Jane Schuchardt, Dorothy C. Bagwell, William C. Bailey, Sharon A. DeVaney,
John E. Grable, Irene E. Leech, Jean M. Lown, Deanna L. Sharpe, and Jing J. Xiao
Financial Counseling and Planning Volume 18, Issue 1 2007
AFCPE 2006 annual conference
B. The emergence of personal finance
Personal finance can be traced back about 200 years as family and consumer sciences specialty with little attention from mainstream economists and business faculty.
This is a unique moment in history to establish an independent area of scholarship that welcomes the contributions of economists, psychologists, sociologists, and others.
Questions for scholars interested in the study of personal finance:
1. Is personal finance a sub-discipline within consumer and family economics, or is the study of personal finance based on multiple disciplines and is itself a profession?
2. How can this work be communicated effectively to economics and finance scholars interested in personal finance topics?
3. Is personal finance, as an academic area of study, part of the broader finance discipline, a focus within family and consumer sciences, or a stand-alone academic profession?
4. How can a clearly defined body of knowledge be established?
5. How can university administrators and faculty be encouraged to support, through tenure and promotion, scholars who publish in personal finance journals?
6. How can theories and conceptual frameworks specific to personal finance be specified for use in grounding research?
7. How can theoretical approaches used in finance, behavioral finance, psychology, and other disciplines inform personal finance research?
C. Defining collective scholarship
Eight collective beliefs provide the foundation for this interdisciplinary profession:
1. Academics, research, and practical experience work together to inform professional financial counselors and educators.
2. The profession empowers people to meet their financial goals, resolve their financial problems, and improve their quality of life.
3. Relationships and personal interactions form the foundation for maximization of individual and community wealth.
4. Strong, healthy relationships and human and social capital make wealth more than just money.
5. Counseling and education are the tools for constructive change that can equip people to make wise decisions and achieve financial security.
6. With quality information, people are capable of making decisions in their best interest.
7. Education, though highly valued, cannot solve all problems.
8. Well-informed public policies can encourage household wealth.
Table 1. Professional issues reviewed for financial educators, financial counselors, and financial planners.
D. Theoretical frameworks
Profession of personal finance is based on theories from several disciplines: family studies, economics, psychology, sociology.
1. Human ecological model
2. Family management systems
3. Discounted utility model
4. Life cycle hypothesis of savings
5. Behavioral life cycle hypothesis
6. Theory of reasoned action and theory of planned behavior
7. Trans-theoretical model of change
8. Household finance
E. Naming the interdisciplinary profession
Several potential names were discussed. Ultimately, attention focused on two: Household Behavioral Finance and Personal Finance.
In summary, the authors of this commentary found reason to put forth Personal Finance as the recommended name for the interdisciplinary profession. Academics and the public are already familiar with and actively use the term. In general, the term conveys its primary focus—financial concerns on a personal level. As currently used, the term connotes both practice and scientific inquiry.
F. Call to action
First, personal finance needs to be defined through more organized activities outside usual forums.
Second, it should be emphasized that the mission of this profession is different from the study of personal finance in business and economics schools and departments to promote financial well-being of consumers and families through education, counseling, service, and research.
Third, the efforts to meet the needs of people working in this interdisciplinary profession should be increased.
Fourth, researchers and practitioners, which include both service providers and educators, need to connect in productive ways.
Fifth, personal finance researchers must connect to researchers outside the personal finance profession.
Finally, this work needs to be timely and appropriately provided to decision makers as related policies are framed and implemented.
AFCPE® must continue to take a key leadership role in organizing and mobilizing its membership to prioritize and take action on these strategies.