Can financial education/coaching break the financial stress, declining health cycle?
In a previous article, I outlined three vicious cycles affecting financial stress, physical and mental health. They are vicious because, once financial stress occurs, the health impacts can lead to yet more stress, which can further impair health, causing additional financial stress as the cycle begins and worsens.
After publishing that story, I learned of the efforts of Creighton University’s Financial Success Program to investigate whether financial coaching could break these cycles. The Program provides financial education that seeks to improve the lives of low and moderate income families in Omaha, Nebraska. I interviewed two of the researchers, Julie Kalkowski and Nicole White on July 27.
The Study
In a recent exploratory study, researchers evaluated the link between financial education and health among low-income, single mothers in Omaha. The intervention consisted of nine weekly classes and one year of one-on-one financial coaching. Participants learned about managing monthly cash flow, insurance, predatory lending, the psychology of money, saving for emergencies and setting goals. They also collected receipts and tracked spending.
The investigators measured changes in health and wellbeing one and two years after participating in the program with a pre- and post-surveys.
The study was limited by a small sample size (n=20) and lack of a control group. This means we can’t be sure whether the observed changes in health and welfare were caused by the intervention or might have happened for different reasons. However, the results were tantalizing enough that a larger and more rigorous study is underway. Below, I share some of the key results of the original study and some additional, anecdotal findings, which I learned in the interview.
Financial Impact
The program did appear to improve participants’ finances. Mean annual income increased $8,026 (+29%) and credit scores increased as well. Participants reported fewer utility shut-off notices and overdrafts (see chart below). It’s notable that participants required less assistance from community agencies, suggesting broader societal benefits to financial education and coaching.
Did Financial Education & Coaching Improve Health (Vicious Cycle 1)?
In the first vicious cycle, financial stress directly and indirectly (via high-risk behaviors) impairs health, which leads to more financial stress, due to the increased medical expense and impaired decision making.
The researchers observed some evidence of reduced high-risk behaviors. For example, participants reduced their average consumption of fast food from nine times per month to six. They also seemed to be exercising more. However, there was no meaningful decrease in smoking.
“I’m heading to the grocery store instead of buying me and my teenager some fast food or even going a notch higher like Applebee’s, I’m going to the grocery store to save money and get food there.” — Study Participant
There were also no statistically significant changes in measures of physical health like weight, blood pressure and A1C (a marker for diabetes). However, several World Health Organization Quality of Life (WHOQOL) measures, including one related to perceived physical health, were significantly improved. This measures feelings of vigor, healthfulness and energy, capacity to perform at home and at work and could result from reduced stress. This is important because higher QOL can increase resistance to disease and resilience.
Did Improved Finances Reduce Cost-Related Avoidance of Medical Care (Vicious Cycle 2)?
Our second vicious cycle is that poor health leads to out-of-pocket costs, which leads to people delaying needed care, worsening the condition and leading to yet more out-of-pocket costs and stress.
The investigators found that many participants faced difficult choices between needed medical care and food, gas or childcare. After the program, they noted significant improvements in mean annual medical care access and less community agency use.
Did Financial Education and Coaching Improve Mental Health and Improve Decision-Making?
The third vicious cycle is that financial stress is associated with depression and other mental health issues, in addition to, high cognitive loads, both of which impair financial and medical decision making, which increases stress further.
The WHOQOL instrument indicated a statistically significant improved psychological well-being, which includes life satisfaction, managing negative emotions, self-acceptance, purpose in life, optimism and feeling in control. Also, measurements on the Trait Hope Scale suggested reduced cognitive load via measurement of hope as the ability to see ways to achieving goals and motivation to make progress towards those goals. However, there was no effect on reported depression and anxiety.
Will Doctors One Day Prescribe Financial Education and Coaching?
In sum, the initial study offered some tantalizing, but inconclusive, support for the common-sense notion that financial education and coaching could slow or reverse the vicious cycles of financial stress worsening health, by reducing stress and improving health.
If the second study (and others) provide evidence for the health benefits of financial education and coaching, doctors may well prescribe them, in addition to traditional therapies to help:
- Ensure compliance with medical regimens (because money is not a hurdle)
- Treat chronic diseases that stress can exacerbate
- Improve mental health and wellbeing
In addition, as healthcare providers transition from fee-for-service model to one where they are accountable for the health of a population, a holistic view suggests financial health (and other sources of stress mitigation) can help manage risk, prevent disease and improve outcomes.
I can see a brighter future for me and my kids. I am not so nervous now. — Study Participant
This article originally published on forbes.com here.