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EXPLORING FINANCIAL WELLBEING IN THE AUSTRALIAN CONTEXT Appendices to Final Report
APPENDICES September, 2017
Muir, K., Hamilton, M., Noone, J.H., Marjolin, A, Salignac, F., & Saunders, P. (2017). Exploring Financial Wellbeing in the Australian Context. Centre for Social Impact & Social Policy Research Centre – University of New South Wales Sydney, for Financial Literacy Australia
Exploring Financial Wellbeing in the Australian Context
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Table of Contents APPENDIXA:RESEARCHMETHODS...........................................................................................3
SCOPINGREVIEW...............................................................................................................................3QUALITATIVERESEARCH......................................................................................................................3QUANTITATIVERESEARCH....................................................................................................................6STAKEHOLDERCONSULTATIONS.............................................................................................................7PROJECTSTEERINGGROUP..................................................................................................................7
APPENDIXB:HOWISFINANCIALWELLBEINGMEASUREDINTHELITERATURE?.........................8
CONSUMERFINANCIALPROTECTIONBUREAUFINANCIALWELLBEINGSCALE.................................................8MOMENTUMUKINDEXOFFINANCIALWELLNESS....................................................................................8NORWEGIANSTUDYOFFINANCIALWELLBEING........................................................................................9
APPENDIXC:DIMENSIONS,SUB-DIMENSIONSANDSURVEYITEMSFORFINANCIALWELLBEING
ANDTHEPROPOSEDINFLUENCERSOFFINANCIALWELLBEING................................................10
APPENDIXD:HOWTHEMODELOFFINANCIALWELLBEINGWASDEVELOPED..........................23
PRELIMINARYMODEL........................................................................................................................23TESTINGANDREFININGTHEPRELIMINARYMODEL...................................................................................24SCORINGFORTHEFINALMODEL..........................................................................................................26
APPENDIXE:DESCRIPTIVESTATISTICS.....................................................................................27
APPENDIXF:BIVARIATECORRELATIONS..................................................................................29
APPENDIXG:REGRESSIONANALYSIS.......................................................................................30
APPENDIXH:TOWARDSAMEASUREMENTSYSTEMFORFINANCIALWELLBEING....................35
OBJECTIVITYANDSUBJECTIVITY...........................................................................................................35TIMEDIMENSION–NOWVERSUSTHEFUTURE.......................................................................................36FUTUREDIRECTIONS.........................................................................................................................36
REFERENCES............................................................................................................................38
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List of Tables Table1:Characteristicsoftheone-on-oneinterviewparticipants.............................................4Table2:Financialwellbeingdimensions..................................................................................10Table3:Sub-dimensionsandcorrespondingsurveyitemsfordimension1..............................10Table4:Sub-dimensionsandcorrespondingsurveyitemsfordimension2..............................11Table5:Sub-dimensionsandcorrespondingsurveyitemsfordimension3..............................11Table6:Influencersoffinancialwellbeing...............................................................................12Table7:Preliminaryconceptualmodeloffinancialwellbeing..................................................24Table8:Rotatedfactorloadingsforpreliminarymodel...........................................................25Table9:Factorloadingsforfinalmodel...................................................................................26Table10:Descriptivestatisticsforcontinuousvariables..........................................................27Table11:Descriptivestatisticsforcategoricalvariables..........................................................28Table12:Correlationsbetweenstudyvariables.......................................................................29Table13:Overallfinancialwellbeingregressedonthestudyvariables....................................31Table14:Feelingfinanciallysecureregressedonthestudyvariables......................................32Table15:Beingincontrolregressedonthestudyvariables.....................................................33Table16:Meetingexpensesregressedonthestudyvariables.................................................34
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APPENDIX A: RESEARCH METHODS
Scoping review
Ascopingreviewofexistingresearchandevidencerelatingtofinancialwellbeing,
financial stress and financial resilience, enabled us to critically analyse how
financialwellbeingiscurrentlydefinedandmeasured,toidentifykeyfactorsthat
influence itandto identifygaps incurrentunderstanding.Usingthereviewwe
developed a preliminary conceptual framework of financialwellbeing thatwas
subsequently tested in the qualitative and quantitative research phases.More
than 80 articles and reportswere identified in the scoping review. The review
identifiedthreemajorgapsintheliterature:
• Limited reference to the broader societal or structural factors thatinfluencefinancialwellbeing.Muchoftheexistingresearchexcludesthe
influenceofstructuralfactorssuchasglobalfinancialmarkets,government
policy,andnationaleconomyonfinancialwellbeing.Instead,theprimary
focusisontheindividual.
• Alackoffocusonfinancialwellbeingacrossthelifecourse:Whilemany
studies acknowledge that aspects of financial wellbeing can interactaccording toageand life stages, few studieshave conceptualised these
relationshipsacrossthelifecourse.Variouslifeevents,suchasmovingout
ofhome,purchasingahome,childrearingandcaringforolderparents,can
occur atdiscreet life stages. Yet all these life events arehighly likely to
influencefinancialwellbeing.Alifecourseperspectiveaccountsforboth
chronologicaltimeandlifeeventsandtheiralignment[1].
• Ambiguity in definitions: There is limited agreement on how financial
wellbeing is defined and measured [2]. For example, while one study
conceptualisesfinancialbehaviourasanintegralpartoffinancialwellbeing
[seeforexample,3],anotherconsidersitasanexternalinfluence[seefor
example,4].Thelackofclarityaroundwhetherfactorsactasantecedents,
components or outcomesof financialwellbeing, hinders the theoretical
developmentandapplicationofarobustfinancialwellbeingframework.
Qualitative research
Focusgroupsandone-on-oneinterviewswereundertakenbetweenAugustand
November2016.Apurposivesampleofparticipantswasselectedtocoverawide
demographyandrangeofsocioeconomicandpersonalcircumstances.Thesample
included 72 participants: 9 focus groups with 54 people living in Australia of
different ages, genders, and socio-economic statuses; and 18 one-on-one
interviewswithpeopleexperiencingchallengestotheirfinancialwellbeing.
The research teamused the services of a recruitment agency and our existing
ongoingrelationshipswithtargetedserviceprovidersandcommunitygroupsto
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support the recruitment of participants. This enabled the research team to
maximise numbers, improve sampling precision and decrease recruitment cost
andtime.The interviewswiththoserecruitedallowedtheteamtoexploreand
makecomparisonsbetweenexperiencesaccordingtogender,age, income,and
geographicalarea.
