Cliffs Notes from the Journal of Financial Planning & Counseling

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Welcome to the
Military Families Learning Network
Webinar
Cliffs Notes from the Journal of Financial
Planning & Counseling
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.

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For Resources, Recording, and More Information:
https://learn.extension.org/events/1652

Dr. Barbara O’Neill
Dr. Barbara O’Neill, financial resource
management specialist for Rutgers
Cooperative Extension, has been a
professor, financial educator, and author
for 35 years. She has written over 1,500
consumer newspaper articles and over 125
articles for academic journals, conference
proceedings, and other professional
publications. She is a certified financial
planner (CFP®), chartered retirement
planning counselor (CRPC®), accredited
financial counselor (AFC), certified housing
counselor (CHC), and certified financial
educator (CFEd).

CliffsNotes From the
Journal of Financial
Counseling and Planning
(JFCP)
https://learn.extension.org/events/1652#.U7MPV01OWM8
Barbara O’Neill, Ph.D., CFP®, AFC, CHC
Rutgers Cooperative Extension
oneill@aesop.rutgers.edu

CliffsNotes Background
• Started in 1958; hundreds of student guides to
explain literary works (e.g., Romeo and Juliet) and
academic subjects
• Controversial: encourages students to bypass
reading the assigned literature?
• Acquired by Houghton Mifflin in 2012
• The term is now used colloquially to indicate that a
long publication, speech, meeting, movie plot, etc. is
drilled down to a series of key points (“Give me the
CliffsNotes”)

Polling Question:
Do you belong to AFCPE (Association for
Financial Counseling and Planning Education)
and receive the JFCP?
_____ Yes
_____ No
_____ Not sure

Polling Question:
If you get the JFCP, about how much of it do
you generally read? (Be Honest!)
_____ 0% to 25%
_____ 26% to 50%
_____ 51% to 75%
_____ 76% to 100%

Polling Question:
If you read 25% or less of the JFCP, please
indicate your PRIMARY reason why (Be Honest!)
_____ Lack of time
_____ Lack of interest
_____ Don’t understand research terms
_____ Don’t see value for present job role
_____ Don’t like topics of JFCP articles
_____ Other

Full Disclosure and “Street Cred”
• JFCP Book Review Editor (2004-Present)
• Author of > 3 dozen book reviews
• Periodic JFCP article reviewer; article award reviewer
• Periodic JFCP article author/co-author
– 2012: http://afcpe.org/assets/pdf/v23_j3.pdf
– 2010: http://afcpe.org/assets/pdf/volume_21_issue_1/oneill_porter_pankow_schuchardt_johnson.pdf
– 2006: http://afcpe.org/assets/pdf/vol-1724-financial-distress-well-being.pdf
– 2005: http://afcpe.org/assets/pdf/vol1618.pdf
– 2000: http://afcpe.org/assets/pdf/vol1111.pdf

Webinar Objectives
• Discuss the benefits of producing and consuming
research
• Discuss brief methodology and findings of 2004-2013
JFCP articles with article links
• Discuss the “So What?” implications of 2004-2013
JFCP articles (“split screen” format)
• Discuss JFCP articles on six topic areas of
widespread interest to financial practitioners
• Discuss key take-away messages

What is Research?
Merriam-Webster:
“Careful study that is done to
find and report new
knowledge about something”

Other eXtension
“Research Briefs”
• Saving Money: Research Insights Webinar
– https://learn.extension.org/events/1442#.U7Qeck1OWM8
– Focused exclusively on research about savings
– Content derived from a variety of journals and corporate
research studies
• Research Briefs
– http://www.extension.org/pages/18203/financial-security-for-al
– Organized by topic area
– Include brief description of study and implications

Webinar Content Parameters
• Last decade of FCP (journal title through 2008) and
JFCP (2004-2013)
• Six topics of widespread interest to financial
practitioners and their clientele
– Cash flow management
– Saving
– Credit and debt
– Investing
– Housing
– Retirement planning

Why Summarize the Journal of
Financial Counseling and Planning?
• Journal (devoted exclusively to personal finance) most
frequently received by PFMPs, Extension educators,
and other practitioners
• Includes a variety of basic personal finance topics
(e.g., credit, cash flow)
• Articles are FREE to download
• Readers can often meet journal article authors in
person at AFCPE meetings
• Reviewers and editor require a strong summary with
clear implications for practice (i.e., So What?)

