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New Financial Tool Helps Measure Financial Well-Being

New Financial Tool Helps Measure Financial Well-Being - The Beacon


By: Jackie

New Financial Tool Helps Measure Financial Well-Being

With 2016 fast approaching, it will soon be time to make New Year’s resolutions. Many of our resolutions are related to our financial situation, such as saving more or cutting down on our spending. Your BBB® has learned that the Consumer Financial Protection Bureau (CFPB) has just released a new tool to help financial educators and consumers measure their financial well-being.

In the Press Release announcing the new tool, Richard Cordray, the CFPB Director commented, “A key part of our mission is providing resources that aid and empower people to lead stable and healthy financial lives. Our financial well-being tool will give financial educators an important means by which to evaluate and support consumers’ financial health.” The Press Release further explains that in the past, there has not been a way to quantify a consumer’s financial well-being, but this new tool makes that possible.

To measure a person’s financial well-being, the tool is made up of 10 questions built around these four elements:

*Financial security in the present – whether consumers feel they have control over day-to-day and month-to-month finances

*Financial security in the future – whether consumers feel they have the capacity to recover from an unexpected financial shock

*Present financial freedom of choice – whether consumers feel they have the ability to make choices that will allow them to enjoy life

*Future financial freedom of choice – whether consumers feel they can meet their long-term financial goals.

The guide to using the CFPB Financial Well-Being Scale describes it as “A measurement tool developed using state-of-the-art techniques, including cognitive interviewing and testing to ensure accurate comprehension of questions. The scale is a highly reliable and valid measure of the financial well-being construct based on multiple waves of quantitative testing.” The tool can also be used to assess a consumer’s current state of financial well-being, to track their progress over time, and to understand how other factors, including program interventions, affect financial well-being.

A copy of the financial well-being guide can be found at

For more information you can trust, visit

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Jackie is the Operations and Education Foundation Assistant with the BBB. She assists consumers with business inquiries, and does presentations to senior groups and high school students. She is a regular contributor to the blog.