Toincludepeoplefromdifferenthouseholdandfamilytypes(e.g.singleparents,
people with caring responsibilities), from culturally and linguistically diverse
backgrounds, and people who have experienced challenges to their financial
wellbeing, the research teamworked with a number of recruitment partners,
including Western Legal Service (Victoria), Women’s Legal Service (Victoria),
CarersNSW,NationalCouncilofSingleMothersandtheirChildrenandMission
Australia.ThecompositionoftheinterviewsampleissetoutinTable1,below:
Table1:Characteristicsoftheone-on-oneinterviewparticipants
Socio-demographiccharacteristics Participantnumbers
Lowincome 15
Culturallyandlinguisticallydiversebackground 4
Caresforafamilymemberwithadisabilityorillness 6
Soleparent 5
Hasadisability 2
Youngunemployed/recentlyunemployed 4
Livinginaregionalorruralarea 3
Totalindividualinterviewees 18
Note:Thecategoriesarenotmutuallyexclusivesosomeparticipantsarecounted
morethanonce.
Focusgroupswereheldintwourbanandoneregionallocation.Theone-on-one
interviewsalsofollowedasemi-structureddiscussionguide(seebelow)andasked
thesamequestionsasinthefocusgroups.Mostinterviewswereface-to-facebut
in several instances participants expressed a preference for undertaking the
interviewbyphone.Threeparticipantswereinterviewedwiththesupportofan
interpreter(threedifferentcountriesoforigin).Focusgroupsandinterviewswere
transcribedandthematicanalysiswasundertakenusingNVIVOqualitativedata
managementsoftware.
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Focus group and interview questions
Whatisfinancialwellbeing?
1. Whatdoesbeinginagoodfinancialsituationmeantoyou?
2. Whatarethethingsthatcontributetoyourfinancialsituation?
3. Talkingaboutyourfinancialsituation,aresomethingsmoreimportantin
everydayliving,andotherthingsmoreimportantin‘thelongrun’?Canyou
elaborate?
4. Whatmakesyoufeelhappywithyourfinancialsituation?
Financialliteracyandwellbeing
5. Howdoyoujudgehowgoodorbadyourfinancialsituationis?
6. Doyouthinkfinancialknowledgeorinformationcanaffectyourfinancialsituation?How?
7. Whatkindsofbehavioursdoyouthinkareimportanttobeinginagood
financialsituation?
Differencesbetweengroups
8. Whichfactorsarethemostimportanttobeinghappywithyourfinancial
situation?Why?
9. Arethereanyfactorsthatyouthinkareparticularlyimportantforpeopleof
youragefeelinghappywiththeirfinancialsituation?
10. Arethereanyfactorsthatyouthinkareparticularlyimportantfor
men/womeninfeelinghappywiththeirfinancialsituation?
Influencers
11. Whatgetsinthewayofhavingagoodfinancialsituation?
12. Whatcanhelpimproveyourfinancialsituation?
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Quantitative research
Drawing on the preliminarymodel developed through the scoping review and
qualitativework,theresearchteamdesignedasurvey.Thesurveyincludeditems
that covered each dimension and sub-dimension in the preliminary model of
financialwell-being.Italsoincludeditemsforeachofthe‘influencers’offinancial
well-being that emerged as important in the literature and qualitative work.
Finally,thesurveyincludeditemstocollectdemographicinformationtosupport
theanalysis.
Thesequestionswerelargelytakenfromexistingquestionnairesincluding:
• TheHouseholdIncomeandLabourDynamicsinAustralia(HILDA)survey,
• ArecentNorwegianSurveyoffinancialwellbeing[5],
• TheFinancialResiliencesurvey[6],
• TheAustralianBureauofStatisticsCensus,
• ThePovertyandExclusioninModernAustralia(PEMA)survey[7],2012).
Thefulllistofquestions(andresponsecategories)isprovidedinAppendixC.The
survey was administered over twoweeks in early December 2016. Data were
collectedbyRoyMorganResearchandwereweightedtoberepresentativeofthe
adult population based on age, gender and location of residence. The 821
participantscamefromRoyMorgan’sOzPaneldatabase,whichisapanelsample
derivedrandomlyfromtheirSingleSourcesurveyofapproximately50,000people.
AnonlinesurveywasusedtocollectthedataovertwoweeksinearlyDecember.
Factor analysis and regression analysis techniques were used to test our
conceptual model of financial wellbeing and to identify factors that influence
financialwellbeing.YoucanreadmoreaboutthesetechniquesinAppendixD.The
statisticalanalysiswasusedtoansweranumberofresearchquestionsincluding:
What is financial wellbeing?What influences financial wellbeing? How do the
differentinfluencescombinetohaveanimpactonfinancialwellbeing?Thishelped
ustounderstand“howwell”theinfluencers(andtheircombinedeffect)explain
why some people have low financial wellbeing and others have high financial
wellbeing.
In keepingwitha life courseapproach,wealsoanalysed thedata to see if life
events (e.g. divorce, losing one’s job) might influence financial wellbeing in
differentwaysdependingontheageoftheparticipants.
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Stakeholder consultations
Telephone interviews were conducted with 11 expert stakeholders including
financial advisors, educators, counsellors and consumer representatives in
NovemberandDecember2016.Expertstakeholderswerecontactedandaskedto
participate in a telephone consultation. A sample of the stakeholders was re-
contacted in April 2016 for comment on a revised version of the conceptual
framework.
The stakeholder consultations were used to inform and refine the conceptual
framework with an emphasis on the practical implications as well as the
componentsoffinancialwellbeingandthefactorsthatcontributetoit.
Project Steering Group
TheprojectwasalsoguidedbyaSteeringGroup.TheProjectSteeringGroupwas
apanelofpolicyandacademicexpertsinthefieldoffinancialwellbeing,financial
literacy and financial inclusion across government, corporate and the not-for-
profit sectors. The Steering Groupmet four times throughout the project and
provided expert guidance in the development of the framework for financial
wellbeinganditspracticalimplications.
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APPENDIX B: HOW IS FINANCIAL WELLBEING MEASURED IN THE LITERATURE? Financial wellbeing has been measured in a variety of ways in the literature,
including differences in the type of measures used (subjective or objective
measures) and the relationships between them; the inclusion, or exclusion, of
enablers andbarriers; and the considerationof structural and systemic factors
that influence financialwellbeing.We explore below three of themost recent
studiestohighlightthevariousapproachestomeasuringfinancialwellbeing.
Consumer Financial Protection Bureau Financial Wellbeing Scale
TheConsumerFinancialProtectionBureau[8]developeda10-itemscaletoassess
anindividual’sleveloffinancialwellbeing,definedas“theextenttowhichtheir
financialsituationandthefinancialcapabilitythattheyhavedevelopedprovide
them with security and freedom of choice.” The scale includes 10 questions
aroundthefourelementsidentifiedbytheConsumerFinancialProtectionBureau
askeytofinancialwellbeing:
• Havingcontroloverday-to-day,month-to-monthexpenses;
• Havingthecapacitytoabsorbafinancialshock
• Beingontracktomeetyourfinancialgoals;and
• Havingthefinancialfreedomtomakethechoicesthatallowyoutoenjoylife
[CFPB2]
Whiletheirresearchacknowledgesthepresenceoffactorsattheindividuallevel
(such as age) and more broadly – including financial behaviours, financial
knowledge,personaltraits,thesocialandeconomicenvironment,andlifestages
– theseare, for themostpart,notconsidered in themeasurementof financial
wellbeing.