JFCP Background Info
• To search archived articles,
http://afcpe.org/journal-articles.php (by
keyword, volume/number, or author)
• To contact the editor (Dr. Jing Xiao):
jfcp.editor@gmail.com
• For manuscript submission guidelines:
http://www.afcpe.org/wp-content/uploads/2014/04/jfcp_manuscr

Question #1
What research study do you remember the
most because it had useful implications for
your work?
Describe the research topic, author, and/or
implications in the chat box.

1. The Marshmallow Test: Delayed
Gratification and Self-Control
• Mischel et al. study of delayed gratification
(late 1960s/early 1970s)
• 4-year old children offered a choice between
one small reward now or 2 rewards if they
waited 15 minutes
• Children who waited had better life
outcomes including higher SAT scores and
scholastic performance, less substance
abuse, fewer behavior problems, and better
social skills and stress coping skills
• http://harbaugh.uoregon.edu/Readings/UGBE/Mischel%201989%20Science,%20Delay%20of%20Gratification.p
Implications
• When people are put in situations
where they trust in a clearly defined
long-term gain, they are more likely to
pursue it
• Willpower appears to breed long-term
success in life (strategic reasoning skills
and trust too?)
• Teach long-term gains of saving
• Develop learning activities that
encourage people to develop willpower
and future-mindedness
• Foster trust by learners

2. The Power of Social Norms
• Goldsten et al, (2008) study of social
norms to change behavior;
experiment about environmental
conservation program in hotels
• Telling people “the majority of guests
reuse their towels” proved superior to
traditional appeals used by hotels that
focus solely on environmental
protection benefits
• Even more superior results for the
setting that closely matched
participants’ immediate circumstances
(“the majority of guests in this room
reuse their towels”)
• http://www.carlsonschool.umn.edu/assets/118359.pdf
Implications
• Provide positive financial frames of
reference such as % of employees
participating in an employer’s
retirement savings plan
• Provide relevant research findings
about financial behaviors of Americans
• Use the “Wealth Test” from The
Millionaire Next Door: formula based
on age and income:
http://www.bauer.uh.edu/drude/Net.Wor

3. Who are the Joneses?
• 6/14 study used American
Life Panel data to examine
how people compare their
income and lifestyle
satisfaction to others
• Found that people are more
likely to compare their
income to family, friends, co-
workers, and people their
age than to neighbors or
U.S. residents in general
• http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450266
Implications
•Teach strategies to increase
household income
•Provide age-based income
information
•Teach the “Wealth Test” from
The Millionaire Next Door
•Discuss money
communication strategies
•Co-worker role modeling

Benefits of Producing Research
• Add to knowledge base in one’s field
• Build “community” with peers
• Develop analytical skills
• Inform best practices by practitioners
• Required for tenure and promotion in academia
• Potentially life-saving results (medical research)
• See
http://chronicle.com/blogs/worldwise/measuring-value-societal-b

Benefits of Consuming Research
• Keep up to date on subject matter content
• Keep programs updated with latest information
• Develop programs that are grounded in theory
and/or empirical findings
• Enhances credibility with clients and
stakeholders, especially if sources are cited
• Provides content ideas for articles, classes,
media, social media, etc.

Question #2
Who are your favorite personal finance
researchers? Why?
Describe the researcher and/or their research
topic in the chat box.

