Finex Webinar: National survey results — consumerfinance.gov


Good afternoon. Thank you for standing by. I’d like to inform all participants that your
lines have been placed on listen-only mode until the question and answer session of today’s
call. Today’s call is being recorded. If anyone has any objections, you may disconnect
at this time. I’d now like to turn the call over to Ms.
Irene Skricki. Thank you. Great. Thank you very much. And welcome everybody to our monthly FinEx
webinar. We’re very excited to have all of you with
us today. And we have a very exciting topic. We have national survey results on financial
well-being that we released a few weeks ago and we will be walking you through all of
that today with our speaker, Genevieve Melford, my colleague here at the Office of Financial
Education. Before we get started, I’ll do our standard
disclaimer. As government employees, we always need to
say this. The presentation is being made by CFPB representatives
on behalf of the Bureau, but it does not constitute legal interpretation guidance, or advice from
the CFPB. And any opinions or views stated by the presenter
are the presenter’s own and may not represent the Bureau’s views. So most of you — if not all of you — hopefully
know who the CFPB is. But to kick us off, the CFPB is a federal
agency that helps consumer finance markets work by making rules more effective, consistently
and fairly enforcing those rules, and by empowering consumers to take more control over their
economic lives. And it’s that last part about empowering consumers
which is why we are here today and why FinEx exists. Just to give you a sense of where we sit within
the Bureau, on the consumer-facing side of the Bureau, the Consumer Education and Engagement
Division. There are six different offices. Some are devoted to special populations, such
as students and military servicemembers, older Americans, and Financial Empowermen, which
is for economically vulnerable consumers. We in the Office of Financial Education — where
Genevieve and I sit — are tasked with educating and empowering all consumer to make better,
more informed financial decisions, though we work closely with all of our other offices
on that. I know this slide is very busy, but it shows
that this webinar is part of the activities offered by the CFPB Financial Education Exchange
or FinEx, CFPB FinEx. And we are essentially a vehicle to get our
information and tools and resources out to people who are working with consumers on financial
topics and to learn back from all of you about what you’re learning, what sort of work you’re
doing, what you’re finding. And so FinEx is the vehicle to do that. Hopefully most of you, if not all of you,
are already part of FinEx and have gotten a monthly newsletter from us — CFPB News
and Updates. If not, we encourage you to sign up. You can either do that by emailing the address
you see at the bottom CFPB_FinEx F-I-N-E-X @cfpb.gov. You can also now do it directly online on
our website. I’ll show you that in just a second. And I show you this slide just to show you
that there are lots of convenings. There are lots of webinars happening. They’re all recorded. You can listen to them. So we hope these resources are helpful to
all of you and that if any of you are not signed up that you consider doing so. We have a resource inventory. We just redesigned it — it will be going
up on our website in the next day or two — which shows all the different tools and resources
we have that you can use. Again, free. You can order them in many cases in bulk. And so we encourage you to look at that. We also have a web page. This is redesigned and was recently launched. The Financial Education for Adults web page
which has all of our different resources that you can access. Again, the URL is on the screen — consumerfinance.gov/adult-financial-education. And if you’re looking at the screen, you can
see on the side there the little signup box where you can put in your email address and
sign up for FinEx directly. And we also have a LinkedIn discussion group
where you can post your own resources. And we also put our resources. Also you can see that on our website. So that’s my standard background to get everybody
up to speed and give people time to sign in to the webinar. And now we’ll move on to our main topic, which
is Financial Well-Being National Survey Results. Our very first webinar two and a half years
ago was on the definition of financial well-being. About a year, year and a half later we did
a webinar on measuring financial well-being. And now another year later we now have results
on what we’re learned about financial well-being for adult consumers in America. So I’m very happy to have this webinar happening. Before I turn it over to Genevieve, I just
want to note that everything she will say today more or less is in the Financial Well-Being
in America Report. I’ve put a screenshot up here along with the
URL consumerfinance.gov data-research research-reports Financial Well-Being in America. It’s not the catchiest of URLs. But it will also be up on the screen again
at the end. It’s again available on our website. So everything she is talking about is available
there. And then before I turn it over to her, I just
want to note that if you have any clarifying questions, use the Q&A function on the WebEx. I will be monitoring that. And if any things come up, I can direct them
to Gen at the moment. And then once she’s done, we will open up
for voice questions. So we’ll let you know when you can do that. And then you’ll also be able to ask questions
directly of Genevieve. So with that, I will turn it over to her. Gen, it’s all yours. Great. Thanks, Irene and good afternoon everyone. And I’m glad that Irene mentioned that there
have been two prior FinEx webinars on the earlier stages of this work. But as I was preparing for this, I realized
they were pretty long time ago and I couldn’t assume that you all either were on or remember
everything from those two. So I will spend about two minutes at the beginning
of my presentation kind of setting the context for the survey before I get into the findings. So as many of you know, the CFPB considers
the ultimate goal of financial education to be that consumers can really make money decisions
that serve their own life goals and that improve their financial well-being. And a key part of our work in financial education
is therefore to study the factors and programs that can help people have higher levels of
financial well-being. So we’ve engaged in a multi-phase effort to
define financial well-being from the consumer perspective — that was the first webinar
— to create a reliable way to measure it that could be broadly used by financial educators
and researchers, and then to conduct a survey using this new measure to learn the state
of financial well-being in America and what factors, both personal and situational, are
