerning low-income adults’ financial literacy have focused on adult learning

techniques (Birkenmaier & Curley, 2009; Lyons & Neelakantan, 2008) and the level of

aptitude in financial literacy to increase the likelihood that the low-income population would

use mainstream financial institutions (Chang & Lyons, 2008; Curley et al., 2009; Lusardi,

Mitchell, & Curto, 2010), leaving a gap of inquiry for what low-income adults want to know

about financial literacy to improve their financial futures. The results of the study could

benefit financial literacy program development and participation, and increase low-income

adults’ abilities to manage their money successfully. The timing of the study corresponds to

the United States’ national push to increase financial literacy for the individual. The study

explored the needs of low-income adults who comprise 30% of United States households

(DeNavas-Walt et al., 2011; FDIC, 2009) in an effort to support national economic stability.

The phenomenological research study design of Moustakas’ (1994) provided the basis

for investigating the phenomenon of financial literacy perceptions and expectations of low-

income adults through their lived experiences. Resulting with the central research question:

What are low-income adults’ perceptions and expectations concerning financial literacy? To

develop an answer to the central question, three sub-questions were developed: (1) "How do

the participants rate themselves in regard to personal financial literacy?” and (2) “Has the

participant’s attendance in a financial literacy program increased their financial

knowledge?”, and (3) “What suggestions from participants could increase participation in

financial literacy program by low-income adults?”

Theoretical Framework

Low-income populations’ needs for financial literacy to gain long-term financial

success might be superseded by their experiences and ability to change their current standard

of living (Allen & Miller, 2010; Goodman, 2012; Lyons & Scherpf, 2004; National

Endowment for Financial Education (NEFE), 2006; Sherraden & McBride, 2010; Servon &

Kaestner, 2008). This phenomenological research study made inquiries about the

participants’ experiences and expectations with financial literacy. The inquiries collected

data from three perspectives: (a) how they developed the financial knowledge that directs

their financial behavior, (b) what expectations do they have concerning their future financial

plans, and (c) whether or not financial literacy program modules help them toward realizing

their plans. The theoretical framework for this study included Maslow’s (1948) hierarchy of

needs and Proschaska’s (1979) transtheoretical model of change. These theories provided

information to help interpret the study populations’ perceptions and expectations of financial

literacy in the hope that the study’s results could lead to recommendations for modifications

in financial literacy programs that could increase participation and financial literacy of low-

income adults.

Maslow’s hierarchy of needs. Maslow’s (1948) motivation theory structure of

individual character growth stems from the fulfillment of lower-level needs before advancing

to the next higher level of need. Maslow’s prescribed hierarchy of needs progresses through

five need levels: physiological, security, social, ego or self-esteem, and self-actualization.

Devaney, Anong, and Whirl (2007) applied Maslow’s hierarchy of needs to encapsulate

seven levels of savings by expanding on Maslow’s five stages by adding one additional level

(no savings) and splitting Maslow’s security level into savings for possible short-term

financial setbacks and financial retirement security. The results revealed that movement

from lower savings levels were stagnant at the security level of safety needs because of a lack

of financial knowledge. Mandell and Klein study (2009) found that the inability to make

appropriate personal financial decisions has far-reaching negative effects on the nation’s

economy. Data collection included the motivational and environmental factors of low-

income adult behaviors in relation to his or her experiences with and expectations of financial

literacy.

Studying savings behavior continued in December 2010 (Gutter et al., 2012). The

researchers studied the psychology, sociology, and economics of 826 complete responses to a

web survey. They found correlations between age, personal planning horizon of long term

orientation, and positive personal experience increased saving behavior. This indicated that

saving behaviors links internal and external variables (Gutter et al., 2012).

Soman and Cheema (2011) researched savings for single income families in India.

The 146 participants held the same job and earned $15.50 per week. The participants were

divided into four groups. The savings requested were either 6% or 12% and the savings were

put in envelopes either left blank or with a picture of their children on the outside. The

savings could also be consolidated or left in the individual envelopes. The results showed

that the participants, who were able to save the most, were requested to save at 6%, did not

consolidate the saving envelopes, and the envelopes had pictures of their children. These

studies could link to Maslow’s hierarchy of needs of savings representing security.

Proschaska’s transtheoretical model of change. The transtheoretical model of

change first established to influence change in unhealthy behaviors includes five stages that

reflect the steps required for change and a sixth stage when a person relapses into previous

unhealthy behaviors (Proschaska, 1979; Xiao, et al., 2004). The first stage,

precontemplation, involves initial awareness but no decision yet to make any changes in the

coming six months. In the second stage, contemplation, an individual decides to make

changes over the next six months. Third, preparation plans are made for change in the next

30 days. The fourth stage is the period the individual has changed his or her behavior, but is

still within the first six months of change. The fifth stage, maintenance, occurs if the

individual has continued with the change for more than six months (NEFE, 2006;

Proschaska, 1979).

Xiao, O’Neill, Proschaska, Kerbel, Brennan, and Bristow (2004) applied

transtheoretical change to financial literacy education through the program Money 2000

because “research shows behavioral change is a process, not an event” (p. 56). The study

resulted in individuals successfully replacing the undesirable behaviors of impulse buying

and accumulating credit card debt with the development of the desirable behavior of saving.

Numerous studies concerning low-income populations have found the transtheoretical model

of change can be used effectively as a basis for evaluating a person’s stage of change with

regard to financial behavior (Loibl, Grinstein-Weiss, Zhan, & Bird, 2010; Lyons &

Neelakantan, 2008; Palmer, Bliss, Goetz, & Moorman, 2010; Shockey & Seiling, 2004;

Spader et al., 2009). The responses gathered in this study were reviewed for trends

associated with the transtheoretical model of change in the acceptance of financial behavior

change. The interview questions were evaluated to determine the transtheoretical stage of the

participant when they attended the financial literacy program. The transtheoretical stage

identified can help financial literacy program marketing to reach low-income adults at each

transtheoretical stage, thereby increasing low-income adults’ participation in financial

literacy programs therefore, increase participants’ long-term financial security.

Definition of Terms

The definitions listed reflect the meaning of operational terms utilized for the study.

Financial literacy. “Financial literacy can be described as the ability to make

informed judgments and to take effective actions regarding the current and future use and

management of money” (FLEC, 2010a, p. 2).

Gatekeeper. A gatekeeper is an individual who has insider status in the organization

in which the research study will occur and willingly assists the researcher in recruiting

participants for the study (Creswell, 2012).

Low-income. Taxable income does not exceed 150% of the federal poverty level

amount reflected by the number of people in the household (U.S. Department of Health and

Human Services, 2011). The development of poverty measures occurred in the 1960’s and

localized programs can measure low-income from 125% to 200% of the federal poverty

guidelines (Kolesnikova & Liu, 2012).

Underbanked. “Underbanked households are defined as those that have a checking

or savings account but rely on alternative financial services. Specifically, underbanked

households have used non-bank money orders, non-bank check-cashing services, payday

loans, rent-to-own agreements, or pawn shops at least once or twice a year or refund

anticipation loans at least once in the past five years” (FDIC, 2009, p. 10).

Assumptions

The assumptions for the study were based upon the researcher being the primary

research instrument. The assumptions focused on my development of interview questions,

my having access to study participants, and my interactions with study participants. The

interview questions I developed were evaluated by outside experts and deemed valid,

unbiased, and appropriate for a phenomenological study. My interactions with participants

took place in an atmosphere of unbiased acceptance on my part of participant responses, I

listened for responses, and I did not provide answers.

My assumptions regarding study participants included availability, low-income status,

and honest communication. The study’s population came from a nonprofit community

organization offering services and counseling to low-income families and single adults.

Volunteer adult participants were individuals who previously attended a financial literacy

program at the community site. Participants responded to me during member checking to

review the results of the data interpretation to ensure validity (van Manen, 2007; Moustakas,

1994). The participants were expected to communicate honestly about their financial history

and future expectations, supported by phenomenological research premises and research

requirements of participants’ confidentiality (Creswell, 2012; Leedy & Ormrod, 2010).

Scope and Limitations

The unique research approach herein investigated low-income adults’ perceptions and

expectations of financial literacy rather than measuring their level of financial literacy before

or after they attended a financial literacy educational program. The small sample size of 20

low-income adults is reflective of the phenomenological research design used to collect data

about personal experiences (Creswell, 2012; Leedy & Ormrod, 2010). The collected data

was analyzed for trends and patterns using NVivo 9 ®, qualitative research software

program, and recommendations were developed to modify financial literacy educational

programs and increase participation.

Limitations to the study reflected availability of participants, honesty of the

participants regarding their financial literacy perceptions and expectations, the attendance of

a single financial literacy program module, the use of a transcriptionist, and geographic

restrictions. Weiss and Bailar (2002) explained that low-income adults’ lack of participation

in research studies comes from various factors, such as no telephone service, frequent moves,

language barriers, and often suspicion of strangers. Participation in the study through

interviews was supported by the nonprofit organization’s gatekeeper and the use of the

snowballing technique. The gatekeeper maintained regular contact with low-income adults

(Creswell, 2012; Weiss & Bailar, 2002). The use of snowballing was required because of the

transitional nature of low income populations.

Interview participation was voluntary, and participation resulted in a $25 gift card for

a local grocery store to increase response rates (Creswell, 2012; Weiss & Bailar, 2002).

Participants’ were only required to attend a single financial literacy program module, because

attendance records from the site gatekeeper showed a lack of attendance in a five module

financial literacy program. The interview’s open- and closed-ended questions were reviewed

by local financial literacy experts and the questions were revised. The pilot study required

additional revisions to the interview questions which increased the study’s validity and

reliability. To encourage participation in member checking gathering to review the research

recommendations, a raffle of a $100 gift card was included.

The use of a transcriptionist to document the interviews could be perceived as a

decrease in time the researcher could be immersed in the data. The skill of the

transcriptionist confirmed by the researcher, however, provided the researcher with more

time to effectively immerse herself in the data by listening and reading the interviews

necessary for interpretation of data.

The recommended curriculum additions could be applied to the target population to

increase participation in financial literacy programs not generalized to low-income

populations because opportunities and barriers reflect local environments. The study could

be replicated by other local organizations concerned with understanding the needs of their

service population.

Delimitations

The sample of the study’s low-income adults was gathered voluntarily through a local

nonprofit community organization which supports low-income adults. The participants could

have volunteered as a result of their desire to support the gatekeeper and the $25 dollar gift

card incentive as suggested by Weiss and Bailar (2002) to increase the low-income

population to participate in research. The participant responses were analyzed through

multiple interpretative readings of the interview transcriptions to extract emerging patterns

and themes in relation to the research study’s central question of low-income adults’

perceptions and expectations of financial literacy. Outlier responses from research

participants were eliminated through the process of data analysis; therefore, single statements

could be left as solitary statements and not reflected in the final summation of the study

(Leedy & Ormrod, 2010). The possibility of the Hawthorne effect, in which participants give

the researcher expected responses (Leedy & Ormrod, 2010), was limited by the interview

questions’ structure and lack of expected responses.

The questions in the interview collection process were reviewed by local area

financial literacy experts to remove possible researcher unconscious bias in constructing

leading questions and to evaluate the questions for understandability by the population. The

resulting questions were pilot tested for reliability and construct validity (Creswell, 2012;

Leedy & Ormrod, 2010; Weiss & Bailar, 2002). The pilot test of the interview questions

occurred with interviewing two participants. The results from the pilot test provided

information to revise the interview questions before the formal interviews began. The formal

interviews started off with the collection of general demographic information and followed

with open-ended questions to gather in-depth experiences and expectations. Interviews are

considered effective in data collection for phenomenological qualitative research (Creswell,

2012).

Summary

The national motivation to increase financial literacy for low-income adults,

compromising 30% of the United States households (FDIC, 2009), and the lack of direct

access to this population was the impetus for this phenomenological study. Financial literacy

program design and presentation by government agencies and financial institutions have low

levels of participation by low-income adults (Servon & Kaestner, 2008; Spader et al., 2009;

Weiss & Bailar, 2002; Zhan et al., 2009). The study was designed, therefore, to discover

low-income adults’ perceptions and expectations for financial literacy and to discover unique

factors that could contribute to the modification of financial literacy programs and marketing

to increase low-income adult participation and hence his or her financial literacy.

Chapter 2 contains a literature review of the topic. The chapter begins with a

literature review of financial literacy programming development throughout the world and

nationally, then focuses on low-income financial literacy studies to highlight the research gap

in direct inquiry of low-income adults’ perceptions and expectations of financial literacy.

Chapter 2 continues with studies covering phenomenological research within the low-income

population, the theoretical framework of Maslow’s (1948) hierarchy of needs, and

Proschaska’s (1979) transtheoretical model of change as they relate to this study. The

literature review conclusion and summary supports the direction of this research.

Chapter 2

Review of the Literature

Financial literacy education for low-income adults promotes and develops behavioral

changes for family welfare that in turn cascade to the community at large (Schuchardt,

Hanna, Hira, Lyons, Palmer, & Xiao, 2009). Increasing positive financial behaviors,

therefore, support a sound economy (OECD, 2010). This phenomenological study

researched the perceptions and expectations of financial literacy for the study’s low-income

adult population to develop and recommend curriculum changes that may increase

participation in financial literacy programs offered to low-income adults (Leedy & Ormrod,

2010). Chapter 2 includes an examination of selected documents from the literature

referencing (a) historical overview, (b) financial literacy studies, (c) expectations for a

financially literate population, (d) accessing the low-income population, (e) Maslow’s (1948)

hierarchy of needs, (f) Proschaska’s (1979) transtheoretical model of change, and (g) studies

acknowledging the challenges of financial literacy education. The topical sections of the

literature review are followed by the chapter conclusion and summary providing key points

derived from the review.

Title Searches, Articles, Research Documents, and Journals

The literature review required comprehensive research of relevant primary sources

and secondary sources accessed through University of Phoenix Online library, a local college

library, and Internet search engines. The key word searches included: financial literacy,

financial illiteracy, financial literacy educational programs, unbanked, financial literacy low-

income, and expectations of financial literacy. The financial literacy research includes

articles and other documents necessary to ascertain information to create support for financial

literacy educational programs beyond educational curriculum initiatives and employers’

programs. Appendix A presents the key word searches and the resulting documents

referenced for this study.

The study elucidated the perceptions and expectations of low-income adults to

financial literacy, and ascertained what could increase participation by low-income adults in

financial literacy programs. The review of historical information and theoretical frameworks

included research on documents prior to 2008 and through 2012. Current literature review

has documents dated after 2007.

Historical Overview of Financial Literacy Programs

The historical overview begins with the financial literacy education initiative from the

Organisation of Economic Cooperation and Development’s (OECD) to promote financial

literacy in response to 21 st century global economic conditions (OECD, 2005). The OECD

looks to coordinate successful financial literacy education initiatives from developed

countries around the world (OECD, 2008). Next in the historical overview describes aspects

of financial literacy program development from the United States, then financial literacy

studies outside the United States affirm the need to increase the individual’s financial

capabilities (Buckland, 2011; FLEC, 2010a; Gallery & Gallery, 2010; OECD, 2010; Oehler

& Werner, 2008; U. S. Treasury Department, 2008). The historical financial literacy

research review showed financial educational programs were developed from the perspective

of what governments and the global financial industry determined individual citizens needed

to learn.

Organisation of Economic Cooperation and Development [OECD]. OECD

established the Financial Education Project in 2003 in response to perceived financial literacy

needs across the global community. A report issued in 2005 established the baseline of

financial education benchmark data (OECD, 2005). The report first explained the

environmental factors that increased the need for financial education: (a) financial product

complexity, (b) an increasing number of financial products, (c) increasing life expectancy,

(d) changes in pension arrangements, and (e) the low-level of consumer financial literacy

(OECD, 2005). The report went on to describe the benefits of financial education through

the adult life cycle and how financial education can support higher levels of income and

improve economic growth and reduce poverty in the global economy. The OECD

recommended principles and practices for financial education and awareness, requesting that

OECD members and nonmembers promote financial education and share good practices. In

2008 the OECD (2008) reported on the need to educate consumers on annuities to

counterbalance the effect of pension changes. Pension changes worldwide have resulted in

decreasing defined benefit plans and continual decreasing benefits of established plans

because of increasing longevity (Brown, 2009; Lusardi, 2012). The OECD established the

International Network on Financial Education (INFE) in 2008 to provide a central location

for information to benchmark best practices worldwide that promoted financial literacy

(OECD, 2010). Expanding on the initial factors supporting the need for higher levels of

financial literacy included discussions of:

• aging populations, which threaten the viability of public pay-as-you-go pensions,

• increases in life expectancy that stretch people’s savings,

• the increased complexity of financial products,

• the proliferation of new financial products

• better educated consumers who want to know more

• a shifting of responsibilities and risks to individuals, such as student loans in New Zealand,

or in some countries a shift from defined benefit pension schemes to defined contribution

schemes.

• the erosion of trust in the financial services industry with such issues as the collapse of

finance companies (NZ), mortgage foreclosures (USA), and lending crises (UK)

• increasing consumer debt and higher rates of bankruptcies

• the ease and availability of credit products to an increasing proportion of the population.

(OECD, 2010, para. 3)

Responding to the global economic crisis in 2008, the OECD issued another report titled

“Financial Literacy and Consumer Protection: Overlooked Aspects of the Crisis” that made

additional recommendations on good practices to increase consumer credit education and

awareness (OECD, 2009). The global economic crisis recovery generates news headlines

from countries around the world as the countries contend with controlling government

spending associated with longevity and pension payments. The global financial environment

supports the direction of increasing financial literacy at the individual level to create

awareness and understanding of global financial restructuring throughout the world. Shifting

responsibility and empowerment back to individual consumers requires national

commitments to financial literacy education because research studies document the

deficiencies in individual levels of financial literacy in many countries (OECD, 2010).