Preparedness for Financial
Emergencies
• Bhargava and Lown (2006) study
of emergency fund adequacy
using 1998 and 2001 SCF data:
http://afcpe.org/assets/pdf/vol-1723-preparedness-for-emergenices---final.pdf
• > 50% of respondents did not
meet any of the emergency fund
measures (i.e., 2-, 3-, and 6-
month income guidelines) in both
years
• Significant determinants of
meeting guidelines: age,
education, income, marital status,
race, homeownership, retired
status, self employment, savings
horizon, risk behavior, and
spending behavior
Implications
•More than half of Americans have
< 2 months of income in reserve!!
This study confirmed the findings of
earlier research
•Emphasize EF importance to less
educated households
•Support America Saves program
•Open a HELOC before a financial
crisis occurs
•Encourage multiple resiliency
resources besides savings:
http://njaes.rutgers.edu/money/resiliency/

Why People Make Religious
Contributions
• Marks et al. (2009) study of why
people make faith-based gifts:
http://afcpe.org/assets/pdf/vol20_2marks_dollahite_dew.pdf
• Qualitative study (445 individuals)
with 4 gifting themes: 1. sense of
obedience/duty, 2. to express
thanks and joy, 3. it is a wise
investment, 4. to promote social
justice and charity
• People make gifts despite
financial challenges; it is a central
part of who they are (“it’s in their
DNA”)
Implications
•The meaning of religious gifts
transcended balance sheets and
numbers (even if financial
ramifications were understood)
•Hasty recommendation to cut gifts
may result in a lost client
•Instead, develop acceptable work-
around strategies with clients;
demonstrate understanding and
respect (cultural competence)

Childhood Financial
Socialization
• Kim & Chatterjee (2013) study of
association between childhood
financial socialization and financial
practices of young adults:
http://afcpe.org/assets/pdf/v24_1_61-79.pdf
• Panel Study of Income Dynamics
data; N = 628
• Respondents who had bank
accounts and had spending
monitored by parents in childhood
were more likely to own financial
assets and have positive attitudes
toward personal finance
Implications
•Study does not assume causality;
also PSID has no data available on
financial education experience
•Study supports the importance of
parental socialization and need for
financial education materials for
parents
•Study also supports the benefits of
childhood savings accounts
•Need to teach personal finance in
multiple venues; family and schools
both important

Savings Behavior
• Fisher (2010) studied gender
differences in saving behaviors using
2007 SCF data set
• Women less likely to save short-term
if in poor health; no health effect for
men
• Low risk-tolerance affected likelihood
of women saving in the short term
and saving regularly
• Each year of education made men
more likely to save in the short-term
and save regularly
• http://www.afcpe.org/assets/pdf/volume_21_issue_1/pattiejfisher.pdf
Implications
•Understanding savings behaviors by
gender can inform financial education
programs
•Risk tolerance affects saving behavior
as well as investment decisions
•In this study, income and wealth were
insignificant variables in explaining
likelihood of saving
•Good health habits, health insurance,
and emergency funds are especially
important for women
•Targeted financial education programs
for women

Characteristics of
Successful Savers
• Fisher & Anong (2012): 2007 SCF
data: 46% saved regularly, 32%
irregularly, 22% did not save
• Precautionary and retirement
motives, long-term planning horizon,
and higher income increased
likelihood of saving regularly or
irregularly vs. no saving
• Retirement motive separated regular
savers from irregular savers: 1.5
times more likely
• http://www.afcpe.org/assets/pdf/v23_j4.pdf
Implications
•Motives are strong predictors of
disciplined saving
•Emphasize the importance of
identifying goals to encourage a
regular habit of discretionary saving
and automated saving
•Households in all income groups can
be regular savers
•Stress saving small amounts over
long time horizons which makes goal
attainment more feasible

Characteristics of
Successful Savers
• Grinstead et al. (2011) study of IDA
program participants in American Dream
Demonstration
• About 4 of 5 low-income working families
are “asset poor” with < 3 months
expenses at the federal poverty level to
survive a financial crisis
• Hours of participation in financial
education program, higher matched cap,
prior use of a savings account, and
greater educational attainment were
associated with greater likelihood of
savings and saving goal achievement
• http://www.afcpe.org/assets/pdf/vol_22_issue_2_grinstead_mauldin_sabia.pdf
Implications
•Learning needs vary. If resources
allow, financial education should be
tailored and individualized (e.g.,
financial coaching)
•Peer financial counseling is a low-
cost option to savings coaches
•High match rates and match caps
motivate people to save
•Provide a link between people’s
saving goals and financial education
content