related to it. So, what exactly do we mean when we talk about
financial well-being? Well through open ended, one-on-one interviews
with consumers around the United States, we learned that financial well-being has four
elements. The first is having control over day-to-day
month-to-month finances, which means to comfortably meet ongoing obligations. Second, it means having the capacity to absorb
a financial shock. And people told us that that could be achieved
through a combination of savings, credit, insurance, and a safety net of family or friends. Third, it means being on track to meet to
meet financial goals — whatever they are for an individual. And fourth, having the financial freedom to
be able to make choices that allow you to enjoy life. And another way to think about that is that
financial well-being is the feeling of having financial security and financial freedom of
choice in the present and when looking toward the future. So I do want you to think about that definition
because that’s the heart of everything else I’m going to talk about — about measuring
the extent to which people have this. Okay. So because a person’s preferences and feelings
of security and freedom cannot be directly observed or captured using traditional financial
data, we needed to create a new tool to measure financial well-being that could account for
differences in consumer circumstances, life stage, and preferences. With the support of a number of experts and
using state-of-the art methods, we developed, tested, and validated a financial well-being
scale. A scale is made up of multiple questions that
can be scored to produce a single measure of something that cannot be directly observed,
such as an attitude or an ability. And a scale is therefore the natural choice
to measure the concept of financial well-being. These are the ten questions that make up the
financial well-being scale and they’re how we measured financial well-being in the national
survey. They can be scored to produce one number between
zero and 100. For the first six statements, the respondent
is asked how well does this statement describe you or your situation? And for the last four statements they’re asked
how often does this statement apply to you. You can see that these questions are a mix
of objective and subjective statements, like the statement giving a gift for a wedding,
birthday, or other occasion would put a strain on my finances for the month prompts people
to think really concretely about how much slack they have in their budget But the statement
I can enjoy life because of the way I’m managing my money prompts a deeply personal reflection
of what an individual values in their life and if they feel in control of their money. So these are simple questions that are relatively
easy to answer but along with the scoring procedure they provide a scientifically rigorous
way to make a distinction between people with different levels of financial well-being. And we’ll see in the survey results that it
really does do it — it really does distinguish between people with different levels of financial
well-being. With this new measurement tool in hand, we
set out to study the state of financial well-being in America and how other factors relate to
an individual’s level of financial well-being. We did this by conducting the National Financial
Well-Being Survey in late 2016. I’m going to just briefly describe the survey
methodology here. But if you want to know more, the report that
Irene linked to, Financial Well-Being in America describes the methodology in great detail
— particularly in Appendix C if you really want to get into the gory details. But the sample for the survey was drawn from
the GFK Knowledge Panel, which is designed to be nationally representative of US households. And in addition to the standard GFK Panel,
the survey drew upon GFKs knowledge of Panel Latino and the survey was offered in both
English and Spanish to ensure representation of Latino respondents. Nearly 6,400 people completed the survey,
which included both the CFPB Financial Well-Being Scale — those ten questions I just showed
you — and around 70 other measures of personal and situational factors that prior research
suggested may influence an individual’s financial well-being. Our prior research suggests that financial
well-being is likely determined by a combination of both the opportunities available to a person
and their own actions and behavior. So the additional measures included in the
survey were identified from this prior research, which is all available on our website as well
if you’re interested in the earlier phases, as well as from discussions with experts conducted
during this survey design phase. In our result on the survey results, we include
findings on financial well-being for all the measures and categories that you see in this
table on the screen right now. But for today’s presentation I’ll present
some high-level takeaways as well as a selection of findings for specific subgroups. The first finding I want to share is that
levels of financial well-being in America vary widely and reflect people’s underlying
financial circumstances. The graph you see here, the sort of colorful
rainbow graph at the top, is the distribution of financial well-being scores for all US
adults. I feel like I should have said ta-da, like
this is it — this is how financial well-being scores look in America. Especially for those of you who know about
the scale and may have used it and may have been curious what scores look like, this is
an interesting graphic. So the average financial well-being score
for American adults is 54. But that in no way represents the majority
experience. Rather, people’s level of financial well-being
varies widely. And as you can see about a third of people
have financial well-being scores below 50. About a third have scores between 50 and 60,
and about a third have scores above 60. And within these larger categories, a number
of people have scores at the very bottom of the distribution — below 40 — and a number
have scores above 70, which is the top of the distribution. What I really want to emphasize when you see
that is, this scale when we administer this is really helping us understand in a pretty
fine-grained way how financial well-being varies and people, you know, answer these
questions actually very differently. But what did these numbers really mean? Well, what we learned from the survey results
is that financial well-being scores reflect real differences in underlying financial circumstances. I’ll show you the details of this in the next
few slides, but to summarize, scores of 50 or below are associated with a high level
of probability of high difficulty making ends meet and even for paying for basic needs like
food, housing, or medical care. And nearly everyone with scores of 40 or below