Momentum UK Index of Financial Wellness
BuildingontheworkofMomentuminSouthAfrica,theMomentumUKIndexof
FinancialWellness [9] usesmicro andmacro indicators to assess the financial
wellbeing of UK individual and households. Themicro index comprises seven
domainsassessingvariousdimensionsoffinancialwellnessattheindividuallevel
thatcontribute70%oftheoverallindexscore.Themacroindexcontributesthe
remaining30%, andencompasses “threemacro-economic indicators chosen to
provideaholisticoverviewofthenationaleconomy:theunemploymentrate,GDP
per capita and the Gini coefficient of income inequality” [9]. Each domain
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contributesamaximumoftenindexpoints,withahigherindexscoreindicatinga
higherleveloffinancialwellness.
Norwegian Study of Financial Wellbeing
TheConsumerResearchNorwaygroup (Kempson,Poppe&Finney,2017)have
recentlyundertakenanationalstudyof financialwellbeing.Aselectionof their
measures of financial behaviours were used in the quantitative phase the
research.Kempsonetal.[5]alsobuiltonexistingtheorytodevelopamodelof
pathwaysbetweenenablersandbarriers.
Intheirstudy,avarietyoflife-stage,demographicandeconomicfactorswerealso
considered at the individual level in relation to the determination of financial
wellness.Regressionanalyseswerealsoconductedtoexaminetherelationship
betweendemographicandsocio-economicfactorsandfinancialwellness.
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APPENDIX C: DIMENSIONS, SUB-DIMENSIONS AND SURVEY ITEMS FOR FINANCIAL WELLBEING AND THE PROPOSED INFLUENCERS OF FINANCIAL WELLBEING Appendix C defines the financial wellbeing dimensions (Table 2), sub-dimensions and
correspondingsurveyitems(Table3–5),andthepotentialinfluencersoffinancialwellbeing
(Table6).Table6describestheroleofeachinfluencer(e.g.,afinancialbehaviourorfinancial
knowledge),itslevel(e.g.,individual-level),thewordingforeachsurveyitemandtheresponse
categories.
Table2:Financialwellbeingdimensions
Financialwellbeingmeans…
Meetingexpensesand
havingsomemoney
leftover
Beingincontrol Beingfreeoffinancial
worries
Table3:Sub-dimensionsandcorrespondingsurveyitemsfordimension1
Dimension1 Meetingexpensesandhavingsomemoneyleftover
Definition Referstoyourfinancialcircumstances,andincludeshavingadequateincome
tomeetbasicneedsandenablechoicesinspending.Thismeanshaving
enoughtopayexpensesandpayoffdebt,andthenhavinga‘buffer’incaseof
unexpectedexpensesandsomesavingsor‘abitextra’toaffordsomeextras.
Sub-
dimensions
Abilitytomeet
expenses
Manageable
debt
Savings
buffer
Abletoafford
“littleextras”
Ableto
make
choices
regarding
spending
andlife
planning
Survey
questions
Inthelast12
months,how
difficultwasit
foryoutomeet
yournecessary
costofliving
expenseslike
housing,
electricity,
water,health
care,food,
clothingor
transport?[6]
(1)Verydifficult---(5)Veryeasy
Whatisyour
currentlevel
ofdebt?[6]
(1)morethanIcanpayback(2)justmanagingtopaybackdebt(3)payingdebtscomfortably(4)payingdebtverycomfortably
Whatis
your
current
levelof
savings?[6]
(1)Nosavings(2)<1month’sincome(3)1-2months(4)3-6months
Whenwasthe
lasttimeyou
bought
something
specialfor
yourself-
something
thatyou
wouldn’t
normallybuy?
[7](1)never/morethanayearago(2)<1year(3)<3months
Thesurveyquestionsfor‘savingsbuffer’and‘abletoaffordlittleextras’aretreatedasproxiesforbeing‘abletomakechoices’
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(5)Ihavenodebts
(5)6+months
(4)<Month(5)Thisweek
Table4:Sub-dimensionsandcorrespondingsurveyitemsfordimension2
Dimension2 Beingincontrol
Definition Exercisingcontrolmeanshavingasenseofcontroloveryourfinancial
situationinthepresentandfuture
Sub-
dimensions
Havingcontroloveryourfinancial
situation
Settingandpursuinglong-termgoals
Survey
questions
Towhatextentdoyouagreeor
disagreewiththefollowing
statements(1-5scale):
“Myfinancialsituationislargely
outsideofmycontrol”?[adapted
from5]
Towhatextentdoyouagreeor
disagreewiththefollowing
statements(1-5scale):
“Isetlong-termfinancialgoalsand
strivetoachievethem”[10]
Table5:Sub-dimensionsandcorrespondingsurveyitemsfordimension3
Dimension3 Feelingfinanciallysecure
Definition Beingfreeoffinancialworriesreferstoyoursubjectiveassessmentof
yourfinancialsituation,includingbeingfreeoffinancialworriesinthe
presentandfutureandhavingasenseofsatisfactionwithyour
financialsituation
Sub-
dimensions
Freedomfromfinancialworry Satisfactionwithfinancial
situation
Survey
questions
Howdoyoufeelaboutyour
currentfinancialsituation?
[adaptedfrom11]
(0)Constantlyworried---(10)Feelcomfortable
Howsatisfiedordissatisfied
areyouwithyourfinancial
situation?[10]
(0)Totallydissatisfied---(10)
Totallysatisfied
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Table6:Influencersoffinancialwellbeing
Roleinframework Surveyitem Responsecategories
Financialself-efficacy
Individual-levelinfluencer
Thefollowingstatementsare
aboutattitudesconcerning
moneyandpersonal
finances.Pleaseindicatehow
stronglyyouagreeor
disagreewitheach:
• Idoagoodjobof
balancingmyspending
andsavings
• IalwaysmakesureI
havemoneysavedup
foremergenciesor
unexpectedexpenses
1.Stronglydisagree
2.Somewhatdisagree
3.Disagree
4.Neitherdisagreenotagree
5.Agree
6.Somewhatagree
7.Stronglyagree
98.Don’tknow
Financialself-efficacy
Individual-levelinfluencer
Thesearesomethingsthat
otherpeoplehavesaidabout
managingmoney.Please
indicatehowwellthey
describeyoupersonally
• Iamveryorganised
whenitcomesto
managingmymoneyday
today
1.Fitsverywell
2.Fitsfairlywell
3.Fitsneitherwellnorbadly
4.Doesnotfitwell
5.Doesnotfitatall
(itemsreversecoded)
Futureplanningfinancial
behaviours
Individual-levelinfluencer
Whichofthefollowinghave
youdoneinlast12months?