Financial literacy legislation in the United States. The great depression of the

1930s brought about the first onslaught of financial regulation to control the banking industry

and spurred the creation of Social Security in 1935, providing governmental support and

funding for retirement (Social Security Administration, 2010). The advent of social security

phased in a behavioral change for individuals to stop working, as seen by average retirement

age: 74 years in 1910, 70 years in 1950, 65 years in 1970, and 62 years in 1985 (Cahill,

Giandrea, & Quinn, 2006) even as life expectancy increased. Life expectancy in the United

States for males was: 49 years in 1910, 67 years in 1950, 68 years in 1970, 71 years in 1980,

and 75 years in 2000. Life expectancy in the United States for females was: 52 years in

1910, 72 years in 1950, 76 years in 1970, 78 years in 1980, and 80 years in 2000. The

statistics show people did not stop working to enjoy retirement leisure time through the

1950s, but the leisure of retirement appears in the 1970s statistics as people stopped working

at 65 years while life expectancy for both males and females exceeded 65 years (Arias,

2011). Social security, pensions, and savings supported people during their retirement years,

minimizing the need for financial literacy education for the GI generation, representing the

veterans of World War II born between 1900 and 1924.

The economic shift in decreasing pension funding, lack of personal saving, and

increasing longevity has halted the descent in the retirement age (Cahill, Giandrea, & Quinn,

2006). The changes in social security benefits and access to social security benefits have

reversed the trend for the Baby Boomers’ generation, people born after World War II

between 1946 through 1963, retirements and beyond as people grapple with funding

retirement. Baby Boomers’ expectations of a secure retirement based on social security, has

Baby Boomers reevaluating retirement and requiring financial literacy education.

In 2003, recognizing the decreasing level of savings in the United States and social

security funding issues, Congress, through the Fair and Accurate Credit Transaction Act of

2003, established the Financial Literacy and Education Commission (FLEC) to coordinate

the activities of 19 federal agencies to support financial literacy and education. This

commission was created as a division of the United States Treasury Office (FLEC, 2010a).

The FLEC’s first report, issued in 2006, expounded on the need for individuals to take

ownership of their financial futures and identified the unbanked and underbanked

populations. The term unbanked refers to individuals without an established account in a

depository institution, such as a bank or credit union. Underbanked individuals have an

established depository account and pay for financial services outside the banking institutions.

The percentage of the United States’ population either unbanked or underbanked in 2009 was

25.4%; the percentage of the state of Connecticut’s population either unbanked or

underbanked totaled 19.1% (FDIC, 2009).

The FLEC created a website (mymoney.gov) as a go-to place for financial literacy

documentation and advise organizations outside the government, yet the Government

Accountability Office [GAO] issued audit reports in 2007 and 2009 indicating that the FLEC

has not accomplished the mission of supplying a national financial literacy education

strategy. The FLEC contended that the task of coordinating 19 agencies while possessing no

legal authority to compel action or available staff to devote to the task could not be

accomplished (GAO-09-638T, 2009).

The presidential advisory council on financial literacy also established in 2003, issued

a report in 2008 listing 15 recommendations, including promoting the availability of financial

education resources for parents, caregivers, and teachers of pre and early school-age children;

listing essentials for literacy programs; and the need to help unbanked and underbanked

individuals (U.S. Treasury Department, 2008). The presidential advisory council assigned

FLEC to follow up on the audit recommendations and worked in association with the

Financial Industry Regulatory Authority (FINRA) foundation to have a third party measure

financial literacy.

FINRA, a federal agency established in the 1920s to be an independent regulator for

the United States securities firms, commissioned a report on the United States financial

capability as of 2009. The results indicated a need for financial literacy education because

approximately half of the population surveyed had difficulty making ends meet; the majority

have not planned ahead with emergency savings, children’s education, or retirement; 20%

stated they use nonbank services and self-reported themselves as having financial knowledge

and decision-making skills (Applied Research & Consulting, 2009). A 2010 study by the

National Foundation for Credit Counseling (NFCC) indicated improvement since 2007 with

more people budgeting and controlling their spending. However, those lacking retirement

savings increased from 28% to 33% of the population (NFCC, 2010).

Jump$tart, a private foundation working in partnership with the FLEC, provides

information to improve financial literacy to high school students, and produces bi-annual

surveys measuring the financial literacy of high school students in the United (Cory &

Pickard, 2008). The 2008 report showed a drop in financial literacy at the high school level

from 57.3% in 2005 to 48.3% in 2007 and, measuring college students for the first time in

2007, 62% of college students were found to be considered financially literate. One

important financial behavioral action and attitude is the acceptability to Americans of

carrying huge amounts of debt that negatively affects long-term financial stability.

Bolton, Bloom, and Cohen (2011) concur that the American families in 2007 had debt

exceeding 40% of their income and marketing of debt and debt consolidation plans

emphasize short term benefits. Cory and Pickard (2008) results indicated that the financial

community should not wait for the government education system to design and implement

financial literacy curricula. The increasing change and complexity in the financial markets

makes creating and maintaining up-to-date financial literacy education curricula impossible.

The need for financial institutions and employers, therefore, to become involved in educating

their clients and employees, respectively, is essential.

Another governmental agency in FLEC’s domain, FDIC sponsored the Money Smart

financial literacy program designed to educate the low-income population about banking

services (Lyons & Scherpf, 2004). The program consists of 11 modules although usually

only the first five modules are presented These five modules were designed for individuals

first coming into financial education and in need of education on basic financial topics of

available banking services, budgeting, and savings (FDIC, 2010; Lyons & Scherpf, 2004).

The remaining modules cover more advanced topics and can be presented at a later time after

individuals have enacted the basic financial initiatives. Presentation of the Money Smart

program by financial institutions helps them achieve compliance with the Community

Reinvestment Act of 1977 (FDIC, 2010).

FLEC contending with its responsibilities of coordination of financial literacy among

government agencies, government task forces, and private sector organizations issued a

report in response to the 2009 audit. In 2010, the FLEC issued a report on the national

strategy for the promotion of financial literacy education programs stressing four goals: (a)

awareness and access, (b) determination and integration of core financial competencies, (c) to

strengthen the provisions of financial education, and (4) to identify and share effective

practices (FLEC, 2010a). At that time, the vision statement for the FLEC was: “Sustained

financial well-being for all individuals and families in the United States” (p. 6). The FLEC

has posted requests for feedback and discussion of the suggested core competencies of

earnings, spending, saving (includes investment), borrowing, and protecting for financial

literacy education to design measurement criteria for financial literacy programs (FLEC,

2010b). The continuous governmental efforts to increase financial literacy in the United

States since 2003 compiled with global economic crisis that began in 2008 are evident of the

need for research studies to investigate possible means to increase financial literacy.

Financial literacy studies influences. The global economic crisis that began in 2008

confirmed the lack of financial literacy and overconfidence of financial players across the

globe. Selected financial literacy studies undertaken outside of the United States direct

attention to the levels of financial literacy and other environmental factors underlying the

global financial crisis (Buckland, 2010; Gallery & Gallery, 2010; Oehler & Werner, 2008;

Umberto & Gianni, 2010; Williams, 2007). The studies presented illustrated various

financial literacy education programs to bring awareness, knowledge, and behavioral changes

that would enhance global economic recovery and thwart future economic meltdowns. These

studies support research to connect to citizens’ individual financial literacy needs.

In a case study undertaken by Oehler and Werner (2008) a comparison was made

between the financial literacy campaigns in the United Kingdom and Germany. The case

study’s variables were the lack of retirement savings in conjunction with the decreasing value

of government sponsored pensions. The predisposed governmental neoclassical perspective

linked with utility theory expected individuals to be adaptable to changes in the funding for

retirement. The lack of savings and financial literacy, however, indicates that real-world

factors influence theories.

Oehler and Werner (2008) acknowledged that behaviors to create financial

contractual relationships were influenced by bounded rationality. Contractual relationships

established by individuals to save for retirement occurred at or close to retirement not leaving

enough time for changes in funding patterns that would result in the accumulation of wealth

prescribed by utility theory. Bounded rationality influenced the initiation of contractual

relationships because individual bounded rationality represented personal financial

knowledge. The United Kingdom’s national priority strategy focused on financial

capabilities and generic financial advice. The limited success of these programs has the

United Kingdom establishing new schemes for expanding financial educational programs to

vulnerable groups and establishing personal accounts.

Germany national strategy in 2008, of targeting adult financial education needed to

expand to the vulnerable groups not currently exposed to financial education programs

(Oehler & Werner, 2008). Germany planned to design financial education programs that

target life stages, and offered the programs to vulnerable groups free of charge. The United

Kingdom case study showed the movement by the government from recognition of the

neoclassical perspective and utility theory, toward awareness of individual influences.

Germany’s study resulted in awareness of individual influence, acknowledged lack of

financial education, institutional schemes, and recommended the creation of automatic

retirement accounts for vulnerable groups. The study did not report details on population and

sample sizes.

Buckland’s (2010) mixed method research study assessed the financial literacy of

low-income individuals in Canada. Buckland suspected that financial literacy needs differ

across socio-economic classes so financial literacy testing required target population testing.

Financial literacy programs, consequently, need specific development to reach target

populations. Surveys and interviews gathered evidence of financial literacy concerning

budgets, income, credit, banking services, and governmental programs. Surveys were

returned by 82 participants and the 15 people interviewed were selected through the

snowballing technique. The research findings indicated that low-income individuals have

different financial literacy needs influenced by external factors of income trends, banking

services, and social assistance policies. Two significant discoveries included: (a) the addition

of children caused low-income adults to focus more on the future rather than day-to-day

finances, and (b) social assistance policies did not provide enough for significant savings.

Another result was that low-income individuals could not maintain the minimum bank

account balances required by the banking industry to forego fees.

Buckland’s (2011) meta-analysis of 152 low-income research studies resulted in

numerous recommendations to support the low-income population’s need for financial

literacy. The categories for recommendations included measurement of financial literacy and

financial literacy programs, development, and evaluation. Buckland indicated that the

measurement of financial literacy must reflect the socio-economic levels of the population.

Buckland recommended qualitative research to inquire about the values and long-term life

and financial goals of low-income populations and supported the need for this research study.

A quantitative research study in Italy evaluated the connection between financial

capability and self-accounting (Umberto &Gianni, 2010). The research involved the creation

of a regression analysis model where individuals could select from income levels, savings

goals, and external influences to determine their exposure to risk if they took on an additional

loan. The study results indicated that the regression analysis model could be consulted if

individuals were contemplating additional debt, thereby lessening the need for financial

education and providing more financial counseling. The study’s website design and

programs could fill the gap in financial education for adults finished with formal education

that have Internet access, and are at ease with website technology. The program was not

been designed to provide financial education for less educated or lower income citizens.

Williams’ (2007) qualitative content analysis research on Canadian and United

Kingdom regulators responsible for the promotion of financial literacy as expected by the

OECD, showed governmental responsibilities conflicted. The conflicting responsibilities are

to educate citizens on the need to save for long term financial future and support consumer

spending to improve the country’s economic conditions. Both governments remarked on

their expectations that individual citizens could regulate their well-being for long-term

financing by becoming responsible and self-regulating; therefore, citizens should not look to

governmental financial provisions. The self-regulation perception permits a free market,

relieving regulators of responsibility for monitoring the financial market and requiring

individuals to protect themselves.

Williams’ (2007) research evaluated consumer selection processes for financial

products. The product selection was affected by how the product was framed. Products with

vivid presentations sold more than plain quality and accurate text materials (Williams, 2007).

To combat the selection process by presentation, the consumer should receive immediate

educational feedback to neutralize consumer bias. Immediate educational feedback is not

available through educational websites; therefore, expectations of consumer financial literacy

cannot replace regulations. Another finding is that the government has conflicting

responsibilities not only of encouraging financial literacy education and saving for

retirement, but supporting commerce and individual spending as well.

The global financial crisis that began in 2008 indicated that the complexity of the

financial market is difficult for professional regulators. The approach, therefore, in the

United Kingdom and Canada for individuals to understand the complex financial market

defies logic. The realization of the expectations of self-regulation and protection could

contribute to a future financial crisis (Arthur, 2011; Williams, 2007; Willis, 2008).

Reporting on financial literacy in Australia in the aftermath of the global crisis,

Gallery and Gallery (2010) stated that the crisis relates to three systematic problems: (a) a

decision maker’s behavioral bias, (b) the short term vision of corporate and financial

markets, and (c) the absence of acceptance of responsibility by individuals, corporations, and

financial institutions for their actions that led to the global financial crisis. Considering the

lack of financial aptitude among the Australian population, shifting personal responsibility

for financial management is unrealistic because individuals may not have the aptitude to

achieve an adequate financial literacy level or the desire to become financially literate.

Wilson’s (2012) report addressed financial exclusion of the Australian low-income

population. Financial exclusion means low-income adults do not have access to affordable

credit limiting them to obtaining credit from predatory lenders. Wilson recommends

governmental regulation much like the United States 1977 Community Reinvestment Act to

provide tax credits to mainstream financial institutions to provide small loans to low-income

Australians.

Financial literacy programs need to be designed to offer information relevant to

impending financial decisions, understanding that human behavioral tendencies include

inertia and procrastination when making complex decisions, and over-confidence developed

by self-attribution bias. The Australian government response to increase the country’s

financial literacy includes educational pathways, employers, unions, websites, and

community programs. A limitation on future financial programs is the possibility of market

sponsored funding of financial literacy programs that could undermine the development of

unbiased programs which presents a challenge for regulators. The need for financial literacy

education, however, to create global stability outweighs the limitations.

These studies show the conflicting responsibilities of government to support

individual citizens to prepare for long term financial futures and the need to support

consumer spending to improve the country’s economic conditions. The development of

financial literacy educational programs, however, can support the balancing of consumer

spending and savings. The FDIC’s Money Smart financial literacy program does involve

educating consumers to develop a balanced savings and spending plan. Participation in this

financial literacy program and other financial literacy programs available in the United States

is low (Chang & Lyons, 2008; Servon & Kaestner, 2008; Spader, Ratliffe, Montoya, &

Skillern, 2009; Weiss & Bailar, 2002; Zhan et al., 2009).

Current Literature: Financial Literacy Development

The topic of financial literacy generated numerous studies. The focal points of the

studies reviewed were to evaluate past studies measurability, consumer attitudes, and

availability to financial literacy programs to the low-income population. Studies on financial

attitudes have shown that Americans are overconfident in managing money when comparing

the savings and long-term plans of Americans to their statements on personal beliefs (Lusardi

& Mitchell, 2007).

Financial literacy education programs directed at different segments of the population

have not shown resounding positive financial behavioral changes. An evaluation of the

programs might determine why they are not successful (Lusardi, Mitchell, & Curto, 2010).

Studies which examined low-income populations have shown positive results from financial

educational programs when associated with this population’s needs, but motivating

participation has proven difficult (De Sousa, 2010; FDIC, 2010; Servon & Kaestner, 2008;

and Zhan et al., 2009).

The current literature section reports first on research studies reflecting on the

constructs under consideration for this research study. The remaining sections include the

expectations of programs and the accessibility of financial literacy programs to low income

adults. The integration of the research studies supports this research to possibly modify

financial literacy programs for low-income individuals and families.

Financial literacy studies. Meta-analyses of financial literacy research studies

revealed a lack of details for recreating the studies and inconsistency in research methods

with regard to content, terms, structure, and measurements to evaluate the studies (Huston,

2010; Remund, 2010). The financial literacy studies, however, reported on the need for

financial literacy education as a means for sustained economic recovery (OECD, 2008;

Remund, 2010). Research studies recommend increasing access to financial literacy

educational modules through social workers (Birkenmaier & Curley, 2009; Lim, DeJohn, &

Murray, 2012). Willis (2008) is a supporter that people should receive financial literacy

education related to their needs.

The financial literacy, however, of most individuals are not enough to navigate

through the financial market complexity and people should look for professional advice for

personal finances as they do for legal and medical advice (Williams, 2007; Willis, 2008).

Collins (2012) analyzed data from the 2009 FINRA Financial Capability Survey and found

that people who obtained professional financial advice were people with higher incomes,

education, and financial aptitude, rather than consumers with low income or education levels.

Meier and Sprenger (2007) studied the behavior and environmental influences of

participants who self-selected into offered financial literacy educational training. The study’s

location at a Volunteer Income Tax Assistance [VITA] site offered access to lower-income

individuals and families who accepted financial assistance with annual tax processing.

Clients coming to the VITA site were offered short credit counseling sessions to discuss their

credit report scores.

The research findings indicated personal time orientation preferences with respect to

long-term versus short-term focuses influenced the probability of individuals accepting the

credit counseling session (Meier & Sprenger, 2007). Individuals with long-term orientations

self-selected into the credit counseling sessions. Although clients with short-term focus did

not participate in the study, they might have benefited from the counseling session because

myopic behavior is related to higher debt levels and detrimental to long-term financial goals

(NEFE, 2006; Meier & Sprenger, 2007). Linking time orientation to financial literacy

education supports the need for further research and new educational programs that consider

the influences of time on motivation. Limitations to the study were primarily related to

population bias. The population at a VITA site presents a bias in attitude regarding

participation because the population is accepting a free service when other options are

available such as self-preparing or paying a tax preparer. Additionally, the self-selection

process presumably led to a biased population who overestimated positive results, so future

studies should acquire a randomized population (Meier & Sprenger, 2007).

Lusardi and Mitchell (2007) continued their studies of financial literacy by comparing

financial literacy education to economic concepts. Their meta-analysis report brought

together the results of various financial literacy studies and linked the results of these studies

to long-term influences to society, as changes in the economy are reflective of individuals’

financial behaviors. The studies of the financial literacy of high school level individuals

showed consistently low scores. Other study’s results included: (a) financial knowledge

overconfidence, (b) good intentions to change behaviors do not always result in change, (c)

people participating in a savings plan had an increased propensity to participate in other

savings plans, and (d) poorly informed consumers do not learn to save or invest for

retirement.