experiences those struggles. In contrast, scores of 61 and above are associated
with quite low probability of having trouble paying for basic needs or making ends meet. And scores above 70 reflect nearly universal
financial security. What this finding suggests is that the financial
well-being scale is actually a practical measure for gauging how people are doing financially. This slide provides a visual of how clearly
the financial well-being scores is related to difficulty in making ends meet. As you can see, nearly everyone with scores
of 40 or below has difficulty covering expenses and paying their bills in a typical month. And this is true for about three quarters
of people with scores below 41 and 50 as well. I think if you hit the tab, some additional
information will appear. So these are the scores below 40. You can see that that’s roughly the same experience
41 to 50. It’s about three quarters of people in the
51 to 60 scores range, which is what the average American is experiencing. About 30% of people have trouble making ends
meet in a typical month. And this falls to less than 10% for scores
about 60 and to nearly zero for scores about 70. And just to make it easier, the dark greenish
blue bars are having difficulty making ends meet. And when it turns light is when you’re not- Right. Since the key is a little hard to read. Thanks. And overall, 43% of US adults reported struggling
to pay bills in a typical month, if you’re curious. We find a very similar pattern in the way
that financial well-being score tracks with experiencing material hardship, which means
significant financial struggles such as running out of food, not being able to afford a place
to live or medical treatment or having utilities turned off. So this is basically a more extreme version
of having trouble making ends meet. Again, the vast majority of people with financial
well-being scores of 40 or below have experienced material hardship in the past year, more than
half of people with scores between 41 and 50, and then just like before we see that
the incidence of these decline dramatically after 61 and virtually goes away after 70. And overall, about a third of all US adults
reported experiencing at least one of these forms of material hardship in the past year. Yes, next slide. So now that we have a sense that people have
very different levels of financial well-being, and that financial well-being roughly tracks
with people’s experiences or lack thereof with financial struggles, the next thing we
want to look at is what factors are associated with having higher or lower levels of financial
well-being. In the report we examine differences in financial
well-being by six categories of measures which I’m going to go through today. So I’m going to go through all of the categories
but not all of the measures. These descriptive findings provide insight
into which subgroups are faring relatively well and which ones are facing greater financial
challenges. All the findings I describe have been tested
for statistical significance and they highlight potential opportunities for both practice
and further research. owever, descriptive relationships between
various characteristics and financial well-being do not necessarily mean there’s a causal relationship. These factors could influence financial well-being. Financial well-being could influence these
factors or both of them may be influenced by some other third factor. So please keep in mind that when I present
these comparisons, we are not attempting to establish the causes or drivers of financial
well-being, but we very much look forward to future research that does that. And actually Gen, a related we did have one
question come in. Was a confident interval of predictability
based on this sample? Not entirely sure what that means. Okay. I guess to the respondent I would say pretty
much all of the technical details of the sample — the weighting, the distribution statistics,
et cetera — are in the report or we can email or talk after to make sure that I can directly
answer that question. Okay. Okay. So with that being said, our high-level takeaway
from looking at the distribution of financial well-being scores by a number of different
measures — we actually looked at it by about 50 different measures — is that while many
factors are clearly associate with financial well-being, no one factor determines it, which
is consistent with what we learned in our prior qualitative research with consumers. For the subgroups of people we examined for
this report — so subgroups means like within a category like income, the subgroups would
be the different income categories within income. That’s what I mean when I say subgroups. So it’s the different groups within any one
measure. So for the subgroups of people we examined
for this report, the average spread between the highest and lowest financial well-being
score is more than 30 points. I just point that out to say that there are
large differences, you know, when an individual is a member of a group that is a relative
disadvantage, they might still have a financial well-being score higher than in the relatively
more advantaged group. Not only do scores vary widely in the US overall,
there’s large distributions and a lot of variation even within subgroups. That’s really interesting to us because it
suggests that even when an individual is a member of a group that’s at a relative disadvantage,
there may be compensating factors or strategies that really do offer opportunities for these
individuals to boost their financial well-being. And I think that’s encouraging. And we’ll talk a little bit more about specific
examples of that at the end. So, let’s get into the details. For each category of measures in the report,
there’s a graphic like this one which shows how average financial well-being differs by
all the measures in that category — which in this case is individual characteristics. And it also shows how those subgroup averages
compare to the overall US average score as 54. We refer to this as the green lollipop graph. And it’s one of the two kinds of graphics
that I’ll teach you to read today and then I’ll go through a bunch. Right. And once you get the hang of the green lollipops,
it’ll make sense. When you first look at it, it’s a little daunting
but- Right. -it’s actually kind of a neat way to portray
this data. It gives you a sense both of how much different
subgroups differ from the overall average and then just a quick visual sense of which
measures are kind of creating kind of strong differences in average financial well-being
scores because you can see how far apart are the green lollipops in any one category. Ehat we find in this area is that among all
of the individual characteristics, financial well-being seems to be most strongly associated
with education followed by age and physical health — which is really interesting. Can you explain what the bolded ones are ones