1.Followedabudget
2.Savedregularly
3.Paidmorethanthe
minimumrepaymentrequired
bycreditcardcompanyorloan
provider
4.Paidmorethanthe
minimumhomeloan
repayment
5.Madevoluntary
contributionstowardsmy
superannuation
96.Noneofthese
98.Don’tknow
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Table6:continued
Roleinframework Surveyitem Responsecategories
Day-to-daymoney
managementbehaviours
Individual-levelinfluencer
Whichofthefollowing
methodshaveyouusedin
thelast6monthstokeep
trackofyourmoney?
1.Ikepttrackofmymoneyin
myhead
2.Ikepttrackofmymoneyby
writingdownnotes
3.Ikeptreceipts
4.Iusedahousehold
budget/spreadsheet
5.Iusedanonlinebudgeting
toolorapp
6.Iusedanapptokeeptrack
ofmyspending
7.Icheckedmybank
statementsfor
unusual/suspiciousentries
8.Icheckedmycreditcard
statementsfor
unusual/suspiciousentries
9.Ilookedatsomeorallofmy
bank/creditcardstatements
butnotinanydetail
96.Noneoftheabove(Ididn’t
keeptrackofmyspending)
97.Other(Pleasespecify…)
98.Don'tknow
Financialbehaviour
Individual-levelinfluencer
Thesearesomethingsthat
otherpeoplehavesaidabout
managingmoney.Please
indicatehowwellthey
describeyoupersonally.
• Itendtobuythingseven
whenIcan’treallyafford
them
1.Fitsverywell
2.Fitsfairlywell
3.Fitsneitherwellnorbadly
4.Doesnotfitwell
5.Doesnotfitatall
6.Don’tknow
Financialknowledge
Individual-levelinfluencer
Howmuchunderstandingdo
youhaveaboutfinancial
servicesandproducts?
1.Idon’tunderstandthemat
all
2.Ihaveabasicunderstanding
3.Ihaveagoodunderstanding
4.Ihaveaverygood
understanding
98.Don’tknow
Financialknowledge
Individual-levelinfluencer
Howconfidentdoyoufeel
aboutusingfinancialservices
andproducts?
1.Ihavenoconfidence
2.Ihavelimitedconfidence
3.Iamreasonablyconfident
4.Iamveryconfident
98.Don’tknow
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Table6:Continued
Roleinframework Surveyitem Responsecategories
Financialattitude
Individual-levelinfluencer
Myfinancialsituationwill
lookafteritselfandIdon’t
thinkorworryaboutit
1.Stronglydisagree
2.Somewhatdisagree
3.Disagree
4.Neitherdisagreenotagree
5.Agree
6.Somewhatagree
7.Stronglyagree
98.Don’tknow
Financialattitude
Individual-levelinfluencer
Dealingwithmoney/financial
mattersisstressful?
1.Stronglydisagree
2.Disagree
3.Neitheragreenordisagree
4.Agree
5.Stronglyagree
98.Don’tknow
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Whataccesshaveyouhadto
abankaccountoverthepast
12months?
1.Ihadnoaccesstoabank
accountatall
2.Ihadaccesstoabank
accountonlythrougha
partner,relativeorfriend
3.Ihadmyownbankaccount
98.Don’tknow
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Whichofthefollowingbank
accountsdoyouhaveaccess
to?
1.Everyday
banking/transactionaccount
2.TermDeposit
3.HighInterestOnlineAccount
4.BonusInterestorReward
SaverAccount
5.Someothersavingsaccount
(pleasespecify)
6.Don’tknow
7.Prefernottosay
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Overthepast12months,if
youneededcredit/loans,
whichofthefollowingdid
youuseorwouldyouhave
beenabletoaccess?
1.Ihadnoaccesstoanyform
ofcredit/loans
2.Acashloanfromanon-bank
creditprovider(e.g.onlineor
storefrontlender)
3.Aloanfromapawnbroker
4.Aloanfromfriendsorfamily
5.AloanfromCentrelink
6.Aloan(includingcreditcard)
fromabankorbuildingsociety
7.Communityfinance(e.g.No
interestLoanScheme[NILS],
StepUP)
8.Amortgageoran
investmentloan
98.Don’tknow
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Table6:Continued
Roleinframework Surveyitem Responsecategories
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Doyouneedmore
credit/loansthanyou
currentlyhave?
1.Yes,Ineedalotmore
2.Yes,Ineedalittlemore
3.Icouldusesomemore,but
Icangowithoutit
4.No,Ialreadyhaveallthe
credit/loansIneed
5.No,Idonotwanttouse
anycredit/loans
98.Don’tknow
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Whathasbeenyourlevelof
insuranceoverthepast12
months?
1.Ihadnoformofinsurance
2.Ihadsomeinsurance
3.Ihadbasicinsurance
4.Ihadalotofinsurance
98.Don’tknow
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Doyouneedmoreinsurance
thanyoucurrentlyhave?
1.Yes
2.No
98.Don’tknow
Accesstofinancialproducts
andservices
Individual-levelinfluencer
Whattypeofextrainsurance
doyouneed?
1.Healthinsurance
2.Motor-vehicle-insurance
3.Homebuildinginsurance
4.Homecontentsinsurance
97.Other(pleasespecify)
98.Don’tknow
Education
Individual-levelinfluencer
Whatisthehighestlevelof
educationthatyouhave
alreadycompleted?Ifyou
wereeducatedinacountry
otherthanAustralia,please
choosetheclosestoption
fromthelist.
1.Year9orbelow
2.Year10or11
3.Year12
4.Certificate(levelunknown)
5.CertificateIorII
6.CertificateIIIorIV
7.AdvancedDiplomaor
Diploma
8.Bachelor'sdegreeor
higher
99.Prefernottosay
Employmentstatus
Individual-levelinfluencer
Howmuchpaidworkareyou
currentlydoing?Please
answerconsideringallyour
jobs.
1.35hoursormoreperweek
2.Lessthan35hoursaweek
andhappywithhours
3.Lessthan35hoursaweek
butwantmorehours
4.Notworking,lookingfor
work
5.Notworking,notlooking
forwork
99.Prefernottosay
Contracttype
Individual-levelinfluencer
Areyouemployedona
casualcontract?
1.Yes
2.No
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99.Prefernottosay
Table6:Continued
Roleinframework Surveyitem Responsecategories
Maritalstatus
Individual-levelinfluencer
Whichbestdescribesyour
currentsituation?
