New CFPB tool helps measure financial well-being

December 15, 2015

WASHINGTON (12/15/15)--Financial educators and others who work on building financial capability can help consumers measure their financial well-being with a new tool released by the Consumer Financial Protection Bureau (CFPB).

Billed as a “first-of-its-kind” tool by the bureau, it uses the same measurements used by financial professionals to accurately and consistently quantify financial well-being.

The new tool is comprised of 10 questions that financial educators can use when working with clients to measure their financial security and overall sense of financial well-being. The questions that make up the scale are built around the four elements of financial well-being that were published in a January 2015 CFPB report.

The four elements are: financial security in the present; financial security in the future; present financial freedom of choice; and future financial freedom of choice.

According to the CFPB, financial educators can use the scale in a variety of ways:

  • As an initial assessment when a financial educator first begins working with a consumer, and help guide an initial conversation about the consumer’s financial situation;
  • At different intervals to track a consumer’s financial well-being over time. Changes in answers to certain questions can provide additional insights to how a consumer’s financial well-being is evolving;
  • To gauge how well a program is improving the financial well-being of the individuals it is designed to serve; and
  • To use in survey research to analyze the relationship between financial well-being and other factors.