you’re going to go into more- Absolutely, yes. Okay. Thank you. So when we do each of these overview slides
for categories, the ones that are bolded are the ones we’re going to do a deeper dive on
the findings of. But I want you to know all of the characteristics
that are in the report in case they pique your interest and then you think Gen didn’t
cover that. But I can get the details if I go to the report. Thanks. Drilling down on education, as you might expect
the more education someone has, the higher their financial well-being tends to be. Adults with less than a high school degree
have an average financial well-being score of 48 — which as you may remember means they
face a very high probability of having difficulty of making ends meet. By contrast, those with a graduate or a professional
degree have an average financial well-being score of 61, which falls into the score range
where most people are financially secure. And so, I’m not going to reiterate this on
every slide we do, but I want to get us in the mindset that the difference between 48
and 61 is very significant. And I don’t mean that – it is statistically
significant, but that’s not what I mean, I guess I mean economically significant, materially
significant. If you remember back to what I showed you
about the economic circumstances that people are experiencing when they get a score below
50 versus over 60, they’re quite different. So I just want to emphasize that this is a
big difference. And so the graphic that you see here is the
other kind of visual apart from that green lollipop image that I showed on the previous
slide that we use to present results from the survey. So I’m going to just walk you through how
to read it this one time and then you’ll see this graph again a bunch of times. So for each subgroup of people defined by
the measure — in this case, for people with differing levels of educational attainment
— the light gray line, which is, you know, the widest bar you see, shows the 10th and
the 90th percentile scores. Which means that 80% of all of the people
in that subgroup have financial well-being scores that fall within that long, light gray
line. So the vast majority of people, 80% of all
people in that category, have scores between those two points that’s the 10th and the 90th
percentile. The dark gray line is the 25th and 70th percentile
scores, which means that half of all people in that subgroup have financial well-being
scores along the dark gray line. And the black line in the middle is the average
score for the group. So we find this visual very useful as a way
to demonstrate how widely scores vary within subgroups — and there are differences in
that in different measures — and also how people in subgroups at a relative disadvantage
can have financial well-being scores higher than those in relatively more advantaged groups
and vice versa. The less overlap we see among subgroups, the
more strongly the measure may be related to financial well-being. . Next we find that an older a person is, the
higher their financial well-being tends to be. On average, adults ages 34 and younger tend
to have the lowest financial well-being with an average score of 51, while adults 65 and
older have the highest financial well-being, at scores similar to what we saw with adults
with graduate or professional degrees. However, there is wide variation in the level
of financial well-being within all age groups showing that people can have relatively high
or low financial well-being at any age. Could be for many factors which we – if you’re
interested in some of our ruminating on why this could be and some of the potential factors,
we go into that in more detail in the report. But in the interest of time, I will not do
that on each of these slides. Irene is looking grateful. Okay. So let’s move on to household and family characteristics. This section includes all the measures that
you see here, which obviously are both kind of measures more about the household and measures
about the family structure. And also census region, which is where is
the household located. The largest differences in financial well-being
that we see in this area are related to how satisfied people are with the place they live
and whether they own or rent their home. The other things are sort of more modest differences. And interestingly, the findings by census
region at least are no difference by census region but that could be because census regions
are large so they hide a lot of variation within them. This graphic shows you that adults who report
that they are very satisfied with the place they live have an average financial well-being
score of 60. Which is ten points higher than for those
who reported being less than very satisfied. And home owners have an average financial
well-being of 58. Higher than both renters and those who neither
rent nor own. While it’s possible that owning a home enhances
financial well-being, it’s also possible that those who are able to purchase a home are
in a stronger financial position than those who are not, and that those factors are also
associated with higher levels of financial well-being. And I just want to say one thing. We didn’t actually say a whole lot about the
green lollipops, but the line down the middle is the US average. If your green lollipop is going to the right,
you can see how long the lollipop stick is. That means you’re better off. You have a 60 for the very satisfied with
housing. The green lollipop’s pointing to the left, means you’re worse off than the
average. Absolutely. So next we look at financial well-being by
a number of income and employment characteristics. Among the characteristics examined in this
category, financial well-being seems to be most strongly associated with employment status,
household income, and the relationship of that income to federal poverty thresholds. And that’s consistent with our qualitative
research in which consumers described good employment and the ability to pay bills and
afford wants as being important for their ability to achieve higher levels of financial
well-being. So overall, retired adults in the US have
the highest financial well-being of any employment category, with an average of 60, which is
consistent with our findings that older adults have higher average financial well-being. Then, adults who are homemakers, self-employed,
and employed part-time or full-time have an average financial well-being score of 54,
which is equivalent to the national average. And students have an average of 51, which
again may be related to being relatively younger. And financial well-being tends to be the lowest
for adults who are unemployed or laid off and sick or disabled. So then as you would expect, individuals with
higher household incomes do have on average higher levels of financial well-being. Average financial well-being for those with