1.Single
2.Married
3.Defacto/livingwitha
partner
4.Widowed
5.Divorced
6.Separated
7.Refused
8.Don’tknow
Mentalhealth
Individual-levelinfluencer
Duringthepast30days,
abouthowoftendidyoufeel:
• Nervous
• Hopeless
• Restlessorfidgety
• Sodepressedthat
nothingcouldcheeryou
up
• Thateverythingwasan
effort
• Worthless
1.Allofthetime
2.Mostofthetime
3.Someofthetime
4.Alittleofthetime
5.Noneofthetime
98.Don’tknow
Table6:Continued
Roleinframework Surveyitem Responsecategories
Mentalhealth
Individual-levelinfluencer
Pleaseindicatetowhich
extentyouagreeordisagree
withthefollowingstatement:
Myparentsdiscussedwith
mehowtomanagefinancial
matterswhenIwasgrowing
up.
1.Stronglydisagree
2.Disagree
3.Neitheragreenordisagree
4.Agree
5.Stronglyagree
98.Don’tknow
Disabilitystatus
Individual-levelinfluencer
Doyouhaveanylong-term
healthcondition,impairment
ordisabilitythatrestrictsyou
inyoureverydayactivities,
andhaslastedorislikelyto
last,for6monthsormore?
1.Yes
2.No
98.Don’tKnow[9]
Generalhealth
Individual-levelinfluencer
Ingeneral,wouldyousay
yourhealthis:
1.Excellent
2.Verygood
3.Good
4.Fair
5.Poor
Exploring Financial Wellbeing in the Australian Context
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Table6:Continued
Roleinframework Surveyitem Responsecategories
Housingstatus
Household-,family-,peer-
levelinfluencer
Whereareyoucurrently
living?
1.Livinginatemporaryor
insecureaccommodation,
suchasboardinghousesand
caravanparks
2.Homelessorinashelteror
refuge
3.Livinginahousing
commissionproperty,
communityhousingorpublic
housing
4.Livinginaveryshortterm
rental(e.g.noleaseoralease
oflessthan6months)
5.Livinginarentalproperty
withaprivateleaseof6
monthsormore(including
sharingaflatwithothers)
6.Livinginstudent
accommodation
7.Livingathomewithmy
parents
8.Newhomeowner,starting
topayoffamortgage
9.Establishedhomeowner
andIhavepaidoffmorethan
50%ormymortgage
97.Other(pleasespecify)
Householddensity
Household-,family-,peer-
levelinfluencer
Includingyourself,howmany
peopleaged15andoverare
livinginyourhouseholdona
usualnight?
1.One
2.Two
3.Three
4.Four
5.Five
6.Six
7.Seven
8.Eight
9.Nine
10.Tenormore
98.Prefernottosay
Exploring Financial Wellbeing in the Australian Context
18
Table6:Continued.
Roleinframework Surveyitem Responsecategories
Householddensity
Household-,family-,peer-
levelinfluencer
Howmanypeopleaged
under15arelivinginyour
householdonausualnight?
1.One
2.Two
3.Three
4.Four
5.Fiveormore
99.Prefernottosay
Housingcost
Household-,family-,peer-
levelinfluencer
Howmuchdoyouspendper
weekonrentormortgage
paymentswhereyouare
currentlyliving?
<Insertfreetext>
Socialcapital
Household-,family-,peer-
levelinfluencer
Overthepast12months,
howwouldyoudescribeyour
levelofcontactwithsocial
connections?Social
connectionsreferto
connectionswithfamily,
friends,workcolleagues,
neighboursorclubs.
1.Iamisolatedoralonemost
ofthetime
2.Ihaveoccasionalcontact
3.Ihaveregularcontactwith
moredistantsocial
connections
4.Ihaveregularcontactwith
closeconnections
98.Don’tknow
Socialcapital
Household-,family-,peer-
levelinfluencer
Howlikelyareyoutoget
financialsupportfromyour
socialconnections(family,
friends,workcolleagues,
neighboursorclubs)intimes
ofcrisis?
1.Never/Veryunlikely
2.Fairlyunlikely
3.Unsure
4.Fairlylikely
5.Always/VeryLikely
Socialcapital
Household-,family-,peer-
levelinfluencer
Howmuchsupporthaveyou
hadfromcommunityor
governmentorganisationsto
helpwithyourfinancial
situationoverthepast12
months?
1.Ineededsupport,butIhad
noaccesstoit
2.Ireceiveemergency
supportservices(e.g.food-
banksorvouchers)
3.Ireceivespecialisedsupport
services(e.g.mealsonwheels,
financialcounselling,no
interestloan,homecare
services)
4.Iusedtheirsupport
occasionally,butIwasnot
reliantonthem
5.Ididnotneedany
communityorGovernment
support
98.Don’tknow
Exploring Financial Wellbeing in the Australian Context
19
Table6:Continued
Roleinframework Surveyitem Responsecategories
Householdincome
(equivalised)
Household-,family-,peer-
levelinfluencer
Inordertounderstandhow
differenthouseholdsdeal
withfinancialstresswewould
appreciateanestimateof
youryearlyhousehold
income(beforetaxand
expenses).Pleasechoose
fromtherangesbelow.
1.Under$10,000peryear
(under$385perfortnight)
2.$10,000to$19,999per
year($385to$769per
fortnight)
3.$20,000to$29,999per
year($770to$1,154per
fortnight)
4.$30,000to$39,999per
year($1,155to$1,538per
fortnight)
5.$40,000to$49,999per
year($1,539to$1,923per
fortnight)
6.$50,000to$59,999per
year($1,924to$2,308per
fortnight)
7.$60,000to$69,999per
year($2,309to$2,692per
fortnight)
8.$70,000to$79,999per
year($2,693to$3,077per
fortnight)
9.$80,000to$89,999per
year($3,078to$3,462per
fortnight)
10.$90,000to$99,999per
year($3,463to$3,846per
fortnight)
11.$100,000to$109,999
peryear($3,847to$4,231
perfortnight)
12.$110,000to$119,999
peryear($4,232to$4,615
perfortnight)
13.$120,000to$129,999
peryear($4,616to$5,000
perfortnight)
14.$130,000to$139,999
peryear($5,001to$5,385
perfortnight)
15.$140,000to$149,999
peryear($5,386to$5,769
perfortnight)
16.$150,000to$199,999
peryear($5,770to$7,692
perfortnight)
17.$200,000to$249,999
peryear($7,693to$9,615
perfortnight)
Exploring Financial Wellbeing in the Australian Context
20
18.$250,000ormoreper
year($9,616ormoreper
fortnight)
99.Prefernottosay
Financialdependents
Household-,family-,peer-
levelinfluencer
Doyouhaveanyfinancial
dependants?Afinancial
dependantisachildunder
theageof15,orchildren15-
24yearswholivewithyou
morethanhalfofthetime,
andforwhomyouprovide
financially,orotherpersons
forwhomyouprovide
financially.