Characteristics of
Successful Savers
• Rha et al.(2006) study of the effect
of “self-control mechanisms on
saving behavior: SCF data
– (e.g., saving goals, anticipation of
future expenses, saving rules
including saving regularly or saving
one family member’s income)
• Household saving behavior was
strongly affected by mechanisms
that help people practice self-
control; 56% spent < income
• Households with savings rules
were much more likely to spend <
income than those without rules
• http://www.afcpe.org/assets/pdf/vol-1722-self-control-mechanisms.pdf
Implications
•Behavioral variables affect savings
behavior at all income levels
•Help people establish realistic
personal “savings rules”
•Help people anticipate future
financial planning needs
•Teach financial goal-setting and
provide tools with which to do it

Characteristics of
Successful Savers
• Hogarth & Anguelov (2003) study
of savings by low-income
households, SCF data
• Ability to save was associated with
socioeconomic (e.g., income) &
demographic (e.g., education)
characteristics, expectations (e.g.,
about future income), motivations
(e.g., a reason to save), access to
resources, & institutional
environment (e.g., credit checks on
potential depositors)
• 60% of households at or below
poverty level indicated they saved
• http://www.afcpe.org/assets/pdf/vol1411.pdf
Implications
•Even poor households can save
although amount is low; people at all
income levels were savers
•Poor households could still probably
not meet short-term emergencies
•Hispanics were more likely to be
savers than White households in this
study; not always the case
•Expectations and motivations matter
•Support policies and programs that
promote saving

Household Debt and IRAs
• Bernstein (2004) analyzed
relationship between household
debt and IRA ownership using
SCF data:
http://afcpe.org/assets/pdf/vol1517.pdf
• Households who depend on
credit card debt and loans are
less likely to fund IRAs than those
who borrow for real estate; also,
divorced persons
• IRA savings has lower priority
than other financial objectives for
many families
Implications
•Additional motivation is needed for
IRA contributions (e.g., automated
deposits)
•Paying off high-interest credit cards
may be best short-term strategy but it
sacrifices future security
•MyRA is promising “starter program”
for Roth IRAs:
http://www.treasurydirect.gov/readysave

Convenience Credit Card Use
• Rutherford & Devaney (2009)
study of factors influencing
convenience use of credit cards:
http://afcpe.org/assets/pdf/vol20_2rutherford_devaney.pdf
• N = 3,476 households (SCF data)
• Convenience users more likely to
believe using credit was bad, had
longer planning horizons, did
more shopping for credit, and
were older and had a college
education and higher income
• Less likely if they were late with
payments, thought it was OK to
use credit for vacations, and
sought advice from people or
media (instead of own searching)
Implications
•Help consumers understand how
they view credit influences financial
behavior
•Use awareness tools like Credit
Card Smarts calculator to show
actual credit interest costs for
revolvers
•Encourage small positive steps:
paying 6% of balance vs. 3%
•Encourage planning and assist
with budget preparation:
http://njaes.rutgers.edu/money/pdfs/fs42

Credit Card Payments
Source of Data: Credit Card Smarts
calculator, Advantage Publications

Question #3
So what are some of the key “take-aways”
that you have heard that could impact your
work with clients (Topics #1- #3)?

International Diversification
• Bhargava et al. (2004) study of
diversification benefits of
international investing:
• Studied returns on four indexes:
S&P 500, MSCI World Index,
EAFE, and MSCI Europe Index
• Found that benefits of
international diversification are
present but decreasing over time
• Correlations between world
markets are increasing
Implications
•Invest a portion of portfolio in
international markets, especially
European
•Provide international investing
resources such as SEC fact
sheet:
http://investor.gov/investing-basics/inve
•Encourage simplicity:
international index funds

Financial Risk Tolerance
• Yao, Gutter, & Hanna (2005)
explored the effect of race and
ethnicity on financial risk
tolerance using 6 SCF data sets:
• Whites are more likely to take
SOME financial risk than Blacks
and Hispanics (i.e., financial risk
tolerance) but less likely to take
SUBSTANTIAL financial risk (part
of answer to SCF question)
Implications
•Consider impact of culture on risk
tolerance (e.g., Machismo = investing
bravado)
•Consider that strong desire by Blacks
and Hispanics to get ahead may
influence risk tolerance
•Use valid and reliable measures of
risk tolerance such as
http://njaes.rutgers.edu:8080/money/ris
•Targeted investor education for
minority groups