incomes under $20,000 is 46, rising to 60 for those with incomes of $100,000 or more. However, despite the differences in averages,
all of the household income levels have a lot of variation within them and overlap substantially,
which suggests that factors other than income are also in play in determining one’s level
of financial well-being. So there’s really a lot of wide distribution
and a lot of overlap that you can see on this graph, which is really interesting. But it’s also important to note that the overlap
in distributions between the lowest two income groups and the highest income group is still
quite low, which suggests it may be extremely difficult for individuals with very low household
incomes to achieve the highest levels of financial well-being, given the other barriers they
face. So we certainly want to acknowledge that while
also noting that it’s very interesting that clearly income alone is not explaining financial
well-being here. Okay. And so the next category we look at differences
in financial well-being based on the savings, insurance, and other safety nets that people
have developed or otherwise have access to. And we find that differences in average financial
well-being are largest based on the level of liquid savings people have and on their
ability to absorb an unexpected $2,000 expense. We define liquid savings as total savings
held in cash, checking, and savings accounts. And at the lowest savings level, adults with
less than $250.00 in liquid savings have an average financial well-being score of 41 compared
to 68 for those with 75,000 or more in savings. This 26-point difference is the largest difference
in financial well-being observed across any factor in our report. So I do want to emphasize of all 50 measures,
this one in particular has the widest difference in average financial well-being scores and
also has much less overlap than most. As you can see, the distributions are narrower
and overlap much less for liquid savings, for example, than they did for income, which
is really interesting. And there’s similarly a strong positive relationship
between financial well-being and the ability to absorb an unexpected expense, which we
define as certainty in your ability to come up with $2,000 in 30 days Adults who are certain
they could come up with the money have an average financial well-being score of 62,
which is 23 points higher than for those who are certain they could not. And as was true for the liquid savings, there
are kind of narrower distributions around these and less overlap. And it really is interesting to compare those
with the results for income and the fact that these groups have relatively less variation
and overlap than income suggests that financial cushions may be more closely tied to financial
well-being than income is. And while these patterns are purely descriptive,
they are consistent with our earlier research which suggested that savings are fundamental
to feelings of financial security. That’s what people told us. And also that income, while important, does
not fully capture all of the elements of financial well-being. The
next thing we look at is you’ll see this is a long list. There are a whole range of things that we
were really interested in that we group under this umbrella category of financial experiences. So that includes lots of things, but among
them – and you can see the whole list there. And if any of those are particularly dear
to your work, please feel free to check out the details in the report. But among them, the largest differences that
we found were based on whether an individual had been turned down for credit, if they had
been contacted by a debt collector, or if they had used non-bank short term credit products. And I do want to note that all three of these
measures may be associated with the conditions and constraints of living with limited financial
resources. So it’s not like those are hugely shocking. But it’s interesting to see the details of
how those scores distribute. To drill down a little bit more, you can see
that the average financial well-being score for adults who indicated they had been turned
down for credit and those who had been contacted by a debt collector are both 43, interestingly. This actually maybe begs some questions about
to what extent are these the same people. I actually have not done that analysis, but
this was kind of striking that at the low end, that’s pretty low. And then by comparison people who had had
neither of these experiences had financial well-being slightly above average. And when we look at financial well-being by
financial product use, we see that adults who have a checking or savings account do
have higher financial well-being — 56 –than people who don’t. Adults who reported using non-bank short-term
credit such as payday loan, pawn loan, or auto title loan over the prior 12 months have
average financial well-being of 42 compared to 55 for adults who did not use that type
of credit. And users of non-bank transaction products
like reloadable debit cards, check cashing products or services, or remittance products
or services, have an average financial well-being score six points lower than adults who did
not use such services. But it’s really interesting that – I won’t
get into it now because I know I don’t have the visual, but for those of you who are interested
in this topic in particular we discuss how the overlap and the distribution is actually
quite different for each of these products, suggesting that some of them might have a
closer relationship to financial well-being than others. So I encourage you to check that out in the
report if this topic is of interest to you. The last category or the last financial experience
measures I want to flag which I think are really interesting are looking at a couple
other types of financial experiences. One is that consumers who have financial services
experiences where they felt mistreated or not respected on average have lower financial
well-being than consumers who do not have those experiences. And then because we have a lot of financial
educators obviously in the group, I thought I would mention that we find that learning
positive money management norms and skills while growing up — which is also known as
financial socialization — does appear to be associated with higher financial well-being
in adulthood. These experiences include having families
that talked with them about money management practices or provided them with an allowance
to manage or a savings account of their own. So if you are someone who studies or works
on issues related to youth financial socialization, there’s some more good information to dig
into around that. The final category of results is one that
is likely to be of particular interest to this group. This is how we look at how financial well-being
scores vary by what people know, do, and believe about money management and find the differences
