The Consumer Financial Protection Bureau1 (CFPB) is a regulatory agency charged with overseeing financial products and services that are offered to consumers. The CFPB protects consumers from unfair, deceptive, or abusive practices and takes action against companies that break the law. The CFPB arm people with the information, steps, and tools that they need to make smart financial decisions. Jay Harold’s new post, “Take the Test: 90% with Scores between 11 & 30 Catch Hell,” talks about the difficult financial position of Americans today.
The real median income in 2016 of nonHispanic White ($65,041), Black ($39,490), and Hispanic-origin ($47,675) households increased 2.0 percent, 5.7 percent, and 4.3 percent, respectively, between 2015 and 2016 according to a September 2017 Census Report2.
CFPB research3 suggests that financial well-being is determined by the combination of the opportunities available to a person and their own actions and behavior. One’s social and economic environment can expand or limit a person’s opportunities. Available opportunities, including access to jobs, benefits, sufficient income, and family resources likely play a major role a person’s financial well-being. Furthermore, consumers with low or volatile incomes are less likely to have access to financial products and services that meet their needs and could contribute to their financial stability. Financial behaviors can also be influenced by personality, attitudes, knowledge, and skills, as well as the context in which a decision is made.
Below is the September 26, 2017 press release announcing the results on a national survey and a new online financial tool.
WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) released the results of a first-of-its-kind national survey on the financial well-being of U.S. consumers that showed that more than 40 percent of U.S. adults struggle to make ends meet. The survey provides measurements and insights on the financial well-being of specific groups of consumers as well as the population as a whole. In addition to the survey, the Bureau also released an interactive online tool allowing consumers to measure their level of financial well-being.
“These survey results are beginning to measure and examine the financial well-being of consumers,” said CFPB Director Richard Cordray. “And the new tool we are releasing allows consumers to measure their own financial well-being and helps them take better control of their financial futures.”
National Financial Well-Being Survey4
The National Financial Well-Being Survey was conducted by the CFPB in 2016. Using the 10 question scale developed by the CFPB, the survey provides the first-ever national data directly measuring the financial well-being of U.S. consumers. Upon answering the 10 questions provided, consumers were given a score from 0-100. In the survey, the average consumer score was 54. The consumer sample used to conduct the survey was designed to be representative of U.S. households. In addition to responding to the questions which are included in the financial well-being scale, people participating in the survey answered questions about a host of other measures. These measures include individual, household, and family characteristics; income and employment; savings and safety nets; financial experiences; and money behaviors, skills, and attitudes. Major findings from the report include:
- More than 40 percent of adults report struggling to make ends meet: Of the nationally representative sample of consumers surveyed, 43 percent of consumers report struggling to pay bills. Additionally, over one third—34 percent—of all consumers surveyed reported experiencing material hardships in the past year. For the survey, examples of material hardships include running out of food, not being able to afford a place to live, or lacking the money to seek medical treatment.
- Certain financial and demographic characteristics are associated with financial well-being: Educational attainment, income, and employment status all appear to have a strong relationship with financial well-being. Additionally, the survey showed that financial well-being is higher for older adults, especially those aged 65 and older, whose average score was 61. On the other end of the spectrum, younger adults, those 34 and younger, tended to have the lowest financial well-being score with an average of 51.
Financial Well-Being Tool
The CFPB is also releasing an interactive online tool to enable people to evaluate their own financial well-being and explore ways to take control of their finances. This new tool is based on the CFPB Financial Well-Being Scale, which was released in 2015 for use by financial education professionals working with consumers. The tool allows consumers to use the financial well-being scale themselves, and see their resulting financial well-being score online. Consumers can track their financial well-being score over time, or see how they compare to other consumers nationally, including by income, age, and employment status. Additionally, consumers can access CFPB resources to help take control of their finances and make progress towards financial goals, and find free or low-cost help from financial professionals.
Here’s how it works:
Answer the questions and get your score. You won’t be asked about any personal financial data—it’s not that kind of questionnaire. See how and why we developed it.
Review steps you can take if you want to be able to answer the questions differently.
See how your score compares to other U.S. adults from our national survey.
Part 1: How well does this statement describe you or your situation?
Part 2: How often does this statement apply to you?
Go to https://www.consumerfinance.gov/consumer-tools/financial-well-being/ to take the test.
Educational attainment, income, and employment status all appear to have a strong relationship with financial well-being. Additionally, the survey showed that financial well-being is higher for older adults, especially those aged 65 and older, whose average score was 61. On the other end of the spectrum, younger adults, those 34 and younger, tended to have the lowest financial well-being score with an average of 51.
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- https://www.census.gov/content/dam/Census/library/publications/2017/demo/P60-259.pdf Pg. 7
- https://files.consumerfinance.gov/f/documents/201709_cfpb_financial-well-being-in-America.pdf Pg. 20