Asset Ownership By Black
and White Families
• DeVaney et al. (2007) study
using 2004 SCF data of likelihood
of owning homes, investment
accounts, and retirement
accounts:
• Key factors in likelihood of
owning assets and asset value:
education, income, and contact
with financial institutions
• Black families were less likely to
own assets compared to White
families; value of assets was
lower
Implications
•Need for quality education programs
throughout the life cycle
•Need to help people improve their
human capital to earn a higher
income
•Need for financial institutions in low
income communities
•Target programs for minority
audiences showing successful role
models

Investment Risk Tolerance of
Couples
• Gilliam et al. (2008) study of
differences in husbands’ and
wives’ tolerance for financial risk:
http://afcpe.org/assets/pdf/3-2865-volume-19-issue-1.pdf
• 110 couples completed web-
based survey; SCF question
• Mean scores for husbands were
significantly > for wives
• Found positive relationship
between wives’ risk tolerance and
level of education
• Wives’ higher educational level
associated with lower risk
tolerance among husbands
Implications
•Financial practitioners should NOT
assume that a husband is more risk
tolerant than his wife
•Don’t use demographic
characteristics as heuristics for risk
tolerance; use a tool like
http://njaes.rutgers.edu:8080/money/ris
•A wife’s “bargaining power” in a
couple often increases with
educational attainment

Stock Ownership of Minority
Households
• Hanna & Lindamood (2008) study
using SCF data:
http://afcpe.org/assets/pdf/7-2886-volume-19-issue-2.pdf
• White households are more likely
to hold stock investments than
minority households
• Stock ownership of minority
households decreased
significantly between 2001 and
2004 but did not change
significantly for White households
Implications
•Minorities started investing more
recently than Whites; had less
investment experience
•People with less experience may
react more strongly to market
downturns like 2000-2002
•Concern: lower minority stock
ownership rates exacerbates wealth
gaps
•Programs need to address investor
emotions and long-term investing
benefits

Valuation of Annuities
• Browning et al. (2012) study of
consumers’ ability to accurately
estimate the value of a life
annuity product with 2008 Health
and Retirement Study data:
http://afcpe.org/assets/pdf/v23_2_32-45.pdf
• Higher financial sophistication
and numeracy showed no impact
on ability to value annuity benefits
• Conclusion: widespread lack of
understanding of annuity
products
Implications
•Share annuity resources such as
Annuity Assist Calculator (
http://www.annuityassist.com/calculators/?gclid=C
) and Bankrate calculator (
http://www.bankrate.com/calculators/investing/ann
)
•Share the benefits of annuities in
reducing “shortfall risk”
•Do not have to annuitize all of your
assets

Life Cycle and Housing Cost
Burden
• DeVaney et al. (2004):
• Examined ratio of housing costs
to household income using 2001
SCF data
• Housing cost burden was greater
for singles and single-parent
families than couples with no
children (for both renters and
homeowners)
• Affordable housing burden was
associated with more education
and regular savings
Implications
•Encourage people to become
regular savers and convenience
users of credit
•Help clients see disconnects in their
behavior (e.g., wanting to buy a
home but not saving for a down
payment)
•Provide targeted programs for
minorities with higher housing cost
burdens

Adjustable Rate Mortgage
Borrowers
• Finke et al.(2005) studied
demographic characteristics of
ARM and FRM borrowers using
1989-2001 SCF data :
• ARMs were used more by lower
income, less wealthy, less credit
worthy, and single-headed
households
• Evidence suggests that ARM
borrowers increasingly include
more financially vulnerable
households.
Implications
•Need to teach about the risk
associated with ARMs
•Use calculators to show “worst case
scenario”:
– http://www.bankrate.com/calculators/mortg
(Bankrate)
– http://www.zillow.com/mortgage/calculator/
(Zillow)
– http://tcalc.timevalue.com/all-financial-calcu
(TCalc)