in average financial well-being are largest based on confidence in your ability to achieve
a financial goal — otherwise known as self-efficacy — by people who have a habit of saving, people
who have effective day-to-day money management habits, and also people’s level of financial
skill. Tthe first thing I want to point out about
this is that you can see the differences in average financial well-being based on these
three measures — financial confidence, having a habit of savings and, and engaging in effective
day-to-day money management behaviors — are among some of the largest we find for any
measures. I guess I haven’t shown you many of the measures
that have smaller ones. I’ve only shown you the ones that are relatively
large. But these are essentially on par with some
of these other major ones that you would expect around income, employment status, et cetera. So I think that’s really interesting that
the basic magnitude we’re seeing here is actually really similar to some of the other largest
ones. But I do think it’s important to acknowledge
that several of these practices that we’re looking at — for example, paying bills on
time and paying off credit card balances in full, which are two of the things that go
into the effective day-to-day money management behaviors measure — obviously those are dependent
upon people having enough money to make those behaviors possible. And finally, we find that both factual financial
knowledge and financial skill are associated with financial well-being, though the relationship
with financial skill appears to be stronger. Our earlier research defined financial skill
as knowing how to find, process, and figure out how to act on financial information. And in our earlier work, we actually created
a ten-item scale to measure that. So in the survey and in our report, we measure
financial knowledge using a ten-item financial knowledge scale. We measure financial skill using a ten-item
financial skills scale that we have previously developed. And those are different from the overall financial
well-being scale, just to be clear. Those are totally different scales, yes. They all happen to have ten questions but- They all happen to have to have- They are not interchangeable. Right. No, they’re different constructs. Financial knowledge is literally asking people
to, you know, answer multiple choice factual questions. Financial skill is getting much more at people’s
kind of comfort with finding and processing and getting themselves to act on financial
information. And of course financial well-being scale you’re
familiar with. So they’re different constructs and different
scales. Thank you, Irene. We find a seven-point financial well-being
gap between adults with higher and lower levels of financial knowledge and a larger — 11-point
difference — in average financial well-being scores for adults with higher versus lower
levels of financial skill. That’s our high-level takeaways and a selection
of results. But I think the final reflection I want to
say before we talk about some of the tools and resources that we hope can be of use to
you all in your work is to kind of reflect on the key implications for the practice of
financial education and financial capability programming that to us comes out of these
result that we presented. First of all, we find it really encouraging
for our field that many of the characteristics that appear to be most associated with financial
well-being are in fact already the explicit target of a wide range of financial capability
programs and policies — which suggest to us that at a high-level, the financial capability
field in on the right track. And these findings include that the strongest
relationship to financial well-being appear to be related to savings and safety nets. That’s something that is obviously very much
the focus of much of our programming as a field. That certain experiences with debt and credit
seem to be strongly and negatively associated with financial well-being. There are whole major subsets of our field
and whole industries that are working on this issue — helping people improve their credit
experiences. And also that many of the strongest positive
relationship with financial well-being correspond to financial attitudes, behaviors, and skills. And what we also find exciting about that
last finding and I want to relate it to we probably had a – we did have a webinar this
summer, so maybe some of you heard it, but we recently put out a report on five principles
for effective financial education, which is really a synthesis and compendium of what
strategies, you know, have really been shown to improve financial decision making and financial
outcomes. So the fact that it appears that these things
like financial attitudes, behaviors, and skills are strongly associated with financial well-being
— and separately we actually know that there is a growing body of evidence on strategies
that are effective to move the needle on that — those two facts together we find very encouraging. But of course, more research is needed on
what really drives financial well-being and innovative approaches which involves all of
us and you kind of innovating and measuring and testing and sharing information on ways
to improve it. So with that being said, I just want to talk
about a few resources that we have that can hopefully support you either as practitioners
or researchers or intermediaries or policy makers. These first two are really tools that we think
that financial educators can use to kind of hopefully take inspiration from some of our
findings like I was saying and think about using these five principles for effective
financial education and the evidence-based strategies in that report to kind of move
forward around a lot of these characteristics that seem to be associated with financial
well-being. And then to pivot to what you see on the right-hand
side, of course all of you no matter what your line of work you can use the financial
well-being scale as a way to understand how clients or consumers are doing and also how
these innovative approaches are working. So the kind of combination of here are some
ideas about what folks can do and here’s how we can measure it and communicate it to each
other in a consistent way we hope can be of use. And we would really love to learn from you. If anybody is doing anything along those lines,
we want to hear about it. The next resource is something really neat
that Irene and I were sort of tangentially involved in but we give way more credit to
other colleagues for is the creation of the interactive tool for consumers which allows
them to answer the financial well-being scale questions themselves. This is what it looks like. It’s on our website. It’s a consumer tool on our website. The URL is there. Here’s a screenshot of what you first see. And so basically it includes all ten items