Lusardi and Mitchell (2007) found other characteristics correlated to a lack of

financial knowledge. A characteristic of low level of education connected to unbanked

individuals implying that this population had no involvement with financial institutions;

therefore, had no savings or investments. Another result that might significantly influence

long-term financial insolvency is overconfidence. Overconfidence further widens the

financial knowledge gap because obtaining professional advice or acquiring further financial

literacy education does not occur when individuals are confident in their abilities.

Nonetheless, the researchers were encouraged because governments and NGOs worldwide

have undertaken the task of offering financial literacy programs.

Cocheo (2007) reported on unbanked and underbanked citizen’s needs from the

bankers’ perspectives. The unbanked and underbanked population can represent a niche

market in need of financial services that includes people who do not trust banks, immigrants

who believe they are unwanted by financial institutions, and others who want to hide income

and assets. Reaching to the unbanked and underbanked population can create compliance

required through the Community Reinvestment Act of 1977 and supply an additional revenue

stream for financial institutions (Cocheo, 2007; FDIC, 2010).

A quantitative research study by Rosacker, Ragothaman, and Gillispie (2009)

confirmed that financial knowledge could be transferred at a teachable moment through a

financial literacy study. The study involved upper-level college accounting students teaching

101 freshmen about debt accumulation. A positive post-survey was collected from the

participants, and a request was made for the program to be made available to others on

campus. The study limitation of a convenient sample predisposed the interests and abilities

of the study’s population of college age business students engaging in financial literacy that

reflected a business college program. Future research, therefore, should use a randomized

population.

Fonseca, Mullen, Zamarro, and Zissimopoulos (2012) researched financial literacy

within the household’s financial decision making. The research occurred through Internet

interviews with 2,500 respondents over the age of 18. The esearch examined financial

decisions within United States households to determine if there was a cultural tradition that

the male gender would be making the financial decisions. The research found that the

decisions were influenced by the spouse with the higher level of education, rather than

deferring to the male.

These studies reviewed identified concepts related to financial literacy needs of

various socio-economic groups. The identified concepts of individual characteristics and

behaviors included long-term orientation, financial overconfidence, good intentions, and

savings begat savings (Cocheo, 2007; Collins, 2012; Lusardi & Mitchell, 2007; Meier &

Sprenger, 2007; Rosacker, Ragothaman, & Gillispie, 2009). Suggested venues for accessing

low-income adults to attend financial literacy programs included availability of programs

through social workers, identifying teachable moments to increase financial knowledge,

bankers develop niche marketing to provide financial services, and acknowledging people

can access financial advisors as they would physicians and lawyers (Cocheo, 2007;

Birkenmaier & Curley, 2009; Rosacker, Ragothaman, & Gillispie, 2009; Williams, 2007;

Willis, 2008). These concepts can be related to theories supporting behavioral changes such

as Maslow’s hierarchy of needs and Prochaska’s transtheoretical model of change.

Expectations and education. The second section in the current literature for

financial literacy development segues into research studies about the expectations and

education for a financially literate population. Expectations from the world financial arena

indicate that the result of individuals being financial literate include individuals being

personally responsible for their financial future, therefore, decreasing the possibility for a

future financial meltdown. Financial literacy education studies reviewed some financial

literacy programs and a few meta-analysis studies to evaluate the progress made in the level

of financial literacy in the United States.

Expectations. Financial literacy and capability at the individual level has become an

important aspect of world governmental agencies’ expectations as the global economic

recovery hinges on the financial market that in turn requires investors and consumers to be

confident in both developed and underdeveloped countries (OECD, 2010). New regulations

have been passed to help consumers, and the financial industry is investigating the potential

of markets in undeveloped countries (FLEC, 2010a). Developed countries are undergoing

financial restructuring to support the retirement of their citizens as longevity increases,

shifting the paradigm of financial knowledge and capability to individuals (Arthur, 2011;

Buckland, 2011; Cory & Pickard, 2008; DeNavas-Walt et al., 2011; Gallery & Gallery, 2010;

OECD, 2010).

The expectation for individual financial literacy and responsibility has started to

resemble that of the early 20th century when family financing for long-term expenditures

was the responsibility of the family (Rappaport & Siegel, 2009). Expectation of individuals

able to navigate the complex financial markets without support looks to be excessive after the

global financial meltdown (Arthur, 2011; Williams, 2007; Willis, 2008). Financial literacy

education, however, can support individuals as they prepare for long-term financial needs

and acknowledge that people should obtain financial advice from professionals as financial

planning becomes complex (Arthur, 2011; Williams, 2007; Willis, 2008).

Education. Financial literacy education research review begins with meta-analysis

studies outlining the challenges of compare and measuring financial literacy programs. Then

various financial literacy studies as they apply different socio-economic groupings, excluding

low-income adults. Finally, research studies on financial literacy education for low-income

adults are presented.

The research studies by Remund (2010) and Huston (2010), representing meta-

analyses of financial literacy studies, suggest the development of a consistent financial

literacy definition to design future studies for clearer measurement of financial literacy

programs. Remund’s (2010) research method compiled financial studies, gathered expert

insights, and evaluated invention programs established since 2000. The research resulted in

having information relevant for the development of future studies starting with the need for a

common ground for financial literacy and understanding that financial struggles do not

disappear but evolve and change through adulthood.

The purpose of the study defined closing the gap between the conceptual and

operational of the financial literacy definition in research and in practice (Remund, 2010).

To close the gap requires combining the five categories of the financial literacy conceptual

definition and the six parts of the operational definition to make a comprehensive financial

literacy definition. The conceptual definition includes: knowledge, ability to communicate,

aptitude, financial decision-making skills, and confidence in planning future needs with the

operational definition. The operational definition includes: empowerment, responsibility,

financial capability, credit literacy, financial knowledge, and economic literacy.

Remund (2010) proposed a conceptual financial literacy definition:

Financial literacy is a measure of the degree to which one understands key financial concepts

and possesses the ability and confidence to manage personal finances through appropriate,

short-term decision-making and sound, long-range financial planning, while mindful of life

events and changing economic conditions (p. 284).

Remund’s operational financial literacy definition includes four categories for measurement

and development: budgeting, saving, investing, and borrowing. The concluding statement

for the research study states that future research studies need to work from common

principles to develop and measure the success of financial literacy education.

Huston’s (2010) meta-analysis research included 71 financial literacy studies that

used 51 databases to develop conclusions. The research study was not to evaluate financial

literacy education but to assist researchers in establishing standard financial literacy

instruments by analyzing the constructs of previous financial literacy studies. The study

results compared four facets of construct validation (1) the definition of the financial literacy

construct to be operational and mutually exclusive from other constructs, (2) the instrument

content listed for each study, (3) the method of measure including structural concerns and

how data were collected, and (4) evaluating or scoring of procedures to provide consistency

in testing and interpreting results.

Huston’s (2010) results included 72% of the studies did not define financial literacy,

15% implied definition, 13% provided a definition and only two studies had the same

definition. Financial literacy and financial knowledge were used synonymously in 47% of

studies. The studies included four distinct content areas: money basics and the time value of

money, borrowing, investing, and protection of resources. Borrowing and investing

represent inter-temporal transfers of financial resources between time-frames. Only 25% of

the studies covered the four content areas important in obtaining comprehensive assessment

of financial literacy. Measurement structure included items from three to 68 questions with

the mean, median, and mode results between 10 and 16 correct. Data collection included

38% interviews with 95% over the phone and 62% of self-administered questionnaires with

38% from Internet responses versus mail. Nine out of 10 studies did not indicate whether or

not the respondent was financially literate, and studies with results used different scales to

determine failure. Sixty-eight percent of the studies had target audiences, and sample sizes

ranged from 42 to 12,140.

Huston’s research study results indicated three barriers to creating a standardized

approach for financial literacy. The lack of consistent conceptualization and definition limits

clear design, interpretation, and comparison to other studies. Content structure limits the

instrument acquisition of the respondent’s knowledge and can limit the respondent’s

financial rating. Lastly, the lack of a common and defined measurement interpretation limits

and creates a barrier to understanding financial literacy. Huston’s proposed approach to

research financial literacy includes acknowledging two dimensions of knowledge and uses it

in the financial literacy definition: Develop instruments that measure financial literacy

knowledge and application, understand how other influences effect financial decisions, and

create financial literacy education curricula designed for different demographic populations

(Huston, 2010).

Remund (2010) and Huston (2010) research studies support financial literacy

education. The fact that the meta-analyses found inconsistency in the presentation of

material, however, suggests that future financial literacy educational programs should clearly

define financial literacy and identify the areas of financial literacy that the programs cover.

The purposeful defining of programs provides information to measure the results of financial

literacy programs. Huston (2010) and Remund (2010) meta-analyses recommended future

research on financial literacy, requiring common principles, and measures to provide for

longitude studies to measure the ripple effects of financial literacy programs.

Estelami’s (2009) research correlates consumer financial literacy education with

behavior showing financial capability. Estelami identified five behavioral patterns that can

undermine financial literacy educational programs. The first, hyperbolic discounting, refers

to the time value of money and the distortion of interest rates in a positive manner whether

for payment or accumulation. Second, short-term memory overload explains that

understanding and actions for financial contracts requires more than just short-term memory

when processing financial documents. Third, attribute anchoring occurs in conjunction with

short-term memory overload; individuals can look for and attach too much significance to a

known attribute found in a financial contract. Fourth, poor knowledge of risk levels becomes

reflective of systematic bias when making decisions such as purchasing insurance and

deciding on disaster coverage. Fifth, mental accounting can define the treatment of income

based on source rather than as part of total income available for current or future purchases.

Study results referred to other influences on financial decisions and overconfidence of

financial knowledge.

Learning the negative patterns for financial behavior presented the platform for

education training for positive behavioral modification. The educational financial program

needs to link concepts and theories to financial documents and services and relate to

consumers’ cognitive biases toward financial transactions to reprogram instinctive responses

(Estelami, 2009).

The measurement of financial literacy within the United States continues by testing

the financial literacy of high school and college students to determine if educational

mandates for the kindergarten through 12 curriculum increases aptitude and awareness

(Lusardi, Mitchell, & Curto, 2010). The study expanded a biannual study to include

evaluating independent variables that could have affected individual scores, noting that

positive debt management skills result in building financial assets for retirement. Data

indicated that higher levels of financial knowledge were correlated to the mother’s education

level projecting parental influence for financial knowledge. The researchers theorize that

educational financial high school curricula can provide information to prevent detrimental

choices occurring with credit card debt and involving parents could be more effective than

involving only the young adults. The patterns noted during data evaluation supports the need

for the elimination of one-size-fits-all financial programs and to initiate financial educational

programs for specific financial knowledge and capability transfer.

Howlett, Kees, and Kemp’s (2008) quantitative research study evaluated the financial

literacy, self-regulation, and future orientation variables of 89 graduating college seniors age

20 to 36 to participate in a 401k plan offering. The research study involved college seniors

participating in the study to learn about 401k offerings with or without distraction and found

that learning about 401k plans could decrease their level of self-regulation. A questionnaire

collected data to evaluate the college students’ financial literacy regarding 401k programs,

and to determine personal orientation as either short or long-term.

Howlett, Kees, and Kemp’s (2008) study found a direct correlation to 401k

participation to people distracted thereby decreasing self-regulation and selecting not to

participate in the 401k option. Also participants with short-term orientation were less likely

to select participation in the 401k plan and long-term orientation participants were willing to

select the 401k option. The evaluation on the financial knowledge of the 401k showed

increased participation in the 401k plan. The study results present an opportunity for

employers and educators. Employers should present 401k information without other

distractions. Educators should support financial literacy education focused on long-term

financial success.

Cho, Gutter, Kim, and Mauldin (2012) collected data from a web-based survey

sponsored by twelve universities. The questionnaire was emailed to households with a likely

match of income less than $80,000 and 24-66 years of age, until 1,000 responses were

collected. The sample was then restricted to 826 participants after removing participants who

did not meet the predetermined criteria of income less than $80,000 and respondents 24-66

years of age. The study compared financial habits to parental influences. The study

collected information on four dependent variables of “spending less than income, making

financial plans, monitoring spending, and having spending goals” (p.417) to determine the

financial habits of the respondents; and asked about possible parental discussions or actions

regarding saving and to check off other sources of saving options.

The study’s results indicate: respondents younger than 45 and older than 54 were

monitoring their finances more frequently than the respondents 45 to 54; as family size

increased more planning and monitoring occurred; as income increased more savings

occurred; parental discussions about financial topics has a positive result, while parents seen

as just savers without discussion resulted with a negative financial savings results;

respondents with college degrees or more education than high school were more likely to be

spending more than their income in comparison to respondents with high school education or

less; and respondents sought out advice from financial planners or advisors (Cho, Gutter,

Kim, & Mauldin, 2012). The study recommended that employers partner with financial

professionals and have financial educational programs designed to include both adults and

children (p. 428).

Goetz, Cude, Nielsen, Chatterjee, and Mimura’s (2011) research evaluated three

financial education methods to increase participation of college students in financial literacy

programs. The three methods presented included an on campus financial counseling center,

online financial management resources, and in person educational workshops. The study was

conducted thru an email survey with 509 completed responses out of 3,261 sample

population (p. 31). The respondents were not representative of the student population.

Rather the population was skewed with more females and students with higher than average

grades. The study results showed that each method reached different spectrums of

participants, therefore the methods could be considered complimentary.

Providing financial literacy education to the low income, unbanked, and underbanked

population requires meeting them on their own terms and presenting financial education

materials and offering solutions that can affect them immediately (Allen & Miller, 2010;

Buckland, 2010, 2011; Birkenmaier & Curley, 2009; Servon & Kaestner, 2008; Weiss &

Bailar, 2002). Considering that low-income adults have aged out of K-12 educational

curricula and most do not work for employers offering retirement plans, (Friedman, 2005)

indicated a need exists for research to determine ways to educate low-income adults about

financial literacy. Therefore, researching the low income, unbanked, and underbanked

populations’ accessibility to financial literacy programs is aligned with Schuchardt,

Marlowe, Parker, and Smith’s (1991) three principles in reaching low income families (1)

understanding the community, (2) cooperating with local agencies, and (3) working with

volunteers to reach peers.

The Servon and Kaestner (2008) study supported by the banking industry in Chicago

provided benefits to unbanked individuals including a personal computer and free Internet

access for one year. The study failed to increase low-income participation in banking

services through the Internet. Low-income participants could not afford the Internet services

fees after the free period, therefore supporting previous studies stating that to reach the low-

income population, programs need to incorporate understanding the community.

Birkenmaier and Curley (2009) advocate for financial literacy training to be made

available through social workers who interact on a daily basis with low-income individuals

struggling with many issues including money matters. Social workers have long-term

relationships with low income, unbanked, and underbanked consumers and can follow up on

the success of financial training. Expanding the role of social workers to include financial

literacy might be difficult and require supplemental training or outsource training to be

available where the consumers meet with the social worker. Lim, DeJohn, and Murray’s

(2012) study concurs with expanding the responsibility of the social worker to include

financial literacy. The social worker’s ability to uncover the underlying personality traits and

behaviors creating financial issues puts low-income adults on a path of acknowledging the

need for change and receiving a referral to a financial counselor.

Allen and Miller (2010) reported on an initiative by the United Way in Tampa,

Florida to support family financial well-being by decreasing summer childcare costs. Low-

income parents were required to take financial literacy classes to qualify for free summer

care for their children. A common comment from participants was that some financial

material was too basic to meet their particular need and topics of child and stress

management would have been beneficial (p.96). The results indicate financial knowledge

alone will not create changes to improve the financial well-being of low-income families.

Accessing the low income population. Financial literacy studies with low-income

adults’ populations in the United States are sparse due to limited access to the population. A

symposium and research by Lyons and Scherpf (2004) explains that the low-income access

dilemma and studies after 2008 includes various attempts to access and sway the low-income

population into using mainstream financial services. This section begins with identifying the

government’s perspective on increasing the financial literacy of the United States population

as a whole through mandated educational curricula and employer retirement programs.

United States financial literacy programs were directed at educational curricula,

created by financial institutions helping current customers, used by employers to explain

company-sponsored retirement packages, and employed by nongovernmental organizations

(NGOs) to educate defined populations. The National Endowment for Financial Education

(NEFE, 2006) symposium brought together academicians and practitioners to determine

better pathways to financial literacy. The resulting suggestions included studying how

people learn, how people react, behavioral environmental influences, and educator bias

concerning teaching methods in the attempt to improve financial literacy. Described next is

a study specific to low-income adults and the FDIC Money Smart program, then other

studies involving low-income adults.

Lyons and Scherpf (2004) research study participants included the unbanked and

underbanked population from Chicago, which represented approximately 25% of the United

States population in 2009 (FDIC, 2010). The unbanked and underbanked populations rely on

alternative financial services such as payday lenders, refund anticipatory loans (RALs), and

pawn shops to conduct basic financial institution services such as check cashing and small

loans. The population can fall prey, unfortunately, to predatory lenders and financial scams

(Lyons & Scherpf, 2004; Lim, DeJohn, & Murray, 2012; Wilson, 2012). The FDIC financial

literacy program offered through the banking institutions to the unbanked measures success

by the number of new accounts. The Lyons and Scherpf’s (2004) research collected

information on why the participants stayed unbanked and evaluated the effectiveness of the

FDIC Money Smart program.

Lyons and Scherpf’s (2004) study reported four reasons that kept the unbanked and

underbanked population from opening accounts. The reasons included not having enough

money to open an account, the fees incurred for having an account, limited access to retrieve

deposited money, and the lack of need to write checks. These reasons present a rational

financial decision for people to remain unbanked or underbanked and reveal that the program

was successful based on the individual’s behavior while making a financial decision that

might be right for the individual. Understanding the reasons provides an opportunity for

financial institutions to develop and market specific products to the unbanked and

underbanked. These results are not captured, however, when the program’s success is

measured by opened bank accounts.