1.Yes
2.No
IFYES:
1.Howmanyunder15
2.Howmany15-24years
3.Howmany25years+
Caregiving
Household-,family-,peer-
levelinfluencer
Inthelasttwoweeksdidyou
spendtimeprovidingunpaid
care,helporassistanceto
familymembersorothers
becauseofadisability,along
termillnessorproblems
relatedtooldage?
1.Yes
2.No
Roleinframework Surveyitem Responsecategories
Lifeevents Foreachstatementbelow,
pleasecrosstheYesboxto
indicateiftheevent
happenedduringthepast12
months.Didanyofthese
happentoyouinthelast12
months?
a.Gotmarried
b.Separatedfromspouseor
long-termpartner
c.Pregnancy/pregnancyof
partner
d.PartnerorIgavebirthto,
oradopted,anewchild
e.Seriouspersonalinjuryor
illnesstoself
f.Deathofspouseorchild
g.Victimofphysicalviolence
(e.g.,assault)
h.Retiredfromtheworkforce
i.Firedormaderedundantby
anemployer
j.Majorimprovementin
financialsituation(e.g.,won
lottery,receivedan
inheritance)
k.Majorworseningin
financialsituation(e.g.,went
bankrupt)
l.Aweather-relateddisaster
(e.g.,flood,bushfire,cyclone)
damagedordestroyedyour
home
m.Noneofthese
Exploring Financial Wellbeing in the Australian Context
21
Table6:Continued
Roleinframework Surveyitem Responsecategories
Communitysocioeconomic
status
Remotenessindex
Community-level
Whatisyourpostcode?
4-digitpostcode
Roleinframework Surveyitem Responsecategories
Overallfinancialwellbeing–
outcomeoffinancial
wellbeing
Allthingsconsidered,how
satisfiedareyouwithyour
life?Pickanumberbetween
0and10toindicatehow
satisfiedyouare.
1.0(totallydissatisfied)
2.1
3.2
4.3
5.4
6.5
7.6
8.7
9.8
10.9
11.10(totallysatisfied)
98.Don’tknow
Exploring Financial Wellbeing in the Australian Context
22
Roleinframework Surveyitem Responsecategories
Abilitytoraisefundsinan
emergency
Potentialmeasureof
financialwellbeingnotused
inthefinalmodel(See
AppendixD)
Inanemergency(e.g.yourcar
breaksdown,yourwashing
machineorfridgestops
working),wouldyoubeable
toget$2,000withinaweekto
dealwithit?
1.Yes
2.No
98.Don’tknow
Abilitytoraisefundsinan
emergency
Potentialmeasureof
financialwellbeingnotused
inthefinalmodel(See
AppendixD)
Wherewouldyougetthis
moneyfrom?
1.Familyorfriends
2.Savings
3.Borrowingfromthebank
(e.g.aloanoroverdraft)
4.Usingacreditcard
5.Paydayloan,online
lender,pawnbroker
97.Other(pleasespecify)
98.Don’tknow
Abilitytoraisefundsinan
emergency
Potentialmeasureof
financialwellbeingnotused
inthefinalmodel(See
AppendixD)
Youhaveindicatedthatyou
couldget$2,000foran
emergencyfromthefollowing
sources.Pleaserankthemin
orderfromthemosttothe
leastamountofmoneyyou
wouldbeabletoget.For
example,ifyoucouldget
mostoftheamountfromyour
savingsandwouldhaveto
borrowtherestfromfamilyor
friends,ranksavingsfirstand
familyorfriendssecond.
1.Familyorfriends
2.Savings
3.Borrowingfromthebank
(e.g.aloanoroverdraft)
4.Usingacreditcard
5.Paydayloan,online
lender,pawnbroker
97.Other(pleasespecify)
Financialhopeforthefuture
Potentialmeasureof
financialwellbeingnotused
inthefinalmodel(See
AppendixD)
Thinkingaboutfouryears
fromnow(2020),whichofthe
followingbestdescribeshow
youthinkyourfinancial
circumstanceswillhave
changedbythen."Iexpectmy
financialcircumstancesto
be..."
1.Muchbetterthantheyare
now
2.Slightlybetterthanthey
arenow
3.Thesameastheyarenow
4.Slightlyworsethanthey
arenow
5.Muchworsethantheyare
now
Controloverfinancialdecisions
Potentialmeasureoffinancial
wellbeing,butwasnot
appropriateduetolow
variance(SeeAppendixD)
Whomakesthedecisionsabout
thefollowingissuesinyour
household:
• Managingday-to-day
spendingandpayingbills
• Managinglarge
householdpurchases
(e.g.carsandmajor
appliances)
• Savings,investmentand
borrowing
1.Alwaysme
2.Usuallyme
3.Sharedequallybetween
partnerandself
4.Usuallymypartner
5.Alwaysmypartner
6.Always/usuallyother
person(s)inhouse(e.g.a
parent)
7.Sharedequallyamong
householdmembers
8.Always/usuallysomeone
notlivinginhouse
9.Doesnotapply
Exploring Financial Wellbeing in the Australian Context
23
APPENDIX D: HOW THE MODEL OF FINANCIAL WELLBEING WAS DEVELOPED This research used three methods for developing a model of financial
wellbeing:Ascopingreview,one-on-oneandgroupinterviews,andasurvey
of Australians aged 18 and over. The scoping review helped to develop an
understandingofwhat financialwellbeing looks like for different groupsof
people and to identify gaps in knowledge. This information, guided the
questionsposedtotheinterviewandfocusgroupparticipants.Theirresponses
helpedustodevelopapreliminarymodeltotestwiththesurveydata.Survey
questionsweredesignedtomeasure theproposedcomponentsof financial
wellbeingallowingustocriticallyexamineandmodifythepreliminarymodel.
Preliminary model
Thequalitativeresearchrevealedthreedimensionsoffinancialwellbeing:1)
Meeting expenses and having somemoney left over; 2) Feeling financially
secure; and 3) Being in control. However, the qualitative data showed
complexity around the being in control dimension. By control, participants
meantfinancialautonomy,thatis,havingasayinfinancialdecisionsthataffect
themandhavingaccesstotheirmoneyandcontroloverhowitisspent,and
financialcontrolor‘beingontopofyourfinances’,encompassedkeepingtrack
offinances,controlledspending,andcontroloverfuturefinances.Forsome,
controlledspendingwasdiscussedasacomponentoffinancialwellbeingbut
forothersitwasseenasaninfluencer.Thelatterismoreconsistentwiththe
literature[e.g.,12],buttheformerresonatedwithmanyoftheparticipants.
Therefore we put forward a preliminary model that saw the behavioural
aspectsofcontrolasacomponentoffinancialwellbeing.However,thiswas
donewiththeunderstandingthatthecontrol-relatedbehaviours(andothers)
mayberemovedfromthemodeliftheywerenotsupportedbyfactoranalysis
ofdata.
