Financial Capability, Money Management, and Developmental Resources for Young Children in Low-Income Families

Abstract

The financial and social vulnerability of low-income families with young children requires a thoughtful and multidimensional response. Much of the research in this area has been undertaken with insufficient attention to social structures that serve as a foundation for poverty. Recent scholarship on financial capability, which is thought to be a construct that includes both financial knowledge and inclusion in the mainstream financial sector, provides the conceptual framework for this dissertation. One central purpose of the study is to examine the individual and interactive associations between financial knowledge and financial inclusion and: (1) money management as well as (2) developmental resources for young children in low-income households. This study uses longitudinal survey data from low-income parents of Head Start children (n=681). Associations were tested using multiple regression methods and controlling for demographic and socioeconomic characteristics. Study findings on financial inclusion suggest that owning a savings account appears to help explain money management and developmental resources for young children in the home more than owning a checking account for families in this study. Further, both financial knowledge and financial inclusion seem to be more consistently associated with developmental resources for young children than money management. Implications for policy, practice, theory and research are discussed.