Financial coaching programs are increasingly popular services offered to help people with low and middle incomes navigate their finances. Despite these programs’ growing prevalence across the US, evidence about their effectiveness is still emerging. To add to the evidence base, Urban Institute staff evaluated a uniquely structured program in Delaware: $tand By Me ($BM).
For the past decade, the state of Delaware has offered the $BM financial empowerment program, which aims to improve the financial well-being of Delaware residents. The program’s structure as a public-private partnership and its focus on delivering free services through professional one-on-one financial coaching has helped it grow rapidly in size and scope to reach diverse populations.
The Urban Institute evaluated $BM over the past two years to holistically understand the program’s outcomes. Urban staff conducted interviews and focus groups with stakeholders connected to $BM, financial coaches employed by the program, and residents served by it. Urban also surveyed program entrants, analyzed existing program data, and conducted a quasi-experimental analysis to understand changes in credit outcomes for people served by the program relative to a comparison group.
The research findings show that $BM clients overall are seeing improvements in their financial well-being, both in their perceptions of progress and on various credit metrics. Although elements of the program could be strengthened, its unique structure and approach offer lessons for other states and localities interested in offering similar financial coaching programs.
How Do Clients Feel about $tand By Me?
Through our interviews and focus groups, we found that clients and coaches report the program is serving clients’ needs well.
- Clients and coaches see positive results from the coaching process, which motivates them to continue meeting. After only one session, clients report trust and rapport with their coaches and leave with increased optimism that they can tackle financial issues they were ignoring.
- In only a short time of engagement with coaching, clients and coaches report successes. For some clients, these successes include having a budget or savings cushion for the first time. Others report long-term successes like improving their credit after years of neglect, taking a vacation they saved to afford, or purchasing a home.
How Does $tand By Me Affect Clients’ Debt and Access to Credit?
To understand the outcomes of $BM’s financial coaching, we examined clients’ credit data before and after coaching and compared changes for $BM clients with changes for a matched comparison group with similar baseline attributes.
- $BM clients took more active steps to improve their financial well-being and creditworthiness than a comparison group. The clients were more likely to bring accounts that had previously late or delinquent debts back into good standing (called “curing”), to reduce more of their debt in collections, reduce their credit card utilization rates, and raise their credit scores.
- $BM clients are taking advantage of their improved creditworthiness by adopting new forms of debt. About a year after their first session, the share of $BM clients with a credit card and with a student loan increased more than the comparison group.
What Lessons Does $tand By Me Offer Others Interested in Financial Coaching?
The $BM program offers a unique and compelling example of program design that other states and localities could consider when developing financial coaching programs.
- The program is accessible to all residents in Delaware without eligibility restrictions.
- The services are free, meaning that even those with very limited means can participate.
- The program is a public-private partnership—a combination of state government, philanthropy, nonprofits, and local employers.
- The program has integrated coaches in other human service environments and workplaces.
- The program emphasizes a culture of performance management and results orientation.