The study’s post-training survey indication that 80% of the participants that

completed the course would be opening an account may have reported overly positive results

because no one verified that any accounts were opened (Lyons & Scherpf, 2004). The

evaluation of the Money Smart program based on the number of bank accounts opened by

participants may not measure the true value of the program.

Goodman’s (2012) research reconfirmed Lyons and Scherpf’s (2004) reasons for low-

income adults remaining unbanked. The research in Massachusetts included a survey of 173

low-income adults and continued with focus groups of low-income adults to delve into the

advantages and disadvantages of having a bank account. The results of the study indicated

that low-income adults were unaware of low-cost banking options, which were required to be

available by state sanctioned banks, and participants with short-term financial orientation

rationalized the lack of a need for a bank account. The study recommends financial

education directed at low-income individuals and households in an effort to eliminate

financial ignorance.

Servon and Kaestner’s (2008) research study, previously reported under expectations

and education for a financially literate population, failed to connect and influence the

unbanked and underbanked population. The study provided information on behavioral

patterns influencing future research. The program, designed to entice low-income

individuals to become online bank customers, failed. The training provided benefits

including a new computer and free Internet access for a year, but Internet access was not

affordable to the low-income population to continue after the free benefit period.

Zhan, Anderson, and Scott’s (2009) quantitative research reached out to the

immigrant unbanked and underbanked population in the Chicago area, because the United

States’ immigrant population increased 57% from 1990 to 2000. Barriers to mainstream

financial services identified for immigrants were language related, legal, and cultural. The

program offered through NGOs worked through the barriers and provided information to

immigrants. The program participants started with 61 immigrants; 33 completed the 12-hour

financial literacy program. The post survey documents resulted in self-reported positive

participant results for the program. Verification of the self-reported positive behavioral

change such as opening a depository account, however, did not occur.

The FDIC (2010) evaluated the access to financial services for the unbanked and

underbanked population and that found bank fees and minimum balances contributed to the

lack of participation. Reporting that 1.3 million households closed bank accounts in 2008,

the Governmental Accountability Office (Consumer Finance, 2010) audit report pointed to

additional barriers to financial literacy. English as a second language is affecting financial

literacy with some informational bulletins available only in English, or Spanish. The United

States, also, has had an influx of Muslim immigrants who have different language and

religious constraints that do not permit the earning or paying of interest. The awareness of

new barriers presents opportunities to develop programs to overcome the challenges of the

United States government to increase the low-income population’s financial literacy. The

United States Federal Government continues to develop programs for the low income,

unbanked, and underbanked population (Agency Group 01, 2010). The United States

Treasury Department unveiled a program to reach people who received tax refunds through

the mail last year to work with financial institution partners to open accounts to have the

2010 refunds deposited electronically. The Federal budget for 2011 included funding to

sponsor state and local initiatives to help low-income Americans obtain access to financial

services and products (Agency Group 01, 2010).

Sherraden and McBride’s (2010) longitude research study, the American Dream

Demonstration, occurred from 1997 through 2005 (p. 15). The in-depth study was designed

to study low income adults’ savings behaviors whether selected to participate in Individual

Development Accounts [IDAs] or not. Savings provide the opportunity to increase long term

asset building for long term security. The study maintained connection with 84 individuals,

59 people were selected to participate in IDAs and 25 were not selected. The results of the

study told stories about low-income adults striving to save and make a better life for

themselves and their families. The participants described that saving represented security

and hope for the future. Access to saving and constant financial needs, however, made

accumulating significant amounts difficult. The study conclusions include that human

behavior, habits, and banking institutions policies all affect the individual’s ability to save.

Two future research suggestions are (1) to study the relationship between low-income adults

and social institutions; and (2) to study households’ financial decisions matrix of who is

involved in the decision process, and do decision discussions extend to family members

living outside the household.

Lim, Livermore, and Davis’ (2011) telephone survey of volunteer income tax

assistance (VITA) tax filers resulted in 352 participants from a pool of 582 from Louisiana’s

Department of Social Services records. The study inquired of VITA tax filers eligible for the

earned income tax credit [EITC] to discuss whether their refunds were electronically

deposited into personal bank accounts or did they receive a refund check. If the participants

received checks did they use an alternative financial service to cash their checks or did they

cash the checks at a local bank. The unbanked population was 56% less likely to use

mainstream financial services to receive the cash from their tax filing. The cost of using

alternative financial services promotes the study’s conclusion of suggesting policy changes to

link VITA sites to mainstream financial services for depositing and cashing tax refund

checks and additional financial education. Lim with others continued studying VITA and

EITC.

Lim, DeJohn, and Murray (2012) reports on linking VITA with social workers.

Social workers develop long term connections with low-income families and suggestions

from trusted social workers could increase low-income family’s participation in VITA.

VITA participation could increase the number of tax filings for low-income persons and

taking advantage EITC and prior preparation could provide time for low-income families to

establish a bank account to receive their tax refund electronically, creating an opportunity for

asset building as previously advocated by Sherraden and McBride (2010). This study, also,

concurs with Birkermaier and Curley (2009) linking social workers as advocates for financial

literacy.

De Sousa (2010) reported on a qualitative study of the unbanked for Namibia, Africa.

The unbanked population represents the final frontier for financial institutions. However, the

initial profits for the financial industry working with the unbanked are small until the

unbanked population moves into the mainstream of financial banking, so banking institutions

do not market to the unbanked. The Namibia regulatory agency, therefore, shifted the

paradigm of banking the unbanked to the government creating payment services for the

population of the unbanked. Nambia’s unbanked population embraced the National

Payment System (NPS) and nonbanking institutions provide a payment plan through mobile

coverage at costs much less than the banking institutions.

The need to increase the financial literacy level of low-income individuals and

households is imperative. NEFE (2006) had suggested research to find better pathways to

increase financial literacy. The selected studies relevant to the low-income population above

have found aspects of the low-income population that influence their abilities to increase

financial literacy are summarized below.

Lyons and Scherpf’s (2004) research results concluded that financial literacy

awareness does not require people to change behavior, such as opening a bank account, but

provides information for individuals to make rational decisions based on their personal

environment. Servon and Kaestner’s (2008) research provided computers and Internet access

for a year to help low-income individuals have access to banking. The participants of the

study could not continue to afford the Internet connection and the computer was a luxury

item considering their income level. Zhan, Anderson, and Scott (2009) provided financial

literacy education to immigrants in Chicago. The post class survey indicated that those

completing the training felt they would open bank accounts. No follow-up occurred,

however, to determine if accounts were opened. The FDIC sponsors financial literacy

education in the United States. DeSousa’s (2010) research conducted in Namibia, Africa,

reported that the Namibian government created a national payment system to support the

low-income population. Goodman’s (2012) research returned to the roots of Lyons and

Scherpf’s (2004). Goodman’s work confirmed the reasons for being unbanked as: not having

enough money to open an account, the fees incurred for having an account, limited access to

retrieve deposited money, and the lack of need to write checks. The focus group interviews

of low-income individuals found many had short-term orientation which prevented the

perceived need for savings.

No study, however, made inquiries into the perspectives and expectations of low-

income, unbanked, and underbanked populations regarding financial literacy, indicating a

gap in the research. This research study includes interviews of low-income individuals to

ascertain low-income adults’ perceptions and expectations for financial literacy. In doing so,

it uncovered unique factors that could contribute to the modification of financial literacy

programs and marketing in order to increase low-income adults’ participation levels and

hence their financial literacy.

Theoretical Framework for Interpretation of Data

The interpretation of the data is based on the concepts of financial literacy, Maslow’s

hierarchy of needs (1948), Proschaska’s (1979) transtheretical model of change, and the

research study’s population of low-income adults. The study’s definition of financial literacy

incorporated both financial literacy knowledge and behavior to establish financial capability

(Lusardi, Mitchell, & Curto, 2010; NEFE, 2006; Schuchardt et al., 2009). Enlisting the help

of a gatekeeper provided access to a population considered difficult to access (Buckland,

2011; Creswell, 2012; Mandell & Klein, 2009; Schuchardt, Marlowe, Parker, & Smith, 1991;

Weiss & Bailar, 2002).

The interpretation of the interview used Maslow’s (1948) hierarchy of needs to

understand possible motivation and Proschaska’s (1979) transtheoretical model of change to

access research participants’ desire to increase positive financial behaviors. Maslow’s and

Proschaska’s theories were chosen as the theoretical research frameworks for this study’s

interpretation of the data to develop recommendations to financial literacy programs to

increase low-income adult participation; hence, low-income adult financial literacy.

Maslow’s hierarchy of needs. Maslow’s (1948) hierarchy of needs theory describes

individual motivation as it relates to the fulfillment of needs from the most basic level of

needs level one to level five of self-actualization. The five levels of Maslow’s hierarchy of

needs pyramid begins with basic life requirements of physical and emotional needs; the

second level is safety needs, the third level is belongingness and love needs, the fourth is

esteem needs, and the pinnacle to the pyramid is self-actualization. The theory explains how

people become occupied with attaining needs at each lower level before ascending to the next

level.

Devaney, Anong, and Whirl (2007) posit that savings motives could be correlated to

self-actualization similar to Maslow’s hierarchy of needs, referring to human stages of

development. Devaney et al. (2007) quantitative research obtained data from the 2001

survey of consumer finances sponsored by the Federal Reserve Board of Governors and the

United States Department of Treasury collected from 4,442 households. Devaney’s et al.

(2007) expanded Maslow’s hierarchy for the saving study to include a no savings level and

splitting Maslow’s second level of safety needs into both safety needs and the need for future

financial security. The study’s seven levels of savings hierarchy included no savings, basic

need, safety needs, need for future security, love and societal need, luxury and esteem need,

and self-actualization. The main predictors of moving through the savings hierarchy

included the length of the planning horizon for the family unit, age of the head of the

household, and family size. The study’s conclusion suggested that financial literacy

education should focus on the need level of the population in connection with the program

objectives.

Transtheoretical model of change. Prochaska (1979) developed the

Transtheoretical Model of Change [TMC] for behavioral changes for mental health with six

stages for long-term behavioral change. The transtheoretical model of change, first

established to influence change in unhealthy behaviors, included five stages that reflect the

steps required for change and a sixth stage for when a person relapses into previous

unhealthy behaviors. The sixth stage could occur at any stage during a person’s quest for

change. The first stage, precontemplation, involves initial awareness but no decision yet to

make any changes in the coming six months. The second stage, contemplation, is where an

individual decides to make changes over the next six months. The third is where, preparation

plans are made for change in the next 30 days. The fourth stage is the period the individual

has changed his or her behavior, but is still within the first six months of change. The fifth

stage which is maintenance, occurs if the individual has continued with the change for more

than six months (Proschaska, 1979).

In 2004, the TMC was applied during a study to help consumers change their

behaviors to reduce and eliminate debt (Xaio, O’Neill, Prochaska, Kerbel, Brennan, &

Bristow, 2004). The mixed method research study was developed in two stages. The initial

stage required interviews of five experts in credit card debt counseling to develop the survey

questionnaire to learn if a purposive sampling participant had reached the TMC stage two of

contemplation – intending to take action within the next six months. A pilot survey of 15

participants answered the initial questionnaire. The experts evaluated the question responses

and made some changes. For the second stage, 438 questionnaires were mailed with a

response rate of 60% [263 returned questionnaires].

To participate in the study (Xaio et al., 2004), consumers were required to be in at

least stage two, contemplation, and the purposive sample participants were selected from

debt counselors’ clients. The study was deemed successful in assessing the respondents’

TMC stages two, three, and four; the remaining stages five and six would have required

follow-up to determine if participants reverted back to negative financial behaviors. The

success of the study set the stage for credit counselors to design credit counseling around

client behaviors. Other researchers support the use of TMC in financial education (NEFE,

2006).

Schuchardt, Bagwell, Bailey, DeVaney, Grable, Leech, and et al. (2007) reported on a

professional conference that brought together researchers and practitioners to evaluate the

relationships that underlie financial literacy and found that family and friends influenced

financial behavior and suggested that the Association for Financial Counseling and Planning

Educators (AFCPE) employ TMC strategy to reach consumers. Williams (2007) and

Estelami (2009) supported TMC because to change their behaviors people needed to confront

old beliefs and habits.

Linking educational financial programs to behavior modification could provide the

basis to transfer financial literacy knowledge and financial capability. Financial program

designs need to be varied to support the audience’s financial literacy level, eliminating a

single program approach for financial literacy success (Lusardi, Mitchell, & Curto, 2010;

NEFE, 2006; Schuchardt et al., 2009). Requirements for the program facilitators include

aligning participants and available training programs, competency in the ability to help

people manage change, and the ability to recognize and respond to teachable moments

(NEFE, 2006).

The theoretical framework of Maslow’s and Prochaska’s theories provides a valuable

background for understanding the participants in this study. The framework underlies the

interview questions’ development to obtain information from participants about their

personal mindset to learn financial literacy skills. Understanding the participants’ mindsets

can help during the interview with gathering information pertaining to needs and

expectations of the participants to increase participation in financial literacy classes.

Challenges of Financial Literacy Education

Financial literacy studies indicated financial literacy education participants have not

grasped the information at levels where external financial support would not be necessary

(Arnone, 2009; Arthur, 2011; Lumpkin, 2010; Willis, 2008). Curriculum changes requested

by the United States government for K12 educational programs have shown limited success

(Lusardi, Mitchell, & Curto, 2010, Yilmaz, 2011).

The complexity of financial markets cannot be bridged through financial literacy

education (Willis, 2008). Willis’ (2008) article titled Against Financial-Literacy Education

presented information about relegating the responsibility of the financial markets to the

consumer through advocating financial literacy. The research supported financial literacy

education in conjunction with governmental regulation, rather than having consumers being

solely responsible for their financial future. The expectations that financial literacy

education can create empowered responsible consumers to control the financial markets

lacked empirical support.

Willis identified four barriers for financial literacy education to support the individual

consumers’ responsibilities: “(1) the complexity of the financial products and the speed at

which they change, (2) the low level of computational abilities possessed by most consumers,

(3) the widespread decision making bias that impairs consumer financial behavior, and (4)

the disparity in resources with which industry versus educators can reach consumers” (p.

211). The challenge for global financial sustainability requires responsibility to be shared

among governmental agencies and consumers. Government should establish policies and

legal rules to shape financial markets to become conducive to positive consumer outcomes.

Financial literacy education should reach out and deliver programs to teach about behavioral

bias in attitudes and perceptions, and link financial knowledge to financial capability.

Lumpkin (2010) from OECD concurs with Willis (2008) that financial consumer

protection is essential from the standpoint of both access and suitability for the consumer,

and that financial service providers develop internal controls that minimize inappropriate

consumer exposures.

Arnone (2009) reports from the practitioner perspective of consulting and advising

employer sponsored financial education, stating that individuals should not be expected to

manage personal financial planning on their own. Experience has shown that employer

sponsored financial educational programs must provide employees with information. The

information has not led employees to become their own financial planners. This has fostered

instead a realization of the need to obtain a financial planner. Arnone (2009) suggested

implementing guidelines and aggressive management techniques to increase the personal

involvement in employer sponsored financial benefits and planning. The guidance

emphasizes that employer programs should include adequate protection against financial

risks, save more by living within one’s means, create investment goals, and not comingle

funds of investments linked to goals. Programs should aggressively advise employees,

support individual interventions to discuss personal finances, and include personal financial

reviews within the context of annual employee performance reviews.

Christman (2010) reported on employer sponsored plans to increase employees’

transition from retirement savings to managing retirement funds because of the shifting of

pension plans and changing social security benefits. Christman’s report supports Arnone’s

research conclusion that people need to start saving sooner and have professional support for

financial decisions. Professionals recognize that retirement plans are personal and there is no

single method for successful retirement funding.

Arthur (2011) discusses two financial literacy education challenges. First, financial

literacy is underminded prior to children entering school for the first time. Advertisements

and incessant messages to buy bolster the impression that people are valued by what they

consume. This is the framework that is absorbed by children. Secondly, the concept of

shifting financial responsibility from the government to the individual based on financial

literacy education alone is a simple solution to a complex problem. The development of

critical financial literacy education and collective government measures should be created to

protect the economy.

Willis (2008), Lumpkin (2010), Arnone (2009), Christman (2010), and Arthur (2011)

emphasized the need for financial literacy at a personal level while acknowledging the need

for professional support. The challenges of financial literacy, therefore, suggested that the

financial literate individuals may not be ready to create or maintain a stable financial future

alone. Also, individual need for professional financial support should be recommended and

considered an acceptable part financial literacy programs. Financial literacy programs not

only should transfer knowledge and skills, but include a deeper understanding of the long-

term issues of developing a secure financial future. This requires governmental support and

the availability of financial advisors.

Further Research: Financial Literacy Initiatives

National financial literacy educational programs target children through curriculum in

K-12 schools and adults through secondary venues (FLEC, 2010a; FLEC, 2011; U. S.

Treasury, 2008; U. S. Treasury, 2013). Accessing working adults occurs through their

employers and financial institutions by spreading financial informational literature to their

customers, and some nonprofit organizations offer financial literacy programs for their

clients (U. S. Treasury, 2008; 2013). National surveys report, however, that the financial

literacy lowest levels occur with low-income adults, many of whom are unbanked or

underbanked (FDIC, 2009; 2012). The national financial literacy strategy council has not

identified programs that reach successfully to the low-income population because of this

population’s inaccessibility (U. S. Treasury, 2008). Accessing the low-income population

takes creative targeting and requires financial literacy educational training to match the

cohorts’ current need (Buckland, 2011; Goodman, 2012; Schuchardt, Marlowe, Parker, &

Smith, 1991; Weiss & Bailar, 2002).