More on ARM Borrowers
• Smith et al. (2011) study of the
influence of financial sophistication
on ARM ownership (SCF data):
http://afcpe.org/assets/pdf/vol_22_issue_2_smith_finke_huston.pdf
• ARM borrowing is driven by both
least and most sophisticated
households – but for different
reasons
• Most sophisticated: take
advantage of interest rate spreads
and less sophisticated: because
they are income-constrained
Implications
•Consider how financial sophistication
affects financial decisions; education
and stock ownership are good proxies
•Teach people about the downside of
ARMs: more income constraint and
vulnerability than before
•Consider planned housing tenure;
less risk if mortgage will not be held
for a long time

Retirement Confidence
• Kim et al. (2005) examined
factors contributing to retirement
confidence using 2004 RCS
data:
• Higher levels of confidence:
those who calculated retirement
savings need and had more
savings, higher levels of
confidence in SS and Medicare,
higher household income, better
health, and received workplace
financial education
Implications
•Anticipation and preparation for
retirement are valid predictors of
retirement confidence
•Encourage people to do retirement
savings calculations:
http://www.choosetosave.org/ballpark/
•Conduct workplace seminars with built-
in “action steps”
•Encourage good health habits:
http://njaes.rutgers.edu/sshw/
•Targeted, personalized programs for
low-income individuals

When People Who Stopped
Working Should Take SS
• Kinderman & Jennings (2006)
study with actuarial tables and SS
benefit computations:
• For many, but not all, waiting until
age 66 will yield a larger PV of
the stream of expected future
benefits
• Age 63 is often an undesirable
age to begin taking benefits
• Complex decision involving
health, financial need, taxes,
future interest rates, & SS rules
Implications
•Those with long life expectancy
generally benefit by waiting to FRA
or later
•Use “lifestyle” LE calculators:
– http://gosset.wharton.upenn.edu/mortality
– http://www.msrs.state.mn.us/info/Age_Ca
•Frame the decision in terms of
monthly income: “How much more
will I receive in benefits by waiting
another year?”

Assets of Pre-Retiree Renters
• James and Sharpe (2007) study
of renters age 45-64 using 1995-
2005 Consumer Expenditure
Study data:
http://afcpe.org/assets/pdf/8-
2867-volume-18-issue-2.pdf
• Compared to homeowners,
renters were less likely to
contribute to retirement savings,
invested less when they did
contribute, and favored
investment in short-term
convenience accounts over
retirement savings
Implications
•“Time preference” issues may need
to be addressed: are people living a
“postponed life” in many aspects of
their finances
•Show people the cost of postponed
savings or the benefit of saving
more:
http://www.nytimes.com/interactive/2
010/03/24/your-money/one-pct-
more-calculator.html?_r=0
•Target renters as an audience for
programs

Estate Planning Documents
and Charitable Gifting
• James (2009) comparison of
pre-death charitable
expectations and post-death
distributions
• Data from 1995-2006 Health
and Retirement Study:
http://afcpe.org/assets/pdf/russell_n
._james.pdf
• Most (> half) respondents who
reported having a charitable
estate plan prior to death
ultimately generated no
charitable estate gift after death
• Likelihood of charitable gifts was
significantly higher with a living
trust than having only a will
Implications
•Non-profit donees should not base
future revenue on self-reported
planned gifts of potential donors
•People may falsely describe their
gifting plans or alter them
•Teach people that titling of assets
controls the distribution of assets (title
trumps provisions in a will)
•Those with a spouse or child
beneficiary were significantly less
likely to make charitable gifts

Annuities in Retirement
• Spitzer (2009) study of probability
of outliving a retirement portfolio
with annuitized withdrawals:
http://afcpe.org/assets/pdf/john_j.
_spitzer.pdf
• Used “bootstrap” simulations with
various assumptions on estate
size including RMDs
• Annuities significantly extend the
length of time that a portfolio lasts
BUT the expected estate size
remaining will decrease
substantially
• Trade-off of SECURITY versus
LEGACY
Implications
•Purchasing an annuity reduces
“shortfall risk”
•A high level of security comes at the
cost of not being able to provide a
larger estate to heirs
•Not an “all or nothing” decision;
people can elect to annuitize a
portion of their portfolio or use “term
certain” annuity payment options
•Seek annuities from low-cost
providers to reduce expenses

Question #4
So what are some of the key “take-aways”
that you have heard that could impact your
work with clients (Topics #4- #6)?

