This literature review explores the importance of incorporating formative assessments and use of data to drive instructional decisions and address problems in the learning process for students. The review begins by exploring the definition of formative assessment, and how it can be used in the classroom. It provides examples of formative assessments that can be used in the classroom setting and what those formative assessment could tell a teacher about the next steps in the learning process. Next, this literature review discusses the importance of evaluating and using data gathered from formative assessments in order to make informed instructional decisions to increase student learning and performance. Using formative assessment and assessment data to drive instruction provides a multitude of benefits that can be an extremely cost effective for schools to improve students learning and performance. Assessment is an ever-increasing part of education, and developing teacher skills in this area has the potential to reap a multitude of benefits for students and educators. Not only does assessment help a teacher to make evidence based instructional decisions, it also has the potential to identify students who are struggling and provide early interventions to address issues before they become major learning issues.