This phenomenological research study of low-income adults’ perceptions and

expectations of financial literacy incorporated Prochaska’s transtheoretical model of change

and Maslow’s hierarchy of needs. The theoretical frameworks were used as the basis of the

data collection, interpretation, and support recommendations to modify the FDIC’s financial

literacy program to increase low-income adult participation.

Conclusions

The literature review uncovered a gap in research. No inquiries were made from the

perspectives of low-income, unbanked, and underbanked populations regarding financial

literacy. Financial literacy education, however, represents a part of the solution to global

economic recovery and sustainability (OECD, 2010; U.S. Treasury Department, 2009).

Studies of financial literacy programs initiated in the first decade of the 21st century

measured limited success in increasing financial literacy and accessing the population most

in need of financial literacy education. The results of these studies indicated the need for

program changes to increase the availability of programs to people outside academia, and

especially to low-income adult populations.

The low-income population in the United States in 2009 was approximately 25% of

the population (FDIC, 2009) and access was limited (Weiss & Bailar, 2002). This research

study identified possible financial literacy educational program design changes that could

increase participation in financial literacy programs by the low-income population. The

research process included the direct inquiry of the perceptions and expectations of a financial

literacy program for low-income adults. The qualitative phenomenological research

ascertained the low-income population’s perceptions and expectations of financial literacy

programs. The emerging themes resulted in recommendations to financial literacy program

curricula and marketing to increase participation from low-income adult populations.

Summary

Financial literacy education is an important facet of global and national financial

sustainability (FLEC, 2010a; OECD, 2010). Numerous studies and educational programs

available indicate the need to increase financial knowledge and capability of the individual

(Buckland, 2011; Huston, 2010; Remund, 2010; Lusardi, 2012). The rise of low-income

families in the United States illustrates the importance of reaching this population (FDIC,

2009).

Understanding that access and participation of the low-income population is difficult

to obtain, community-based programs might be successful in providing financial education

that establishes a basis for financial behavioral change (Buckland, 2011; Mandell & Klein,

2009; Schuchardt et al., 2009; Weiss & Bailar, 2002). Financial literacy programs can

increase the awareness of personal financial goals and the requirement of soliciting expert

advice, such as when basic health knowledge indicates someone should see a medical doctor

(Lusardi, Mitchell, & Curto, 2010; Willis, 2008). The shift of long-term financial

responsibility back to the individual requires financial literacy education to be made available

across socio-economic levels. This study ascertained, therefore, the perceptions and

expectations of low-income adults to identify financial literacy programming changes to

influence low-income adults’ participation in programs and, therefore, increase low-income

adults’ financial literacy.

Chapter 3 outlines the qualitative methodology to access low-income adults’

perceptions and expectations toward financial literacy. The data collection design outlined in

Chapter 3 will provide the information about the low-income populations to support the

development of financial literacy programs. Documentation within the chapter of ethical

research includes premises consent, informed consent, confidentiality, population, sampling

frame, data collection, storage, and processing.

Chapter 3

Method

This phenomenological research study was designed to discover low-income adults’

perceptions and expectations of financial literacy to provide information for financial literacy

curricula designs that could attract low-income participants (Buckland, 2011; Servon &

Kaestner, 2008). The qualitative phenomenological study was appropriate for this work as

the research method attempts to understand the experiences of the participants through their

perceptions, perspectives, and expectations (Creswell, 2012; Leedy & Ormrod, 2010). The

study utilized interviews with closed-ended questions to establish the participants’

backgrounds, then opened-ended questions to obtain in-depth descriptions of personal lived

experiences about financial literacy concepts, educational programs, and future expectations

from the sample participants (Creswell, 2012; Leedy & Ormrod, 2010; Moustakas, 1994).

The analysis of the data uncovered trends and themes that affected financial behaviors, and

produced novel information that could help in the development and improvement of financial

literacy educational programs for low-income adults.

Chapter 3 presents the method used in this phenomenological qualitative research

study. The method focused on the responsibility to the participants and supports the

reliability and validity of the final conclusions. The chapter sections include descriptions of

the research method, design appropriateness, central research question, population, sampling

frame, data collection process, reliability, validity, and data analysis techniques for this

phenomenological qualitative research study.

Research Method and Design Appropriateness

Research method. The research methods of qualitative, quantitative, and mixed,

represent categories used for scientific research (Creswell, 2009). The characteristics of

qualitative research include the researcher as the instrument to conduct face-to-face

interviews, data collection that includes both visual and verbal information at a field site

(natural setting), and the interpreting of data to understand complex issues in the search for

factors that influence behaviors (Creswell, 2009). Qualitative research of soft data follows a

nonlinear path to relate authentic interpretations of a specific sensitive issue. The nonlinear

path provides focus of the data’s richness and texture from the recorded thoughts of the

participants. This required the researcher to use inductive reasoning to develop insights and

generalizations from the data collection. Qualitative research data collected from a small

sample size provides for the examination of data for nuances to understand the issue in

context; hence, it is impractical to equate to numerical values to create statistical projections

(Creswell, 2012; Leedy & Ormrod, 2010).

Qualitative designs include case study, content analysis, ethnography, grounded

theory, and phenomenology (Creswell, 2009, 2012; Leedy & Ormrod, 2010). Case study

research involves studying a program or individuals to discover the paths taken to understand

the outcome of a particular issue. It is not relevant to this study’s emphasis on understanding

the perceptions and expectations of financial literacy for program development.

Content analysis is a qualitative approach that merges quantitative aspects and

generally becomes part of a mixed method study. This is done through a systematic

examination of characteristics of material to identify themes, bias, or patterns (Leedy &

Ormrod, 2009). The proposed study involved interviews to extract data with no preformed

expectations from the individuals, rather than analyzing for expected characteristics required

for content analysis. Content analysis was therefore inappropriate for this study.

Ethnography requires researchers to immerse themselves in the culture of the

population to become a trusted member of the society covering a lengthy period to discover

and understand the population. The grounded theory approach utilizes data to develop theory

when theories have not been developed. This study’s data analysis applied Maslow’s (1948)

hierarchy of needs and Proschaska’s (1979) transtheoretical model of change theories to

develop recommendations for financial literacy programs to improve on curriculum and

increase participation. Both the qualitative study designs of ethnography and the grounded

theory would not work for this study because of the limited access to participants outside of

the community organization because of the transitory and suspicious nature of the low-

income population (Weiss & Bailar, 2002).

The phenomenological method fit this research study because of both the participant

characteristics and research topic. Low-income adults are characterized as underrepresented

in studies from noncontact attributable to the lack of telephone service, migration, language

barriers, and suspicion of strangers (Weiss & Bailar, 2002). Access to the participants

required the development of a relationship with a gatekeeper, who had developed a trust

connection to the study’s population, and who helped coordinate the interviews for the

collection of data.

The gatekeeper, as defined by Creswell (2012), is a person with insider status who

has an official or unofficial role at the organization and can become the liaison between the

participants and the researcher. The involvement at a site location through a gatekeeper

where low-income adults feel at ease will provide for better response rates (Weiss & Bailar,

2002). Beloucif, Lal, and Strachan (2010) discuss the need to initially connect with the

gatekeeper to access the organization. The gatekeeper is essential to developing a positive

atmosphere for this phenomenological study.

The research topic of financial literacy is traditionally a taboo subject in the American

culture (Atwood, 2012; Lowrance, 2011; Trachtman, 2008). The research topic along with

the study’s population posed challenges that were overcome by the phenomenological

method and the employment of confidentiality and anonymity to assure the participants of

limited personal risk. The phenomenological method gave the low-income adult participants

an opportunity to have their voices heard (Creswell, 2012). The phenomenological approach

to understanding the population’s perceptions and expectations required the researcher to

collect data from low-income adults in a safe and supportive environment.

Quantitative research applies deductive reasoning to plan research design,

measurement, and sampling (Leedy & Ormrod, 2009). The data collection occurs through

large statistical samples. The data analysis is a reflection of the frequency of actions which

progress through linear research. Quantitative research tests the study’s hypothesis through

controlling variables (Leedy & Ormrod, 2010). The mechanical techniques for statistical

analysis generated in quantitative research stress objectivity and statistical projection through

standardized procedures and the principle of replication (Leedy & Ormrod, 2010). The data

in quantitative research are dominantly collected through surveys for statistical analysis of

the hypothesis to confirm or disconfirm the hypothesis. The data collection can take place

without input from the researcher interpreting the data. Data collection, therefore, does not

provide for an opportunity to change the methodology which can occur during qualitative

research. This researcher collected data concerning participants’ perceptions and

expectations of financial literacy which did not connect to predefined variables associated

with quantitative research (Leedy & Ormrod, 2010).

A mixed methodology combines elements from both qualitative and quantitative

methods to give more details than either could provide alone (Leedy & Ormrod, 2010).

Qualitative research studies might quantify some answers and quantitative interview

questions might incorporate some open-ended questions to solicit insights. Teddlie and

Tashskkori (2009) suggested that the development of a mixed method research begins with a

research question, which, when broken down results in both quantitative and qualitative sub-

questions. Lusardi, Mitchell, and Curto (2010) researched financial literacy programs

through testing financial literacy ability years after participating in financial programs

offered through the K-12 curriculum. The options for quantitative or mixed method, which

required accumulating data to confirm or disconfirm a prior study would fit if financial

literacy programs similar to Lusardi, Mitchell, and Curto’s program (2010) were evaluated.

The study’s research, however, to explore the unique gap toward low-income adults’

perceptions and expectations of financial literacy best fits the selected qualitative

phenomenological research design.

Research exists regarding financial literacy programs for low-income adults’ access

to mainstream financial institutions (Curley et al., 2009; Lyons & Neelakantan, 2008; Servon

& Kaestner, 2008; Zhan et al., 2009). The literature review, however, shows that financial

literacy program development has not inquired into low-income adults’ perceptions and

expectations for financial literacy, but instead only the barriers to mainstream financial

access. Following the Leedy and Ormrod (2010) statement “the data dictates the research

method” (p. 94), a qualitative phenomenological research method was deemed appropriate

for this study.

Design appropriateness. The research question revealed the necessity of a

qualitative phenomenological research method. The research question encapsulated

understanding the research participants’ perceptions and expectations toward financial

literacy. The study emphasized the exploration of the low-income adult population’s

experiences in developing their financial knowledge and behavior. Uncovering what low-

income adult participants’ desired from financial literacy programs could increase

participation in financial literacy programs.

Influencing the low-income adult population to increase participation in financial

literacy programs could positively impact the general problem of a lack of financial literacy

within the low-income population of the United States. The concepts supporting the general

problem of financial literacy in the 21st century include increasing financial complexity, the

shift of public policy toward individual fiscal responsibility, and the expanding percentage of

the United States population living in poverty (Buckland, 2011; DeNavas-Walt et al., 2011;

Cory & Pickard, 2008; Gallery & Gallery, 2010; Lenzner, 2012).

Creswell (2012) explained the appropriateness of using qualitative research when the

problem needs to be explored. The problem is the lack of financial literacy within the United

States. The government instituted financial literacy curricula, but financial literacy has not

increased significantly during the first decade of the 21st century (Lusardi, Mitchell, &

Curto, 2010; Mandell & Klein, 2009; Yates & Ward, 2011). The size of the United States

population living below the poverty level has increased, combined with the complex

financial environment of decreasing social security expectations, defined pension plans, and

changing welfare terms affirms the need for financial literacy education for low-income

adults in the United States (DeNavas-Walt et al., 2011; FDIC, 2009).

This phenomenological study appropriately explored how low-income adults

approach financial literacy to increase the understanding of how low-income adults manage

financially; thereby, increasing the knowledge base required to develop financial literacy

programs that actively engage the cohort under study. Phenomenology studies fall into either

a hermeneutic or transcendental research method. Hermeneutic phenomenology follows the

development by van Manen (2007) where the researcher interprets the participants lived

experiences through interviews and observations. This would require emersion into the

population lifestyle to become an insider, this would be time consuming and would require a

commitment to a longitude study which could extend beyond the time-frame of the

dissertation process.

Transcendental phenomenology is a research methodology developed by Moustakas

(1994). This is a methodology in which the researcher focuses on the description of the

participants’ lived experiences and brackets out the researcher’s personal experiences of the

phenomenon. There are four steps in Moustakas’ transcendental phenomenology research

method: (1) epoche, which requires setting aside prejudgments to obtain information from

participants about their personal experiences and expectations; (2) reduction, which provides

the opportunity to acknowledge each experience ‘reducing’ the experience back to the source

of the meaning creating textual meaning; (3) imaginative variation, which describes the

researcher’s data analysis “to grasp the structural essences of the experience” (p. 35); and (4)

linking the textual and structural essences to the experiences to provide the foundation for

research conclusions. Moustakas’ (1994) transcendental phenomenological method was

selected for this study because the transcendental method was expected to overcome the

financial literacy research barriers of topic taboo and low-income population access.

This study’s topic of financial literacy explored the personal subject of money which

is considered taboo (Atwood, 2012; Lowrance, 2011; Trachtman, 2008) and underlies many

behaviors. Trachtman (2008) explains that the challenge to money discussions stem from

internally and externally developed individual beliefs about money. The American culture of

money taboo by silencing discussion, provides for individuals to carry irrational attitudes

without an outlet for rational discussion (Atwood, 2012; Lowrance, 2011). The research

discussed money management at a personal level to evaluate a financial literacy program.

The participants were assured confidentiality to overcome the money taboo.

Participants’ selected pseudonyms for use during the interview provided for

confidentiality between the researcher and participant while obtaining lived experiences and

future expectations in a perceived nonjudgmental way (Creswell, 2012). Financial literacy

educational programming has been designed to increase the low-income population’s use of

mainstream financial services (Curley et al., 2009; Lyons & Neelakantan, 2008; Lyons &

Scherpf, 2004; Servon & Kaestner, 2008; Zhan et al., 2009). The study discovered the

participants’ reactions to a financial literacy program as to whether the financial literacy

program provided the knowledge and skill set to meet personal financial literacy needs. The

unique perspective of understanding the gap of financial literacy came from a low-income

adult population active in a community nonprofit organization in Danbury, Connecticut. The

data collection through interviews provided insights to further develop financial literacy

programs and create new measurements of financial literacy education effectiveness.

Research Questions

The purpose of this phenomenological study was to ascertain the perceptions and

expectations of low-income adults regarding financial literacy. Understanding and learning

from their perspective provided the opportunity to make recommendations to modify

financial literacy programming curricula and increase participation. Studies concerning low-

income adults’ financial literacy have focused on adult learning techniques (Birkenmaier &

Curley, 2009) and the level of aptitude in financial literacy to increase the low-income

populations’ use of mainstream financial institutions (Chang & Lyons, 2008; Curley et al.,

2009; Lusardi, Mitchell, & Curto, 2010) leaving a gap of inquiry for what low-income adults

want to know about financial literacy to improve their financial future. The results of the

study could benefit financial literacy development and marketing, and possibly increase low-

income adults’ abilities to manage their money successfully. The timing of the study

corresponds to the United States’ national push to increase financial literacy of the individual

thereby supporting national economic stability by exploring the needs of low-income adults,

who comprise 30% of households in the United States (DeNavas-Walt et al., 2011; FDIC,

2009).

The phenomenological research study design from Moustakas (1994) provided the

basis for investigating the phenomenon of financial literacy perceptions and expectations of

low-income adults through their lived experiences. Interviews of low-income adults in a

community-based organization in Danbury, Connecticut occurred until data saturation in

response to the central research question, “What are your perceptions and expectations

concerning the financial literacy program?” Interviews organized through a gatekeeper

provided participants with the opportunity to divulge both their perceptions and expectations

of financial literacy. The participants maintained anonymity during the interview

transcription process by selecting their own fictitious names. The sub-questions categories

for the central research question represent the construct variables of personal financial

literacy, financial literacy program results, and personal thoughts on how to increase

participation in financial literacy programs. The sub-questions supporting the central

research question included (1) “What do you feel is your financial literacy aptitude?”, (2)

“What are your reactions to the financial literacy program?”, and (3) “What should be done

to increase participation in the financial literacy program?”

Population

The general population for the study included 1,300 registered families with

approximately 30 percent representing low-income families from a nonprofit organization

located in Fairfield County, Connecticut. The specific population subset of approximately 20

people follows the parameters set for qualitative phenomenological studies to reach data

saturation (Creswell, 2012; Leedy & Ormrod, 2010). The participant selection criterion had

two conditions; (1) the adult’s income was under $30,000. Thirty thousand represents the

federal guidelines of low-income (FDIC, 2009), and (2) the adult attended a financial literacy

program offered at the nonprofit organization site.

Sampling Frame

The small sample size of 20 participants for this study is reflective of a

phenomenological research study method and fell into the typical range of five to twenty-five

participants for qualitative phenomenological studies to reach data saturation (Creswell,

2012; Leedy & Ormrod, 2010). The participants volunteered from a non-profit organization

that provided financial literacy education. An initial flyer was posted at the nonprofit

organization site, did not generate enough participants confirming the challenge of accessing

low-income adults for research (Weiss & Bailor, 2002). Therefore, the organization’s

gatekeeper contacted clients to discuss the research project and the initial volunteers recruited

friends and family members to participate in this research study. All the volunteer

participants did meet the selection criteria. The purposive sampling criteria include low-

income adults willing to volunteer to share their lived experiences and expectations about

their financial acumen requiring in-depth responses to the interview and clarifying questions

(Creswell, 2012; Leedy & Ormrod, 2010). The sample is homogenous because the low-

income adult participants came from a single community nonprofit organization where they

attended a financial literacy program. The results of the study cannot be projected to the

entire low-income adult population because of the non-random selection, but could provide

trends which can be further researched.