Question #5
YOUR research recommendations:
What personal finance topics should be
studied or studied more?

Key Take-Away Messages
for Financial Practitioners
• Demonstrate “cultural competence” with clientele
(e.g., understanding “drivers” of actions like tithing)
• Encourage savings starting at a young age
• Develop targeted programs for specific audience
needs (e.g., inexperienced minority investors)
• Help people set financial goals and match them
with appropriate investments
• Provide people with awareness tools (e.g., savings
and debt calculators)

More Key Take-Away Messages
for Financial Practitioners
• Encourage small positive steps to get started and “ramp up”
later as finances permit
• Don’t make assumptions about clients based on
demographic characteristics
• Teach the long term benefits of investing
• Help people see “disconnects” between their goals and
financial behavior
• Build action steps into financial education programs
• Frame savings decisions in terms of future monthly income

Other Personal Finance
Research Journals
• Journal of Financial Planning- Requires FPA member log-in for archives;
a few free current articles http://www.onefpa.org/journal/Pages/default.aspx
• Journal of Personal Finance- Free online access to archived articles:
http://www.iarfc.org/journal.asp
• Journal of Financial Service Professionals- Requires a subscription or
SFSP membership: http://www.financialpro.org/pubs/journal_info.cfm
• Financial Services Review- Requires a subscription or Academy of
Financial Services membership: http://academyfinancial.org/financial-
services-review/
• Journal of Consumer Education- Free online access to archived articles:
http://www.cefe.illinois.edu/JCE/archives/.
Complete List: http://www.cfs.wisc.edu/documents/CFS_Potential_Journal_Outlets_August_2012.pdf

Journals that Include
Personal Finance Content
• Journal of Family and Economic Issues- Has archived abstracts:
http://link.springer.com/journal/10834
• The Forum for Family and Consumer Issues- Free online access to
archived articles: http://www.ncsu.edu/ffci/
• Family and Consumer Sciences Research Journal- Has archived
abstracts: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1552-3934
• Journal of Consumer Affairs- Has archived abstracts:
http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1745-6606/
• Journal of Financial Therapy- Free online access to archived articles:
http://newprairiepress.org/jft/

Good Twitter Handles for
Research Updates
• @UWMadisonCFS
• @FINRAFoundation
• @MichaelKitces
• @pewresearch
• @RetirementRsrch
• @sandyblock
• @A_Lusardi
• @ebri
• @CYFIResearch
• @moneytalk1 and @mikegutter and #MFLNPF

Take 5-10 Minutes a Day to
Read a Personal Finance
Research Study
• Read a journal abstract; scan an article
• Pay attention to personal finance research
reports in print/electronic media
• Read tweets about research findings
• RSS feeds
• Other ideas?

Comments? Questions?
Experiences?
Barbara O'Neill, Ph.D., CFP®, CFCS, CPFFE
Extension Specialist in Financial Resource
Management and Distinguished Professor
Rutgers University
Phone: 848-932-9126
E-mail: oneill@aesop.rutgers.edu
Internet: http://njaes.rutgers.edu/money/
Twitter: http://twitter.com/moneytalk1

Next Personal Finance Webinar
Financial Planning for
the Second Half of Life
•Tuesday, September 23, 11 a.m. ET
•1.5 CEUs for AFC-credentialed
participants.
•Speaker: Dr. Barbara O’Neill
•More
information:learn.extension.org/events/1653

Military Families Learning
Network
Family Development
Military Caregiving
Personal Finance
Network Literacy
Find all upcoming and recorded webinars covering:
http://www.extension.org/62581

Cliffs Notes from the Journal of Financial Planning & Counseling

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Cliffs Notes from the Journal of Financial Planning & Counseling