Exploring Financial Wellbeing in the Australian Context
24
Thepreliminaryconceptualmodeloffinancialwellbeingwasasdevelopedas
showninTable7:
Table7:Preliminaryconceptualmodeloffinancialwellbeing
Meetingexpensesand
havingchoices
Feelingfinanciallysecure Beingincontrol
• Abilitytocoverexpenses
• Sufficientsavings
• Manageabledebt
• Havingabitleftover
• Freedomfromfinancial
worry
• Satisfactionwithyour
currentandfinancial
situation
• Financialhopeforthe
future
• Controloverfinancesin
general
• Controloverfinancial
decisionmaking;
• Controloverfinancial
behaviours;
• Controloverfuture
finances.
Testing and refining the preliminary model
Althoughthiswasanexploratoryanalysis,weexpectedthreefactorswould
emerge in themodel, as outlined above. However, factor analysis did not
supportthisfactorstructure(seeTable8below).Firstly,theitemsaccessing
controloverfinancialdecision-making(variables12-14inTable8)emergedas
theirownfactor,butwerenotcorrelatedwithanyoftheotheritems.Closer
inspectionofthedatarevealedthatveryfewpeoplereportedlimitedcontrol,
whichsuggestedthevariablehadlimitedexplanatorypower.Further,itisalso
plausiblethatsomepeoplemaynotwantcontrolovertheirfinancialdecision-
making,whichsuggestedthevariablewasnotappropriateinitscurrentform
andwouldneedfurtherdevelopment.Theseitemswerethereforeremoved
fromthefinancialwellbeingmodel.Thefinancialbehaviouritems(11,15-18)
alsoformedtheirownfactor,butawayfromthegeneralfinancialcontrolitem
andtheotherfinancialwellbeing items.Therefore,wedrewontheexisting
literature and reconceptualised the variables as influencers of financial
wellbeing (financial capability) rather than component items. We did,
however,retainoneitemongoalsetting(11)tomaintainconsistencywithour
scopingreviewandqualitativephase,whichsuggestedthatfinancialwellbeing
hadcurrentandfuturedimensions.Householdincome(6)wasremoveddue
tolowfactorloadingand,likethefinancialbehaviours,islikelytofunctionas
an influencer rather than a component of financial wellbeing. Finally, the
variablemeasuringfinancialhopeforthefuture(3)wasalsoremoveddueto
low and multiple factor loading. It is possible this variable was measuring
optimismmorebroadly, rather than financialwellbeing.Variablenumber5
wasalsoremovedduetolowvariance;veryfewpeoplecouldnotraise$2,000
inanemergency.
Exploring Financial Wellbeing in the Australian Context
25
Table8:Rotatedfactorloadingsforpreliminarymodel.
Rotatedfactors
Surveyitems 1 2 3 4
1.Satisfiedwithcurrentfinancialsituation 0.805
2.Feelpositiveaboutcurrentfinancialsituation 0.781
3.InfouryearsIwillbebetteroffthannow 0.414
4.Recentlyboughtsomethingspecial 0.382
5.Abilitytoraisemoneyinanemergency 0.575
6.Equivalisedhouseholdincome 0.336 0.356
7.Whatisyourcurrentlevelofsavings(categorical)? 0.707
8.Inthelast12months,howdifficultwasitforyouto
meetyournecessarycostoflivingexpenses?
0.774
9.Whatisyourcurrentlevelofdebt? 0.667 -
0.336
10.Financialsituationwithinmycontrol 0.61
11.Isetlong-termfinancialgoalsandstrivetoachieve
them
0.449 0.529
12.Imanageday-to-dayspending 0.799
13.Imanagelargehouseholdpurchases 0.904
14. I make decisions about savings, investment and
borrowing
0.897
15.Idoagoodjobofbalancingmyspendingandsavings 0.349 0.697
16. I always make sure I have money saved up for
emergenciesorunexpectedexpenses
0.547 0.585
17.Financialbehaviour(Impulsivity) 0.5
18.Iamveryorganisedwhenitcomestomanagingmy
moneydaytoday
0.358 0.616
Thesemodifications left eight variables in theanalysis that formeda single
factorwelabelled“overallfinancialwellbeing”(Table9).Althoughthiswasan
unexpected finding, it is consistentwithwork inNorwayby Kempson et al
(2017). The assumptions of factor analysis for this model were met - the
Bartlett testofSphericity showedap-valueof<.001and theKaiser-Meyer-
OlkinMeasureofSamplingAdequacystatisticwas.881(high)1.Theitemthat
assessed when the participants had last bought something special for
themselvesdidhavearelativelylowfactorloading.However,weretaineditin
themodelbecauseitreflectsanimportantfindingfromthequalitativephase.
The extracted factor only explained 46% of the variance in the data. This
suggested that significant information would be lost by combining the
variables together despite them forming a single factor. Therefore, when
1ForanexplanationseeWilliams,B.,Onsman,A.,&Brown,T.(2010).Exploratoryfactoranalysis:Afive-stepguide
fornovices.AustralasianJournalofParamedicine,8(3).
Exploring Financial Wellbeing in the Australian Context
26
examining the influencers of financial wellbeing, we considered the three
dimensions that came from the qualitative research and a single overall
measureoffinancialwellbeing.
Table9:Factorloadingsforfinalmodel
Surveyitems Factor
loadings
1.Satisfiedwithcurrentfinancialsituation 0.846
2.Feelpositiveaboutcurrentfinancialsituation 0.842
3.Financialsituationwithinmycontrol 0.615
4.Isetlong-termfinancialgoalsandstrivetoachievethem 0.526
5.Recentlyboughtsomethingspecial 0.357
6.Whatisyourcurrentlevelofsavings? 0.679
7. In the last12months,howdifficultwas it for you tomeet your
necessarycostoflivingexpenses?
0.786
8.Whatisyourcurrentlevelofdebt?Chooseoneonly. 0.639
Scoring for the final model
Weusedarelativelysimplemethodforscoringfinancialwellbeingsothatit
couldbeeasilyreplicatedandbuiltuponinfutureresearch.Firstly,response
dataforalleightitemswerescaledtohavearangeof1–4,withhigherscores
representinghigherlevelsoftheconstruct.Wethenproducedascoreforeach
dimensionbycalculatingthemeanofeachdimension’srespectiveitems:
• Variables1and2inTable9reflectthedimension“Feelingfinancially
secure”
• Variables3and4reflectthedimension“Beingincontrol”
• Variables5–8reflectthedimension“Comfortablymeetingexpenses
andhavingchoices”.