Informed Consent

The research design, additionally, requires researchers to be ethically responsible to

protect the participants’ rights of privacy (Creswell, 2012; Leedy & Ormrod, 2010). The

initial ethically responsibility comes during the assembly of study participants. The process

began with informing members of the population of the opportunity to volunteer to

participate and the right to withdraw from continuing with participation at any time without

recourse came from two documents distributed to possible volunteers an informational flyer

and an informed consent form.

A flyer explaining the research was distributed to inform possible participants about

how an individual can voluntarily sign up for an interview, and included a description of an

incentive for participation (see Appendix B). The incentive for participation was considered

important to increase participation from the low-income population (Weiss & Bailar, 2002).

If the number of respondents to the flyer did not result in enough volunteers, a secondary

method of snowballing was planned to be carried out until data saturation was met.

Individuals when inquiring about participation received an informed consent form to

review. Creswell (2009) explains that informed consent provides a document to participants

of a study which contains the reason for the study, expectations of the participants, and the

possible risks the participants may encounter. Participants were informed that there would

be no penalty for any unanswered questions; therefore, participants could make an informed

decision to participate voluntarily (Creswell, 2009; Leedy & Ormrod, 2010). Participants

could also determine later, before the results have been published, to withdraw their

interview statements. If that occurred, the information from said participant would have been

removed from the data analysis, and the interview transcriptions shredded and interview

taped erased and destroyed.

The informed consent form was given twice: first at the time of inquiring about

participation, then at the beginning of the interview to read and sign. Appendix C has the

consent form. The informed consent forms will be kept in a secured file maintained for

documentation to fulfill research requirements of holding source documents for three years,

after which all documents will be shredded.

Confidentiality

Confidentiality confers the right to privacy of each participant (Creswell, 2012; Leedy

& Ormrod, 2010). Creswell (2012) explains that qualitative research studies invade privacy

when probing personal backgrounds, behaviors, and beliefs. Ensuring participants’ privacy,

therefore, through confidentiality agreements with researchers and research assistants and

protecting participants’ identities with pseudonyms supports ethical research. Participants in

this study selected a pseudonym at the beginning of the interview. The pseudonyms are on

the informed consent forms and locked away for the prescribed three years at which time all

documentation will be destroyed.

Institutional Review Board

To further ensure the protection of the study’s participants, the University of Phoenix

required the submission of an application for human subject research. The application was

submitted to the University of Phoenix Institutional Review Board to review the study’s

classification for participants, the purpose of the study, and the selection process of

participants. The evaluation of the application determined this research project’s design

acceptable in maintaining the rights of the participants.

Geographic Location

Weiss and Bailar (2002) documented that the challenge to engaging low-income

populations in research is access. To overcome the challenge required identifying and

accessing low-income populations in environments where low-income adult populations

were comfortable. This study overcame the challenge by connecting through a nonprofit

agency located in the community offering services that included a financial literacy program.

The program director volunteered to act as a gatekeeper. The nonprofit program staff’s care

and consideration has made the organization highly respected in the community. The

staffing support for the research study and the program director accepting the gatekeeper

position was reflected in some in-depth interview responses because the gatekeeper

suggested that clients with verbal skills voluntarily participate in the study.

The interviews occurred between the researcher and participants at the nonprofit

community organization location or at the participant’s residence. Each interview was taped

with the consent of the interviewee to ensure all the data collected became available for

analysis. The use of the nonprofit community organization location required a signed

premises consent form (Creswell, 2009). A copy of the premises consent form is in

Appendix D. The data provided by the interviews, when analyzed, uncovered some unique

and novel approaches to increase financial literacy program participation for low-income

populations.

Data Collection

Qualitative research data collection follows five steps as outlined by Creswell (2012).

Researchers first identify participants who can provide the data for the research and sites that

can provide access to a population of participants. The second step is when the researcher

acquires the necessary site permissions to have access to a participant population. The third

step is when the researcher assesses the characteristics of the population, the resources of the

site, and the needs of the study to determine the type of data that can be collected. The fourth

step is when the researcher designs and develops the data collection forms for documentation

that eases the retrieval of data for analysis. The final step encompasses the entire data

collection process requiring the need to proceed in an ethical manner.

Moustakas’s (1994) method for collecting data ensures ethical responsibility.

Moustakas’s qualitative transcendental phenomenology approach requires the researcher to

engage in epoche, the setting aside of beliefs, prejudgments, and prior knowledge,

approaching the data collection with a naïve openness to be receptive to the participant’s

voice. Qualitative research data collected from a small purposive sample size provides the

examination of data for nuances to understand the issue in context, giving the participants a

chance for their voices to be heard (Creswell, 2012; Leedy & Ormrod, 2010). This study

researched the perceptions and expectations of low-income adults toward financial literacy

by applying Creswell’s five steps for qualitative data collection procedures and applying

Moustakas’s (1994) transcendental phenomenology four step approach to the preparation of

the researcher mindset.

Following Creswell’s first step for data collection, this study identified the need for

low-income participants and the challenge became determining sites to access the low-

income population. Weiss and Bailar (2002) reported why access to low-income adult

populations is difficult to engage in research projects: the lack of telephones, it is hard to

engage them because they are suspicious of strangers, and they’re a transient population.

The topic of financial literacy created an additional problem; people feel discussions of

money and money behaviors are taboo (Atwood, 2012; Lowrance, 2011; Trachtman, 2008).

To overcome the lack of access to low-income adults and the financial literacy topic

required determining sites where low-income people felt comfortable to divulge financial

thoughts and behaviors. Low-income status therefore can be confirmed through site

documentation and can set the stage for the comfortable participation by the low-income

adults. The researcher contacted potential sites in order to determine the availability of a

financial literacy program and the need for premises consent. Once a nonprofit organization

willing to cooperate was located, the researcher arranged for premises consent [Appendix E]

to meet step two for data collection.

Step three began with developing a relationship with the program director and

determining the site resources. Creating a relationship with the program director, thereby

enlisting a gatekeeper, presented the researcher with access to participants who were willing

to divulge sensitive personal information by maintaining participant privacy and

confidentiality from the initial interaction (Creswell, 2012). The data collected consisted of

the in-depth personal perceptions and expectations of financial literacy from low-income

adults through taped interviews and access to site information to confirm income levels of

participants. Participants selected the site of their interview to be at the nonprofit site or their

residence to provide an atmosphere where the participant would be comfortable discussing

their financial literacy perceptions and expectations.

Step four refers to preparing for data collection reflected both on the researcher as the

main instrument for the study and the researcher’s tool the interview. The researcher

prepared for the interviews using Moustakas’s (1994) transcendental phenomenology four

step approach and which also encompassed Creswell’s step five. Development of the

researcher’s tool follows.

The categories of qualitative data contain observations, interviews, questionnaires,

documents, and audiovisual materials were reviewed in relation to the study’s need and

participant’s desires for confidentiality enabled the researcher to determine that taped

interviews and documents would suffice (Creswell, 2012; Leedy & Ormrod, 2010). The

interviews were taped for transcription with the permission of the participant. The

transcriptionist had no information about the participant because the taping of the interview

only recorded the participant’s pseudonym. The transcriptionist also signed a non-disclosure

agreement [Appendix D]. The transcribed interviews were the basis for the research

analysis.

Data saturation occurred with 20 participants (Creswell, 2012; Leedy & Ormrod,

2010). The interviews included using pseudonyms for the participants, which met the needs

of the participants for confidentiality, and fulfilled the data requirements of obtaining in-

depth personal responses. The interview question development included steps for construct

validity and ethical consideration, and the questions were pilot-tested (Creswell, 2012).

The data collection process of interviews, site documentation, along with the

qualitative research design and techniques achieved the purpose of the study. The study’s

purpose was to determine the perceptions and expectations of financial literacy for low-

income adults to increase the population’s participation in financial literacy programs.

Instrumentation

The primary instrumentation in a qualitative study is the researcher (Creswell, 2012;

Leech & Onwuegbuzie, 2011; Leedy & Ormrod, 2010). The tool employed by the researcher

was the interview. To validate the researcher’s tool of the interview required evaluating the

interview questions ability to gather the intended information. To measure the interview

questions’ validity comes through pilot testing the interview questions (Leedy & Ormrod,

2010).

The pilot test of the interview questions ensued with interviewing two possible

participants to answer the questions so the researcher could determine whether or not the

participants felt that the questions were clear and unambiguous. One pilot test of the

interview questions occurred at the nonprofit organization site and the other at the residence

of the participant. An interview at setting provided information about the participant’s

comfort and followed the same procedures planned for the formal interview including getting

a signed participant consent form and taping the interview for transcription. The results from

the pilot test provided information to revise the interview questions or setting before the

formal interviews began (Etchegaray & Fischer, 2011). The interview question development

follows, including information about instrument construct, ethical responsibility to

participants, and pilot testing the questions to support the study’s validity and reliability.

Interview question development. The interview question development provided for

the basis of the study’s validity and reliability. The interviews provided the opportunity for

participants to give in-depth responses to questions developed and answer the study’s central

research question (Creswell, 2012). The questions initially requested demographic

information to confirm that the participants met the selection criteria, followed by open-

ended questions to answer the study’s central research question (see Appendix E). The open-

ended questions were developed through information obtained during the literature review to

connect to the question construct validity, and the questions were reviewed by external

experts and pilot tested for validity and reliability.

The interview questions in Appendix E mix the sub-questions categories of personal

financial literacy, financial literacy program results, and personal thoughts on how to

increase participation in financial literacy programs. The questions’ order mixes the

construct categories to provide interviewees the opportunity to divulge experiences from

different viewpoints, adding to the richness of the data. Some questions have follow-up

probing questions. The need for clarifying and elaborating questions depended on the

participants’ initial answers. The probing questions, therefore, were inserted by the

researcher when deemed necessary.

The questionnaire design prior to the expert review and the pilot study is outlined

below. The questions to ascertain the interviewee’s first sub-question category of self-

reported personal financial literacy are questions two, three, four, five, eight, nine, and eleven

(Appendix E). The responses to the questions about the participants’ expectations from the

financial literacy program indicated what they wanted to learn and reflected personal

financial literacy aptitude. A listing of items about which they still want more information

provided information for increasing the scope of the financial literacy curricula and

enhancing personal financial aptitude.

Data collection on the financial literacy program expectation, the second of the three

sub-question categories, included probing questions for elaboration on personal financial

literacy, questions three, five, seven, and eleven (Appendix E). These responses could have

established expected financial literacy knowledge transfers. Question eight, “What new

concepts/information about financial matters was presented to you in the learning modules?”,

relates to both personal financial aptitude and knowledge transferred during the financial

literacy program. Questions six, ten, twelve, and thirteen asked the study participants to

evaluate the financial literacy program based on thoughts about missing information,

including; whether they practice what they learned, and what they liked best and least.

The third category of personal thoughts on how to increase participation in financial

literacy programs can be found in the first and last questions (Appendix E). The first

question links to the marketing of the financial literacy program to learn the how, when, and

where the low-income adult became aware of the program. The final question directly asks

the participant what they believe could increase participation in the program.

Together the various responses answered the central research question: What are

low-income adults’ perceptions and expectations concerning financial literacy?; and, the sub-

questions that support the central research question of (1) “What do you feel is your financial

literacy aptitude?”, (2) “What are your reactions to the financial literacy program?”, and (3)

“What should be done to increase participation in the financial literacy program?”

The researcher conducted a pilot study of the interview questions developed to

increase the validity and reliability of the questions (Creswell, 2012). Etchegaray and

Fischer (2011) outlined the steps for a pilot study. The steps required a review of the

questions by experts in the field of the study. The questions were reviewed by three local

experts one with research design experience and the other two experts with experience in

working with low-income adults. Once the questions were deemed acceptable, two

participants were chosen to answer the questions. This step is the pilot test or the cognitive

interview. The two chosen participants followed the initial interview protocol design. The

participants were formally interviewed starting with discussing the research, asking for their

consent, and answering each interview question. When answering the questions, they were

prompted to describe what they thought when answering the question and were asked to

identify anything confusing. Any questions that arose during the cognitive interview

required changing protocol for the interview, whether it was the setting or the questions. The

responses from the pilot participants were not used as part of the study results.

To increase the volunteer participation rate, an incentive was suggested (Creswell,

2012; Weiss & Bailar, 2002). Participants in the pilot study and the research study received

an incentive of a $25 gift card from a local store, when the interview was completed. The

results of the pilot test yielded information useful for revising the interview questions before

initiating the study, increasing the study’s validity and reliability. Participants of the research

study who attended the study’s results presentation had a chance in a drawing to win a $100

gift card.

Validity and Reliability

Validity and reliability measurement tasks support the quality of research. Validity in

quantitative research differs from the measures of validity in qualitative research.

Quantitative research confirms or disconfirms prior research for validity. Qualitative validity

equates to truthfulness and authenticity of the measurement instrument (Leedy & Ormrod,

2010). Qualitative research conclusions attempt to generate new possibilities and create

dialogue concerning the phenomenon studied (Creswell, 2012). Creswell indicates the term

validity in quantitative research as measured in statistical language and validity is evaluated

by triangulation, member checking, and external audit in qualitative research (Creswell,

2012).

Reliability in research refers to consistency and dependability of the data. The nature

of qualitative research relies on data consistency and dependability to discover themes to

understand a phenomenon. The process of data analysis requires the reading and

interpretation of participants’ perceptions and behaviors recorded during the interview to

uncover trends and patterns that emerge (Leedy & Ormrod, 2010). These trends and patterns

can then answer the central research questions to develop recommendations to increase

participation of low-income adults in financial literacy programs. The following sections

outline the steps taken to ensure validity and reliability that provides a defensible and

meaningful conclusion for this study (Leedy & Ormrod, 2010).

Internal validity. The qualitative internal validation process includes credibility and

authenticity to eliminate other possible reasons for the results of the study (Creswell, 2012;

Leedy & Ormrod, 2010). Creswell’s (2012) methods for internal validation include

triangulation, negative confirmation, member checking, and prolonged engagement. The

data collection took place in the Fall of 2012 with the researcher present onsite beginning in

the Spring of 2012. The researcher’s extended presence built trust among participants and

supported the concept of prolonged engagement. Interviews continued until data saturation

occurred. Triangulation of data obtained could not occur without further research, however,

because the study is making inquiries to discover themes which document why low-income

adults attended a financial literacy program. Negative confirmation and member checking

happened within a focus group debriefing of the study.

External validity. Aspects of qualitative external validity control the extent the

research finding can be generalized to other populations (Leedy & Ormrod, 2010).

Creswell’s (2012) methods for external validation include peer collaboration, researcher bias,

and a final report thick with details including participant’s selection characteristics, and

external audits. Peer collaboration took place, involving an evaluation of the interview

questions by an expert panel of financial literacy providers and the host community

organization directors familiar with the low-income community in Danbury, Connecticut.

Researcher bias relates to the expectation that financial literacy programs do not address the

needs of the low-income population, which was bracketed out from the participants during

the interview review process. The final report’s detailed description provided information

regarding the populations’ characteristics that enable one to infer transferability to similar

populations. The dissertation process provided for external auditing of the study, further

supporting external validity.

Reliability. Qualitative studies’ references to reliability assert consistency and

dependability (Leedy & Ormrod, 2010). During the interview question development, the

questions were reviewed by local financial literacy experts involved with the low-income

adult population. To increase the reliability of this study’s developed questionnaire, a pilot

study was conducted whereby two individuals were interviewed. The participants in the pilot

study were not included as final study participants. The possibility of the Hawthorne effect,

where participants giving the researcher the expected response (Leedy & Ormrod, 2010), was

limited by the questions’ structure and lack of expected responses.

Data Analysis

The data analysis in qualitative research requires a systematic approach to the data

interpretation (Creswell, 2012; Leedy & Ormrod, 2010). Following Moustakas’ (1994)

transcendental phenomenological qualitative data analysis based on Van Kaam’s (1966)

method requires seven steps in the process of extracting textual, structural data analysis to

obtain emerging themes to generate recommendations to support low-income adults’

attainment of stable financial futures. Moustakas’ (1994) seven steps to evaluate the data

include: (a) data horizonalization begins with listing out every term for every experience; (b)

the quantity of term is reduced responses, which requires the evaluation of whether the term

is necessary for understanding the experience and of whether the term can be eliminated

while maintaining the horizonalization of the data analysis; (c) remaining terms are clustered

for themes; (d) themes which are developed are validated, which requires auditing the source

documentation for the inductive and deductive reasoning, and the deletion of unsupported

themes; (e) the written documentation supports the emerging themes through the creating of

textual description from each participant; (f) the creativity, insight, and intuition of the

researcher provide for the imaginative variation and the development of the structural

essence of the experience; and (g) the synthesizing of textual and structural essence of the

experience integrates theories and develops recommendations.

The documentation available from the site confirmed the participants’ low-income

status. The data from the interviewee responses and was analyzed to answer the central

research question of what low-income adults’ perceptions and expectations are concerning

financial literacy. The information obtained from the participants was analyzed for emerging

themes and patterns to create recommendations for financial literacy programs to engage

low-income adults so they could increase their financial literacy, thereby stabilizing their

financial futures. The data saturation process occurred during data interpretation. Each

interview was read multiple times and processed through qualitative research software

NVivo 9 ® for new and recurring themes until no new information was uncovered.

To fulfill the requirements of the study, the data from each interview question was

transcribed in its entirety from the taped interview. Then through the use of NVivo 9 ® a

qualitative research computer software, the research process of recording, storing, indexing,

sorting, and coding occurred (Creswell, 2012). The data analysis using NVivo 9 ® helped

identify emerging themes and patterns to support recommendations to develop financial

literacy programs that could increase low-income adults’ financial literacy. Other data

analysis techniques in qualitative research pertaining to classical content, word count, and

domain analysis was supported through NVivo 9 ®. The final presentation of the data

analysis emerged with the results including written conclusions and visual presentations.

The transcribed taped interviews are provided in Appendix G.