in the financial well-being scale. And you just click through and answer it. And after you answer it then you get your
score immediately. It shows to you in this kind of same color
spectrum as what you saw how we presented the results from the national survey. But it tells you how you’re doing. It shows you what the average score is and
gives you a little bit of feedback based on those colors about sort of what we know about
the more normative meaning of these score bands. And I just wanted to remind you that that’s
what Gen said early on — which is that when your score is under 50 you’re probably having
a lot of – your consumers are probably having a lot of material hardship. If the score is over 60, they’re probably
in better shape. So those colors are meant to give people the
subtle suggestion that over 50 is better and over 60 is even better. Right. And over 70 is really great. Right. Exactly. And so people can get their score right away,
see it on this. They then the next piece of information they
get or the next opportunity they have is to take next steps if they’re interested. So it kind of asks them if they have a sense
of what financial issues they’d like to work on, then they can get started on their own
with a bunch of specific resources we have. Or if they would like to get some more personalized
help on what to do next, then there are some suggestions and resources about how they can
do that. And then the final thing on here is that if
they want to, they can see how their score compares to national averages cut a few different
ways. So they’re told upfront how their score compares
to the overall average, but a lot of people are more interested in how they compare to
people that they think are more like them. So you can see how your score compares using
the national survey data based on age, household income, or employment status. So that’s a really neat tool that you can
either encourage people to use on their own or you can play around with or if you are
a practitioner and you’re interested, you could even have your clients go do this, fill
it out ahead of time and then kind of save or print their results and bring it in to
discuss with you. So those are just some ideas about ways that
could be used by practitioners. Right. And Irene, do you want to say more about this
tool? Just quickly I just want to note for any of
you who have used this scale with clients — and I know quite a few people have out
in the field — this is the first place where you can get the scoring done automatically. When you do it on paper, you have to use the
scoring lookup chart, which is a little cumbersome. But this will actually pop out the score using
that lookup table without you having to do that. So that may be something even if you were
using the scale and just want to go to this, site, you can actually do the scoring online
very simply. And the other thing I just want to note is
that during the development of this, folks involved in this — Gen, myself, and many
others as well — did informal user testing with both consumers but also with financial
educators. I asked a number of financial educators at
different FinEx meetings we had about some of the different ways to show these results
and got really great feedback. If anybody on the phone was part of those,
thank you very much. And we really learned a lot about that some
consumers want to know how they compare to others and some don’t. And so we tried to create the option to just
get your score in a fairly neutral way just with color but not making it too blunt about,
you’re doing really badly. But give people some feedback. Some people actually wanted much more comparison. And so you could dig deeper and see comparisons. So we tried to accommodate the different desires
for types of feedback that we heard from financial educators, which was really helpful. And I think we’ll kind of continue to refine
this over time. So the one other thing that I just to let
you know for those of you who are heavy data users, we also did release a public use data
file from the survey. So if you are interested in asking all of
your specific questions and honestly advance this knowledge base, please do. We can’t run every single question ourselves
on this data, so we really hope that the public use file, which has over 200 variables, not
only does it have more individual questions, but it also has scale scores already in it
— the financial well-being scale score, financial knowledge scale score, financial skill scale
score. So you don’t have to do any scoring. That’s already in there for you and you can
just start playing around with the data. So the URL is here. There are all the stub codes to read it into
your favorite software package and user guide and code book. So I hope that’s of interest to some of you. Right. I’m going to say one more thing about the
consumer tool because I received a couple of questions related to this. So this tool, this is not a data collection
tool. Yes. This will give you your score when you take
the test. As soon as you leave that page, it’s gone. We are not collecting this. Yes. We are not collecting it for the person. If they come back, they have to do it again. If they want to keep their score, they would
have to print it out or write it down. So we can’t aggregate. They can save a PDF. They can print it or they can write it down. But we are not- We don’t keep this data. Right. So, many reasons for that, but anyone using
this, you’re going to have to collect it separately your own way, but at least you can get it
scored. And of course for any consumer who just wants
to come on their own can look at this and look at the tools that it connects to. But it is not a data collection tool. It is simple automated scoring but also consumer
information about well-being. And one I’ll just note too is some of the
consumers who actually tested it for us said they expected some kind of customized advice,
right? This scale does not collect your credit score,
your income. It’s not going to tell you you have too much
debt. You should reduce your debt. It’s about how you feel about your finances. And so we try to message that. We’re not showing you some of the sub screens. But we try to message that this is not a Robo
Advisor, right? This is meant to help you see how your own
feelings about your financial situation, how you answered those questions, relate more
broadly and then some tools that may help you depending on your situation. But it is not customized. So any educator using this of course would
be doing that in their own counseling sessions or financial education. But we want to make sure that consumers know
that this is not that. This is going to give them kind of more general
ideas on how they can improve their finances but not things tailored specifically to their
situation- Right. -because we’re not collecting their financial
