The Wealth Gap: Financial Capability

This is the fourth in a series, Closing the Wealth Gap, of several blog posts regarding the state of wealth inequality in Massachusetts, and how The MIDAS Collaborative has been working to advance the financial security of low to moderate income individuals for over two decades. Before now, we have detailed how MIDAS helps Massachusetts’ residents save more sooner to buy a home, get an education or start a business. In this blog, we will focus on financial education. Quality financial education is vital to financial independence.

In a 2018 study of “Financial Capability” in the United States, it was discovered that African Americans and Hispanics performed the worst on a standardized quiz of basic financial knowledge. This quiz pertained to basic understanding about mortgages, interest rates, and other areas of personal finance. Out of the six questions asked, African Americans answered an average of 2.3 correctly, while White and Asian individuals answered 3.2 correctly. These results show that adequate financial education is not provided to everyone, and the lack of financial education is another marker of inequality. 

In order to provide high quality financial education, MIDAS partners with Dragonfly Financial Solutions. Dragonfly is a financial education company that provides resources for households across the socioeconomic spectrum. Dragonfly works with clients on improving “long-term financial behaviors” and facilitating the ability to “set and achieve your financial goals.” In partnership with Dragonfly, MIDAS’s financial education services have played a substantial role in helping thousands of members save and buy homes. Financial education helps to provide stability across generations because parents, equipped with financial knowledge, are able to teach their children and empower them to change their financial circumstances.