Summary

Chapter 3 depicts the phenomenological qualitative research methodology for this

study. Transcendental phenomenology approach provided the opportunity to ascertain low-

income adults’ perceptions and expectations toward financial literacy. The research results

led to novel recommendations to develop financial literacy program curricula to increase

participation, hence financial literacy. The small purposive sample size is reflective of a

phenomenological research study method to collect data limiting the projection of this

study’s conclusions (Creswell, 2012; Leedy & Ormrod, 2010). The final report’s detailed

description and use of NVivo 9 ®, however, provided information regarding the populations’

characteristics that could infer transferability to other populations and present information

necessary for replication.

Chapter 4 presents the participants’ in-depth experiences and expectations concerning

financial literacy. The analysis of the data collected includes the details of the interview pilot

study and interviews from the study’s participants as outlined in Chapter 3.

Chapter 4

Results

The purpose of this phenomenological study was to ascertain the perceptions and

expectations of low income adults regarding financial literacy to increase participation in

financial literacy programs. The data collected by interviews of low income adults resulted

in making recommendations, found in chapter 5, to modify a financial literacy program’s

marketing and curriculum. The qualitative approach chosen followed Moustakas’ (1994)

transcendental phenomenological qualitative data analysis based on Van Kaam’s (1966)

method that required seven steps in data analysis to obtain emerging themes and generate

recommendations to support low-income adults’ attainment of stable financial futures. The

steps taken provided the systematic approach to the data interpretation and gave the

participants the opportunity to have their voices heard (Creswell, 2012; Leedy & Ormrod,

2010). Chapter 4 presents the results generated in this phenomenological qualitative research

study. The chapter sections include discussions on the (a) study’s population and sampling,

(b) validity and reliability procedures, (c) data collection process, (d) data analysis process,

and (e) results of the analysis.

Population and Sampling

The study’s population consisted of 1,300 registered families with approximately 30

percent representing low-income families from a nonprofit organization in southern, New

England. Participation was limited to adults in the population earning less than thirty

thousand dollars annually and who attended a financial literacy program module or modules

available at the nonprofit organization. The purposive sample selection of 20 voluntary

participants initially came from respondents to a flyer distributed at the nonprofit

organization’s site. Consistent with prior studies, access to attendees from prior financial

literacy classes offered at the nonprofit site proved difficult because contact information

available from mailing addresses and phone numbers were no longer valid (Servon &

Kaestner, 2008; Spader et al., 2009; Weiss & Bailar, 2002; Zhan et al., 2009). Therefore,

using the snowballing sampling technique (Creswell, 2012), the initial respondents referred

other candidates to attend additional financial literacy classes offered through the nonprofit

organization.

Validity and Reliability

Validity and reliability measurement tasks support the quality of research.

Qualitative validity equates to truthfulness and authenticity of the measurement instrument

(Leedy & Ormrod, 2010). Qualitative research conclusions attempt to generate new

possibilities and create dialogue concerning the phenomenon studied (Creswell, 2012).

Reliability in research refers to consistency and dependability of data. Procedures were

followed to assure participants that their responses would be kept confidential, which

enhanced the reliability of their responses. The procedures include the researcher reviewing

the confidentiality statement with the participant before the participant signed the document

and the participant also created a personal pseudonym to use during the interviews. The

pseudonym served as the moniker for the interview transcription and the reference to the

participant in the research report.

The processing of the data analysis required the interpretation of the participants’

perceptions and behaviors recorded during the interview through multiple readings and

listening to the taped interviews to uncover trends and patterns that emerged pertaining to the

phenomenon (Leedy & Ormrod, 2010). These trends and patterns addressed the central

research question which was, What are low-income adults’ perceptions and expectations

concerning financial literacy?, and identified the basic themes from which recommendations

were developed to increase the participation of low-income adults in financial literacy

programs. The use of external experts, a pilot study, and member checking for this study

were taken to enhance validity and reliability in order to yield creditable, defensible, and

meaningful recommendations for this investigation (Leedy & Ormrod, 2010).

External experts. Following the receipt of the research study’s approval, the

researcher contacted local experts to review the interview questionnaire. Three area external

experts working with low income adults in the Danbury, Connecticut area reviewed the

interview questionnaire in Appendix F for clarity, leading questions, and possible bias. The

interview questionnaire was given to each of the experts on September 24, 2012 with a

request to submit comments back to the researcher by October 10, 2012. The comments

from the local area experts provided face and external validity (Creswell, 2012). Changes to

the questionnaire occurred due to some clarity and sensitivity comments. The revised

questionnaire became the basis of the pilot study.

Pilot study. A pilot study increases validity and reliability by evaluating the

credibility of the research instrument which is the basis for the data collection (Creswell,

2009; 2012). The pilot study purposes include: (a) to determine the clarity and appropriateness

of the questions, (b) to determine whether the questions would result in meaningful responses,

and (c) to draw conclusions about the impact of the study from the perspective of the possible

research participants (Creswell, 2009). To increase the volunteer participation rate, an

incentive as suggested by Creswell (2012) and Weiss and Bailar (2002), was distributed to

the participants in both the pilot study and the research study. The incentive, a $25 gift card

to a local store, was given at the completion of the interview.

The first pilot test participant was interviewed on October 15, 2012 and the second

participant was interviewed on October 19, 2012. The participants met the study criteria of

having an income of less than thirty thousand dollars per year and having attended a financial

literacy program module. The feedback from the pilot interview led the researcher to change the

order of the interview questions and led the researcher to conclude that a face-to-face request that

the participant provide his or her income level was not likely to be answered. The need to verify

income level required a change to confirm that the participants’ income levels were less than

thirty thousand annually. The results of the pilot test therefore yielded information which

increased the study’s validity and reliability.

The two pilot study participants’ responses were not included in the compilation of

the research study data. However, the pilot study results required the rearrangement of the

order of the interview questions. The rearrangement of the interview questions revised which

interview questions correlated to which of the three sub-question category constructs. Two

questions, six and nine, combined the constructs of both personal financial literacy and

financial literacy programs. The other interview questions related to the personal financial

literacy construct included three, four, five, seven, eight, and ten. In addition to questions six

and nine, questions one and eleven linked to the financial literacy programs construct. The

information for the third construct - increase participation in financial literacy programs

connected to questions two and twelve. Appendix F2 provides final revised interview

questionnaire employed during the formal interview.

Member checking. Member checking provided validation of the study’s findings

(Creswell, 2012). The researcher invited all twenty of the study’s participants to a gathering

that presented and discussed the study’s findings. Fifteen percent (three) of the participants

attended the gathering: all agreed with the accuracy of the findings and considered the

recommendations realistic for reaching the target audience. Non-attendees received emails

inviting them to review the study’s findings. Twenty-four percent (four) of these participants

contacted the researcher by phone to discuss the findings and confirmed the accuracy of the

findings and the realistic approach with the recommendations.

Data Collection Process

Twenty interviews occurred for the study’s data collection and were conducted from

October 21 to December 3, 2012. The scheduling of the interviews indicated a solution to

one of the challenges of engaging low income adults identified by Weiss and Bailar (2002)

their suspicion of strangers. Two participants scheduled their interviews during their regular

attendance at the nonprofit site. The remaining participants scheduled their interviews when

other people they knew would be in attendance for interviews, even though they would need

to wait while the each person was interviewed. Attendance with other participants required

the participants to coordinate work schedules, thereby increasing the time-frame of the

interviews. The interviews occurred at either the nonprofit organization site or at the

residence of the participant, depending on the participant’s request.

Demographic information. The twenty participants met the initial requirements of

income under thirty thousand and attended a financial literacy program offered through the

nonprofit site involved in the research project. Additional demographic information collected

on the participants included gender, age, the number of people 18 and over in the household,

the number of people under 18 in the household, if the participant had any bank accounts,

and the type of bank accounts. Table 1 below identifies the sample’s gender and age cohorts.

Table 2 provides household population information. Table 3 specifies the bank accounts of

the participants.

Six participants were male with five, 18 to 25 years in age and one, 36 to 50 years in age.

Fourteen participants were female with seven 18 to 25 years in age, five 26 to 35 in age, and

two 36 to 50 years in age.

Table 2

Household Population

# of participants

Children

With 10

Without 10

Adults

1 6

2 7

3 -

4 2

5 -

6 4

7 1

Table 1

Sample

Age Female Male

18 to 25 7 5

26 to 35 5 -

36 to 50 2 1

Adults and children

1 2

2 5

3 4

4 2

5 -

6 5

7 2

Half of the participants (ten) have children in their households. Thirty percent (six of

the twenty participants) have a single adult and 35% (seven) have four or more adults in their

households. Ten percent (two) of the participants’ households have only an adult.

Table 3

Types of Bank

Accounts

# of participants

None 4

Savings only 1

Checking and savings 15

Twenty percent (four) of the participants do not have a bank account, while the

remaining participants have established a savings account or savings and checking accounts.

Data Analysis Process

The participants’ interviews were taped and professionally transcribed. The

researcher cross checked the transcription to the interview tapes. The transcriptions of the

recordings created the data used in the analysis. The transcriptionist did not know the names

of the study’s participants, providing anonymity to the participants. The participants selected

their own pseudonyms used during the interview sessions. The transcribed taped interviews

are provided in an Appendix G.

The data analysis followed Moustakas’ (1994) transcendental phenomenological

qualitative data analysis based on Van Kaam’s (1966) method of seven steps to evaluate the

data. The seven steps taken include: (a) the data horizonalization begins by listing out every

term for every experience; (b) the reduction of the quantity of terms requires the evaluation

of whether each term is necessary for understanding the experience and of whether the term

can be eliminated while maintaining the horizonalization of the data analysis; (c) the

remaining terms are clustered for themes; (d) the themes developed are validated, which

requires auditing source documentation for inductive and deductive reasoning, and the

deletion of unsupported themes; (e) the written documentation supports the emerging themes

through the creating of textual description from each participant; (f) the creativity, insight,

and intuition of the researcher provides for the imaginative variation and the development of

the structural essence of the experience; and (g) the synthesizing of the textual and structural

essence of the experience integrates the theories and develops recommendations (Moustakas,

1994). The research was completed with the use of NVivo 9 ®, a qualitative research

computer software, which provided a central location to record, store, index, sort, and code

the data. NVivo 9 ® helped identify themes and patterns in the data analysis.

The detailed description of the theme development follows in the results section and

employs the participants’ pseudonyms as the identifier to support the research ethical

boundaries for confidentiality. In Chapter Five, the themes are integrated to both Maslow’s

(1948) hierarchy of need and Prochaska’s (1979) transtheoretical model of change to develop

recommendations to complete the data analysis’ final step, the synthesizing of the textual and

100

structural essence of the experience integrates the theories and develops recommendations

(Moustakas, 1994).

Results

The central research question of this study was What are low-income adults’ perceptions

and expectations concerning financial literacy? The initial analysis reviewed each interview

for three construct categories of personal financial literacy experiences, financial literacy

program expectations, and accessibility to financial literacy education. This horizontal

analysis followed the first step of Moustakas’s (1994) modified Van Kaam

phenomenological data analysis.

Multiple readings of the interviews with reductions and eliminations followed

Moustakas’ second step. The next step taken of clustering identified three themes (1)

Participant characteristics, (2) Presentation of financial literacy programs, and (3) Access to

low income adults. These themes reflect sub-themes to be considered to increase

participation in financial literacy programs by low income adults. The emergence of these

themes along with references to textual and structural support follows and is the basis for

Chapter Five.

Theme 1 – Participants’ characteristics. Participant characteristics theme emerged

from participants’ responses referring to personal descriptions of their expectations and

experiences regarding financial literacy. Inductive reasoning established two characteristics

the belief in self and current time-frame orientation. Belief in self theme reflected the

participants’ descriptions of themselves acknowledging their weaknesses and strengthens of

financial literacy, and their attempts to resolve a perceived weakness. Current time-frame

orientation derived from referrals by participants to deal with financial issues as they appear.

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Belief in self. Individual excerpts from Monster, Annastasia, and Margarita support

the belief in self by a description of personal money management habits perceived as good or

bad. Monster remarked that

I’ve never been too responsible with money and I’ve never really fallen into the negatives but

I’m always scraping by and I’m lucky enough to make my bills on time but it’s the money

that I need for myself for fun that I never have (Monster).

Annastasia responded that she hoped, “To get better knowledge on budgeting and see

where I am with my budgeting and see what can help me from this.” Margarita stated, “I

really need to fix my bills and I need to learn how to keep my money.”

Comments from John, Betty, and Paul present other references construed to a belief

in self by the identification of why the participant decided to attend a financial literacy

course. John stated, “I wanted to see what it was about and to learn more about the program

and to see how to save money better.” Betty responded, “It sounded like a good opportunity

to learn about budgeting.” Paul replied, “I didn’t see anything wrong with learning new

ideas and concepts with financial literacy and budgeting.”

All the participants answered a question asking to rate themselves regarding their

financial literacy without clearly defining financial literacy. The responses therefore, are

limited to the individuals’ perception of financial literacy. For instance, Monster

commented that

I don’t really follow the plan I set down but I don’t have the will power to go through with it.

This program has given me a little bit more of an understanding and before I was at a 7 and

now I am at about an 8 (Monster).

Wetgrass observed that,

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Before the program I would say a 5 and now I would probably say a 6 or 7. I feel like only a

5 because if it were higher than that I would have a lot of money saved up and I would not

need to take this class, but now I do have a better grasp on things I can do to save money

(Wetgrass).

Raptor explained his rating in this way

Before the program I had an educated guess on everything and now I know I have more of a

direction on steps that other people take to do things and that always helps, having a guide

behind everything. My rating of myself before would be a 4 but now would be a 7 or an 8

(Raptor).

The participants’ response about the clarity of the financial literacy program clearly

stated they understood the concepts being taught. Holly Berry responded “Yes, they were

clear.” Belle stated, “Absolutely.” Raptor replied, “Yes, to me it was very clear.”

Current time-frame orientation. Current time-frame orientation is captured by

responses that infer a time period of less than ninety days. The current time-frame

orientation impacted directly on the participation of financial literacy programs as noted by

the attendance records at the research site and participant responses to the question about

interest in other financial literacy modules. Ninety-five percent (19 of the 20) of the study

participants were interested in taking other modules, not all modules, and not in the order

presented by the financial literacy program offered at research site.

The participants’ responses generally indicated the modules for future attendance

centered on financial knowledge wanted at the present time. Belle explained that, “I wanted

to look into the Your Credit module because there are some issues with my credit and I

would like to rebuild it.” Chester stated, “…the two that I would be most interested in are

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Loan to Own and Your Own Home because for myself the next big investment that I want to

make is owning my own home.” Sarah replied that “Pay Yourself First sounds really

interesting because I run my money like crazy and I need to constantly save more money for

myself.” One participant Oil Man referenced wanting to learn about savings to support his

daughter’s college education and the child’s due date is in January 2013, “The money

building so that I could try to put money aside for a college education for my daughter before

she gets here and by the time she turns 18.”

After responding to which other financial literacy modules they would be interested

in attending, the participants were then asked why they did not want to attend the other

modules. The participant responses support a current time-frame orientation theme. Lee

replied, “Not now… but maybe I would take them at a later time.” Wetgrass stated, “I know

stuff about banks and information on banking and understanding credit cards and how to use

them, so I feel that the one I chose are the ones that I would need help with.” Betty said,

Well the Charge it Right I don’t really use credit cards so that would not be one I would

attend. The Loan to Own I don’t know if I would need that at this time because I don’t know

that I would be taking out any loans at this time or in the near future (Betty).

The request on current money management style resulted with 75% of the

respondents divulging information that correlates to the current time-frame orientation sub-

theme. The money management style descriptions were grouped into sub-sections within the

sub-theme of current time-frame orientation that included; here and now, self-sabotage, and

savers. The Here and Now sub-section within the sub-theme of current time-frame

orientation can be identified through Chester, Jane, and Snow White. Chester described

himself as “…a paycheck by paycheck person.” Jane’s commented that “I never actually

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stop to think about how I spent my money I just spent it as I went.” Snow White replied, “I

am one of those frequent spenders. I go into the stores and if I see something, even if it is not

on my list I buy it.”

The Self-Sabotage characteristic sub-section was derived from participants’

comments that budgeting can be difficult. Annastasia remarked that “I get unnecessary

things with my savings stash that I dig into. I have a good budget plan but I still dip into that

money that I want to save.” Paul commented that “I try to budget but I could definitely steer

out of temptations here and there.” Juliet explained her bad habit

Pretty much at this point I just have all of my money going into one bank account and I

forget it until I need to make a payment and then I take it out but then as soon as I see how

much I have. I say I have a lot of money in there. I spend a little more because I saved a little

more, which in turn makes all my savings go away (Juliet).

The remaining 25% of the participants were labeled as savers within in the sub-theme of

current time-frame orientation. One respondent indicated that she was not always low

income by her story on savings. Angelina spoke about how her savings have helped her

since she became unemployed.

I do save but then there are times when I have to go into it for a reason but I have had savings

where I have been able to live off of it for a whole year …My financial situation or bills etc.,

is more than my income at this time, so me it is hard to budget. I have always been a saver, I

have a savings to buy what I want and then I have a long term savings where I know I am

going to need this in the long run (Angelina).

Specific characteristics of belief in self and current time-frame orientation represent

sub-themes of the first theme, participant characteristics. Participant characteristics identify

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personality traits of low income adults. These sub-themes are the components of theme one

interpretation in chapter five.

Theme 2 – Presentation of financial literacy programs. The second theme, the

presentation of financial literacy programs, uncovered the participants’ expectations and

perceptions for taking a financial literacy class. The presentation of financial literacy theme

contains three sub-themes. The first sub-theme titled, information wanted gathered what

information participants found relevant. The second sub-theme, presentation style pulled

together the participants’ preferences on how the information was delivered. The third sub-

theme, environment of financial literacy classes assembled class environment details favored

by the participants, which they considered helpful with their learning. Learning the

participants’ expectations provided information to modify financial literacy program

curricula and locations to meet the wants and needs of the program’s intended audience.