situation. And that’s also why we try to tell them that
if they do need that more personalized help, what type of professionals can help them with
that. Right. So I will just go to our final resources slide. Again, we’ve put up the Well-Being in America
Report URL. It’s also pretty easy to find on our website
— the consumer tool — our general website for our financial education materials. Again, I encourage you to sign up for FinEx
if you haven’t. So we have a little bit of time of questions. I know this is a lot of data. I personally think for a couple years we’ve
been or over a year talking about the scale with practitioners and people say it’s really
neat, but we don’t know what it means. I think we finally know a little bit about
what it means now and about at least an early cut of what factors matter. Yes. And as you’ve said, things like savings and
financial confidence and things that our field can actually do something about, which I think
is really terrific and gives us a lot to think about as a field. So I hope that this data is useful, and we
would love to hear from all of you as you move forward in your work and we do as well. As we do more analysis of this data or if
you do or you’re using the scale, we definitely want to hear about all that. So let’s open up for questions now. Again, you can continue to put them in the
Q&A box. And Operator, can you also give us the instructions
on voice questions, please? Thank you. At this time if you’d like to ask a question,
please press Star 1. You will be prompted to record your name. Once again to ask a question, please press
Star 1. One moment please. Great. So while we’re waiting for any voice questions,
we have another email question here through the Q&A box which is please let us know if
there are state-specific results. Yes, and sadly there are not. The sample size does not allow for state level
sampling. It would be wonderful to have it. These findings are representative of the US
as a whole as opposed down to the census region. Region? Region, right. The four census regions. Right. So census regions are not census tracks. Census regions are- Are big. -essentially a quarter of the country. A quarter of the country. Exactly. Not census tracks- Yes. -which are- Which are very small. -a few blocks. Right, exactly. Yes. So yes, we didn’t do a large enough sample
size to do state specific. Yes. Great. Operator, do we have any voice questions? At this time there are no questions. Once again to ask a question, please press
Star 1. I think people are still processing what a
green lollipop really means. I do have one question now. Great. (Ray Johnson), you may ask your question. ‘Thank you. Is any of this work – all of this work is
focused on consumer. Have you had companies approach you and say
I’m trying to help my employees. You have amazing tools at your disposal. How can I use them, access them, modify them
to understand how to best help my population improve their financial wellness? I think the short answer to that is yes, but
Irene and I are not the team that would be interfacing with those folks. So what I would love to say is we have colleagues
who would love to hear from you, if that’s your interest. We have a workplace financial wellness sort
of team within Fin Ed that Irene and I are not on. And I believe the answer to your question
is yes but I’d love to connect you with those folks for a better and more helpful answer. Right. And I mean just generally certainly there
are I think employers in work places who are using our tools generally. And many of them do connect well to different
aspects of well-being and financial capability. You know, we have tools on retirement and
on savings and owning a home and buying a car and things like that. We do also – again, this is a scale that is
available for anyone to use. It is free. It is a resource for all of you. And we do know of quite a few organizations,
including some employers that have tried using it or started to use it. We are – I particularly am reaching out to
practitioners and others to understand how different practitioners are using this. To some degree, that would include employers
and financial institutions. So I
think we’ll know more about that over time. Again to ask a question please press Star
1. Great. Well we’re almost at time. So I hope that this has been useful and we’ll
still if there’s one more – we’ll check once more for voice questions before we sign off
completely. But I do think there’s a lot of things in
here that the financial education field has just has only just come out. We have to start chewing this over and thinking
about what it all means for the work we do. I do think – I hope this will make the scale
a more practical resource for practitioners. Yes. Because I know those who have been using it
— and there are quite a few people in different types of financial education programs who
have been experimenting and trying out the scale. And I know that as I think I mentioned earlier,
a lot of people say I like it but we don’t really know what these numbers mean yet. And now I think this data really does give
us a lot of information about what national averages are, about what the score is related
to different characteristics, different demographic groups. So we’re beginning to have more of a sense
of what it means. Lots more work to be done of course, but I’m
hoping this will give people more of sort of a framework in which to fit any use of
the scale that they’re doing with their own programs. Right. And to reiterate, if you’re using the scale
in research, if you’re using it as a practitioner, if you’re using it as an employer and you
haven’t already told us about it, please do. Irene and I would love to hear about it. Yes. And again, you can always email that FinEx
email address. I check it multiple times a day. And I am trying to work with practitioners
around the country to figure out what people are learning in using the scale. And we’ll start to really figure out how these
results relate to that. And we’re right at 3:00 so we will wind up
now. So thank you very much Gen for walking us
through all of this very complicated in I think a very accessible way. Again, it’s all available on our report online
along with the consumer tool. So I encourage everyone to take a look at
that. I forgot to mention earlier if anybody wants
a copy of the PowerPoint, please send an email to the FinEx box [email protected] and I
will happily send that PowerPoint out to you so that you can look it over at your leisure. So thank you very much everybody. We’re thrilled you all joined us. And we look forward to having many of you
join us on our next FinEx webinar in November. Thank you very much. Thanks everyone. Have a great day. This concludes today’s conference. Participants may now disconnect.

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