Information Wanted. What information for a financial literacy programs comprises

of the general consensus noted from the participants regarding wants, needs, and expectations

for attending a financial literacy program. The details underlying the concept of what should

be presented in financial literacy modules reflect the attitudes of participants who attended a

single financial literacy module on budgeting. Specific sub-sections included money

management and available support. The sub-section of money management was found in

selected responses from Chester, Jane, John, and Betty. Chester’s response was that,

The biggest thing I expected to learn obviously was management of money and how to

divide up spending and also the idea of how to be able to compromise what you don’t need

all the time versus what you do need, in terms of you don’t need to eat out twice a week, or

go out to buy new toys or new video, or sports equipment etc. (Chester).

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Jane replied that “I was just hoping to learn different ways to keep track of money.”

John stated his expectation “I expected that I would learn more banking and financial and

more about saving money.” Betty said,

I liked learning about the different ways to budget your money more for things that you want

versus the things that you need and how you can eliminate the wants if your needs are more

important and putting those above the wants (Betty).

Expectations to receive information on methods to managed money are supported by

5 selected participants’ responses. Belle responded that “How to organize my money issues.

Maybe an example of the spreadsheets...” Raptor said,

I just wanted to learn more of a guideline on how to save…The models for savings and

writing down expenses and everything, I had considered that in the past but I never realized

how practical it would be until it was written on paper until now so that was something that is

new to me now and I like that idea a lot (Raptor).

Margarita stated, “I wanted to learn how to better distribute my money for my bills

and pay my bills on time.” Betty answered,

Just talking about different systems of saving money, like putting it in envelopes, or you have

the option of putting it in the bank so that you do not see it, or different ways of organizing

on a calendar, or spreadsheet however you want to. I would like to start writing down more

daily of my spending habits so that I can see on paper what I am doing wrong or right

(Betty).

Jane response spoke of a budgeting technique, “The Spending Diary, so that I can see day to

day what I spend money on. I think I am going to take this page.”

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Available Support sub-section of the information wanted sub-theme emerged from

participants, who were pleased to learn of available support. Margarita happily responded,

“That there are places that can help me.” Paul stated, “Some tax credit, other information

about taxes and certain agencies that can help you out.” Annastasia expressed, “Yes, the tax

filing section, discussed who can file your taxes for free and who can file your taxes for free,

I did not know that and it was something new to me.”

Presentation style. The presentation style sub-theme falls under the presentation of

financial literacy programs theme, related to the delivery of the information when a

participant attended a financial literacy program. The participants remarked on what they

learned and what they liked best of the program and focused on simple ideas presented

clearly. The following comments textual support the key presentation items of simple ideas

and clear presentation appreciated by the study’s participants.

Participants spoke of learning new savings tips. Juliet’s, John’s, Foxy’s, and Snow

White’s responses follow. Juliet stated, “I did like the concept of using the separate account

with having and extra savings it’s a smart idea.” John replied,

Yes definitely, some of the new ones presented to me were about how I can save money with

the coupons and all the different ways to save money and financially be able to do other

things with your money and not spend it all (John).

Foxy answered, “The thing about paying yourself first, just simply before you get the

money in your hand. Just send $20 in an account and letting it build over a period of time.”

Snow White expressed, “Yes, the spreadsheets, the taxes, tax numbers and a couple of the

ideas for savings such as the list and not getting anything that is not on the list.”

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Organizing ideas were well received by the participants who expected to learn how to

organize money issues. Comments supporting organizing ideas included below are from Oil

Man, Angelina, Clint, Wetgrass, and Monster. Oil Man said, “They talked about the finance

expense and bill that you have to put away, and how you put the bill to come in at the same

time.” Angelina responded, “Yes the one where I can reschedule my bills so that they all

come in at one time.” Clint stated, “the Lemon Log”, referred an iphone application

mentioned by one of the other attendees who used Lemon Log to manage their expenses.

Wetgrass replied,

I think so, I like the expense envelop system it is a good way to not spend your money and

put them in different places and keep them separate, label them for things that you need them

for and know that you cannot take from there and then you have that money set aside and you

know what you can take from and what you can’t (Wetgrass).

Monster stated,

I would say the monthly payment calendar, although I would never really consider the

monthly aspect like daily and break it down, that was the most informative to me. It opens

the door for a yearly plan and it makes me looks towards the future rather than daily

(Monster).

Interesting financial literacy tips using technology came from participants not from

the material in the financial literacy program. The lemon log mentioned by Clint in the

organizing ideas sections was a suggestion by someone in his class. Juliet mentioned, “My

credit card limit is only up to $400 and I have an e-mail notification once I hit $200.” Raptor

explained, “…my bank every time I use my debit card it puts $1 dollar into my savings

account…”

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Another aspect of how to present the financial literacy program includes comments

from 40% (eight) of the participants about the clarity and helpfulness of the presentation

material. Textual support for clarity and helpfulness came from selected responses by Raptor,

Sarah, and Wetgrass. Raptor declared, “That it was written in a way that was easy to

understand and you don’t have to be super smart to understand money and it was simplified

so it was easy to comprehend.” Sarah commented,

What I liked the most is that it targeted me personally, because I knew exactly what was

going on and that everything that was being taught I had to take seriously and it was to help

me with my spending problem (Sarah).

Wetgrass remarked that

I liked all the different tools that I have, all the different sheets that were given to me to help

me manage my money, different worksheets like the monthly expense worksheets and the

monthly payment schedule and the monthly payment calendar. I think that will be useful in

the future (Wetgrass)

Environment of financial literacy classes. Environmental needs of a financial

literacy information session derived from comments describing class atmosphere liked by

participants. The participants’ commented on the class environment centered on small

groups which provided an atmosphere where the participants felt comfortable expressing

their thoughts. Chester’s spoke of class size begins the textual support for the environment

of financial literacy class sub-theme.

I think smaller groups work best; a big open group might make people more hesitant to ask

more questions because you don’t want to feel like you are so dumb in front of so many

people. When things are conducted in smaller groups or even a one on one session you feel

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you get a much stronger learning experience because you are directly in contact with the

person as compared to being in a big open atmosphere where there is plenty of who may

have the same question but are afraid to ask and by being a one on one you can say wait I

don’t understand or I have a question about this, can you explain that better. You will have

more clientele with larger classes but the learning experience I think will diminish (Chester).

Annastasia, Belle, Jane, and Juliet agreed about small groups,

Hearing everybody’s thoughts on what they do to save and to keep track of their money, like

the apps that they talked about, everyone had a different app as to how they saved for their

phone, on what they do and what could be helpful (Annastasia).

Belle declared, “Smaller groups are better. I would say 10 max, after that it starts to

get too loud and too many side conversations and you cannot really focus.” Jane responded,

I liked the people that I took it with because they asked questions that I couldn’t form so it

gave me more answers to questions that I couldn’t think of right away and more insight to

other things and it was described in a way that was also easy to understand (Jane).

Juliet expressed,

I liked that it wasn’t very dry course, it was fun, and I was able to understand things a little

bit better instead of just of being told to just do this, this and this, it was presented in a more

personal manner. I definitely would say a small group of people would be fine.

The presentation of financial literacy programs is the second theme and contains three

sub-themes that reflect on the participants’ wants, needs, and expectations concerning

financial literacy. The first sub-theme, information wanted, detailed information wanted

about money management and available support. The second sub-theme, presentation style,

provided guidance from participants about how to deliver the financial information with

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simple ideas clearly presented. The third sub-theme, environment of the financial literacy

class, participants requested the classes should be small.

Theme 3 – Accessing low income adults. The third theme, accessing low income

adults, extracted through the data analysis reflects the primary challenge of accessing low

income adult populations to increase participation in financial literacy programs. Questions

answered by the study participants provided possible solutions to increase participation by

low income adults in financial literacy programs. In order to increase participation of low

income adults in financial literacy programs participants’ responses were weighted toward

verbal communication (word of mouth) and focused advertisement targeting this population

group.

One hundred percent of participants attended the financial literacy program by verbal

referrals from either a family member (30%, six participants) or friend (70%, fourteen

participants). Some textual support follows. Clint said, “My friend told me about the

program.” John replied, “I learn about it from my neighbor.” Raptor commented, “I learned

about it through my roommate.” Holly explained, “I learned about it from my sister.” Lee

stated, “Through a family member.” Oil Man mentioned, “I heard about if from my cousin.”

Suggestions by participants to increase participation focused on advertising. Table 4

compiled the suggestions.

Table 4

Accessing low income adults - Participant Suggestions

Sub-themes Sub- sections Detail % of Respondents

Advertising

Flyers 65%

Community Centers 15%

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Schools 15%

Mall Kiosks 10%

Churches 5%

Coffee Shops 5%

In Utility Bills 5%

Tax Centers 5%

Where People Look for Jobs 5%

Inclusions 40%

Food 10%

Interesting and Beneficial

10%

Small Groups 10%

Child Care 5%

Weeknights 5%

Social Media 30%

Word of Mouth 40%

The interviewees were requested to think about marketing the financial literacy

program to attract people, like themselves, or people they perceived needed to learn financial

literacy skills. Each participant made multiple suggestions. The total percentage of

respondents therefore shown in Table 4 is greater than 100%. The results displayed in Table

4 were aggregated into two broad sub-themes from the study’s third theme: access to low

income adults. The sub-theme, Advertising generated sub-sections such as the location to

place flyers, suggested advertisement copy, and use of social media. The second sub-theme,

Word of Mouth is backed 100% by how the study participants came to attend financial

literacy program.

The subsequent quotes recorded from participants’ interviews provided textual

support of advertising. Snow White described,

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To get more people to come it depends because everyone is motivated by different courses

but if someone is going to be taking the budgeting class or something of that nature it is

because they are have money issues so the one thing that would stimulate people that are

having budgeting issues is money… post the signs in the stores and maybe even in the

papers, a lot of people flip through the paper, so that would be a good advertisement but not

where you have to spend a lot of money because obviously there are people who are

financially strapped who would benefit from taking a budgeting class. So as far as a

marketing strategy maybe you can talk to CL&P and see if you would be able to send a letter

out with the monthly electric bill and tie into some of the companies that bill people (Snow

White).

Juliet suggested,

After hearing it I’m going to put it into effect for myself and I can say look I’ve taken these

tips and use them to save money and you can do the same. If they ask how did I learn how to

do that, I can tell them that I went to these classes and they were easy, well spoken, easily

understood and you can learn a lot. I would say for something along this line I see people at

tables at certain events {mall kiosks} you can do that you can do that and do small

advertisement. Say hey, check out these modules they can help you save money or work on

your finances (Juliet).

The advertisement sub-section of inclusions listed different participant advertisement

ideas to increase participation rates. Wetgrass proposed that advertisements should mention

how individuals could benefit from a financial literacy course and that the module titles

should be revised to focus on benefits on the modules’ information

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I feel like if it is explained that this is to help people budget…I feel that they will be more

likely to take the course if they realize it is solely to benefit them and if they are going to get

tricks out of it and it will be useful so maybe explain to them how much debt people are in

and let them know that it is for their benefit. I feel like word of mouth is one of the best

advertising techniques. I’m not sure of any ways you can make it seem like it is a fun thing

but I feel like people are very into like benefiting themselves and helping themselves and if

they hear that they can get heal to save money they might be more inclined to go take the

course. Maybe make different titles for each module and make them sound more exciting and

more like they are going to benefit people (Wetgrass).

Chester impressed the need to include in financial literacy program advertisements

that classes are small and recommended that advertisements be made through social media

sites.

I think smaller groups work best; a big open group might make people more hesitant to ask

more questions because you don’t want to feel like you are so dumb in front of so many

people. When things are conducted in smaller groups or even a one on one session you feel

you get a much stronger learning experience because you are directly in contact with the

person as compared to being in a big open atmosphere where there is plenty of who may

have the same question but are afraid to ask and by being a one on one you can say wait I

don’t understand or I have a question about this, can you explain that better. You will have

more clientele with larger classes but the learning experience I think will diminish…Well of

course the one thing that probably in most age do is browse the net, so there is the basic

things of social media networking sites is always the best way to go (Chester).

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Sarah advised that word of mouth and social network advertising, explicitly Facebook

should be used. She added,

I will tell more people to come myself as well as my friends, because it has been really

beneficial to me. They might be skeptical at first but hopefully after l listening to it they will

have a better understanding. Possibly post something on the website as everyone is on the

web now-a-days. Maybe try to go on Facebook. Yes because everyone is always on it even if

it is for 5 minutes, they check updates and such. You can get many people to read it and

understand it especially all ages (Sarah).

The second sub-theme, Word of Mouth, came from 40% (eight) of the participants

but never as the only option. Lee remarked, “I guess by word of mouth. Oh, well maybe you

can visit like a church setting and hand out flyers to church members or a community center

and hand out flyers there as well”. Betty simply stated, “Word of mouth, maybe people

could tell their friends, and you can put up flyers in schools, banks or community centers”.

Raptor suggested both word of mouth and to advertise where people look for jobs.

Well, I think word of mouth couldn’t hurt and obviously advertising is big and maybe

placing ads in papers or maybe on job websites that is one thing I realize that when I am

looking for a job I am always worried about my finances as well, so perhaps something like

that may help some more people that are working or are not working but they are looking for

a new job so they can see that they can come take a class like this (Raptor).

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The results showed verbal communication from either friend or family made the

participants’ attend of the program. Participants’ suggestions included verbal

communication (word of mouth), place advertisement in locations where low income adult

population congregates, and that advertisement should focus on benefits to audience.

Summary

Chapter 4 began with the documentation of the data collection process to ensure the

occurrence of ethical procedures throughout the research, which included the validation of

the research instrument through external experts and a pilot study. The objective of chapter 4

included the presentation of themes generated from analyzing the responses from the

research participants. The themes represent categories to base curricula and marketing

platform changes to increase participation in financial literacy programs.

Theme one, participants’ characteristics identified two sub-themes of low income

adults’ personality traits: belief in self and current time-frame orientation. Theme two

reflects on the presentation of financial literacy programs acknowledging the participants’

wants, needs, and expectations. Sub-themes within the presentation of financial literacy

programs include information wanted, presentation style, and environment of the financial

literacy class. The third theme, access to low income adults, resulted in two sub-themes:

advertisement and word of mouth. The multiple suggestions by participants’ to increase

participation in financial literacy classes are outlined in table 4 listed under the sub-themes of

word of mouth and advertisement.

The three themes are connected to the research theoretical framework in chapter 5

and support the recommendations listed in chapter 5 in response to the central research

question of, What are low-income adults’ perceptions and expectations concerning financial

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literacy?, to increase participation of low income adult financial literacy programs. Chapter

5 contains the findings, limitations, and the recommendations derived from this study.

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Chapter 5

Conclusions and Recommendations

The purpose of this qualitative phenomenological study was to ascertain and interpret the

experiences and future financial expectations of low-income adults in Danbury, Connecticut

to increase attendance in financial literacy programs. Financial literacy programs for low-

income adults in the United States are designed for basic financial management to guide

participants into mainstream financial services (Curley, Ssewamala, & Sherraden, 2009;

Lyons & Neelakantan, 2008; Lyons & Scherpf, 2004; Servon & Kaestner, 2008; Zhan,

Anderson, & Scott, 2009) and to decrease their vulnerability to predatory lenders and

reliance on welfare programs (Chang & Lyons, 2008; Federal Deposit Insurance Corporation

[FDIC], 2009; Lim, DeJohn, & Murray, 2012; Wilson, 2012). Financial literacy programs

available through government agencies and financial institutions, however, have low levels

of participation (Chang & Lyons, 2008; Servon & Kaestner, 2008; Spader, Ratliffe,

Montoya, & Skillern, 2009).

This study explored the participants’ reactions to a financial literacy program

regarding whether the financial literacy program provided them with the knowledge and

skills to meet their personal financial literacy needs. The unique perspective of

understanding the financial literacy program participation of low-income adults from a

community nonprofit organization provided insights to develop financial literacy programs,

discovered new measurements of financial literacy education effectiveness, and uncovered

possible methods for increasing participation.

The research method of this study involved a small sample size of 20 interviews of

low-income adults and is reflective of the phenomenological research design used to collect

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data about personal experiences (Creswell, 2012; Leedy & Ormrod, 2010). The data

collection occurred between October 20, 2012 and December 4, 2012. The data analysis

followed Moustakas’ s (1994) modified Van Kaam’s seven steps for phenomenological

research studies.

Chapter 5 presents the results of the study’s themes in conjunction with Maslow’s

(1948) hierarchy of needs and Proschaska’s (1979) transtheoretical model of change to

understand human behaviors that affect personal behavioral change in relation to personal

financial knowledge development. The intent of this chapter is to present and interpret

findings drawn from the analysis of data. The chapter includes limitations and delimitations,

a discussion on the findings overarching themes; the significance of the study’s conclusions

and resulting implications, and recommendations for future research and financial literacy

program marketing and curricula changes to increase low-income adults’ participation in

financial literacy programs.

Limitations

Limitations to the study reflected availability of participants, honesty of the

participants regarding their financial literacy perceptions and expectations, the attendance of

a single financial literacy program module, the use of a transcriptionist, and geographic

restrictions. Weiss and Bailar (2002) explained that low-income adults’ lack of participation

in research studies comes from various factors, such as no telephone service, frequent moves,

language barriers, transitory nature, and often suspicion of strangers.

Participation in the study through interviews was supported by the nonprofit

organization’s gatekeeper and the use of the snowballing technique. The gatekeeper

maintained regular contact with low-income adults (Creswell, 2012; Weiss & Bailar, 2002).

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The use of snowballing was required because of the transitional nature of low income

populations and makes it difficult to follow up with the low-income participant population to

determine whether or not the participants made changes in their behaviors as assumed by

Proschaska’s (1979) second stage of contemplation.