The mean of the three scores was averaged to form an overall financial
wellbeing score. This method applied no weighting to particular items or
dimensions.Insum,thefollowingvariableswerecalculated:
• Ascorefor“Feelingfinanciallysecure”(1-4scale)
• Ascorefor“Beingincontrol”(1-4scale)
• Ascorefor“Comfortablymeetingexpenses”(1-4scale)
• Anoverallfinancialwellbeingscore(anaverageofthethreescores,1-
4scale)
Exploring Financial Wellbeing in the Australian Context
27
APPENDIX E: DESCRIPTIVE STATISTICS Table10:Descriptivestatisticsforcontinuousvariables
Variable Range Mean(N=821)
StandardDeviation
Overallfinancialwellbeing 1-4 2.81 0.61
Feelingfinanciallysecure 1-4 2.70 0.71
Beingincontrol 1-4 2.92 0.68
Meetingexpensesandhavingsomemoneyleftover 1-4 2.79 0.71
Financialknowledge 1-4 2.60 0.70
Financialself-efficacy2 0-6 4.41 1.27
Financialbehaviour(Impulsivity) 1-5 4.11 1.00
Sumoffinancialbehaviours 0-5 2.08 1.24
Financialattitude(doesn'tcareaboutmoney) 1-7 3.11 1.57
Financialattitude(moneyisstressful) 1-5 2.59 0.96
Accesstofinancialproductsandservices 1-4 3.26 0.51
Mentalhealth3 1-25 6.04 4.75
Generalhealth 1-5 3.24 0.96
Cumulatednumberoffinancialshocks 0-5 0.25 0.44
Numberofchildren 0-3 0.63 1.01
Numberoffinancialdependents 0-6 0.67 1.11
Mortgage/rentpayments($) 0-$4,000 289.99 393.27
Socialcapital 1-4 3.21 0.62
Equivalisedhouseholdincomequartiles 1-4 2.50 1.13
Communitysocioeconomicdisadvantage 1-10 6.56 2.70
2Financialself-efficacyreferstopeople’sself-ratedabilitytomanagetheirfinances.Thisrepresentstheirself-rated
abilitytomanagetheirday-to-dayspending,balancesavingswithspendingandtohavemoneysetasideifneeded.It
istheaveragescoreofthethreevariablespresentedinTable6,page13
3Higherscoresreflectpoorermentalhealth
Exploring Financial Wellbeing in the Australian Context
28
Table11:Descriptivestatisticsforcategoricalvariables
Categories N %Age 18-19 15 1.8%
20-24 61 7.4%
25-29 58 7.1%
30-34 106 12.9%
35-39 61 7.4%
40-44 78 9.5%
45-49 77 9.4%
50-54 43 5.2%
55-59 70 8.5%
60-64 88 10.7%
65-69 78 9.5%
70+ 86 10.5%
Total 821 100.0%
Maritalstatus Marriedordefacto 525 64.3%
Single 291 35.7%
Total 816 100.0%
Highestlevelof
Education(orequivalent)
Year9orbelow 21 2.6%
Year10or11 80 9.8%
Year12 77 9.4%
Certificate(levelunknown) 15 1.8%
CertificateIorII 13 1.6%
CertificateIIIorIV 97 11.9%
AdvancedDiplomaorDiploma 138 16.9%
Bachelordegreeorhigher 377 46.1%
Total 818 100.0%
Disability Nodisabilityorlongtermhealthcondition 592 74.4%
Hasadisabilityorlongtermhealthcondition 204 25.6%
Total 796 100.0%
Homeowner NotHomeOwner 271 33.3%
HomeOwner(includingwithmortgage) 544 66.7%
Total 815 100.0%
Exploring Financial Wellbeing in the Australian Context
29
APPENDIX F: BIVARIATE CORRELATIONS Table12:Correlationsbetweenstudyvariables
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.1.Overallfinancialwellbeing 1 2.Feelingfinanciallysecure .89 1 3.Beingincontrol .82 .60 1 4.Meetingexpenses .87 .71 .56 1 5.Financialknowledge .36 .29 .41 .25 1 6.Financialself-efficacy4 .65 .56 .62 .52 .32 1 7.FinancialImpulsivity .26 .27 .22 .21 .12 .43 1 8.Sumoffinancialbehaviours .33 .27 .38 .23 .22 .31 .14 1 9.Doesn’tcareaboutmoney .28 .35 .12 .26 .07 .16 .02 -.10 1 10.Moneyisnotstressful .46 .45 .35 .39 .40 .34 .20 .14 .16 1 11.Financialinclusion .38 .35 .34 .31 .28 .27 .08 .44 .05 .20 1 12.Age .15 .19 .04 .18 .08 .18 .23 -.07 .07 .12 .05 1 13.Maritalstatus(nopartner) -.14 -.18 -.10 -.10 -.12 -.06 -.04 -.23 -.09 -.05 -.18 -.17 1 14.Education .06 .04 .05 .08 .08 .05 .00 .16 -.07 .01 .16 -.19 -.06 1 15.Disability(yes) -.17 -.16 -.19 -.11 -.09 -.06 .02 -.12 -.08 -.11 -.09 .27 .08 -.11 1 16.Mentalhealth(poor) -.55 -.54 -.43 -.47 -.28 -.38 -.17 -.19 -.20 -.43 -.27 -.26 .23 .00 0.20 1 17.Generalhealth .31 .27 .32 .24 .18 .22 .07 .24 .05 .18 .16 -.20 -.09 .15 -.49 -.33 1 18.Cum.financialshocks -.18 -.20 -.11 -.18 -.09 -.09 .03 -.05 -.09 -.08 -.14 -.08 .03 -.01 .12 .15 -.11 1 19.Numberofchildren -.11 -.09 -.04 -.16 .00 -.08 -.04 .16 -.09 -.11 .08 -.22 -.29 .13 -.11 .04 .05 .00 1 20.Num.financialdependents -.08 -.07 -.03 -.11 -.01 -.09 -.08 .11 -.04 -.08 .00 -.36 -.28 .08 -.17 .03 .12 .00 .65 1 21.Rent/mortgagepayment -.13 -.11 -.02 -.21 .03 -.11 -.10 .15 -.09 -.07 .07 -.27 -.15 .17 -.18 .02 .08 .01 .34 .23 1 22.Socialcapital .40 .34 .34 .38 .16 .22 .03 .20 .08 .23 .27 -.01 -.05 .09 -.24 -.39 .26 -.17 -.05 .00 -.01 1 23.Homeowner .27 .30 .20 .21 .15 .22 .16 .27 .08 .10 .33 .46 -.41 .02 .01 -.26 .02 -.07 .13 -.06 .04 .08 1 24.Equivalisedh.holdincome .31 .28 .27 .27 .19 .11 -.01 .37 -.01 .08 .40 -.15 -.16 .34 -.18 -.16 .13 -.09 .08 -.03 .21 .28 .20 125.CommunitySES(SEIFA) .11 .09 .09 .12 .08 .03 .02 .07 .03 .05 .05 .03 .01 .14 -.04 -.04 .04 -.07 -.01 .00 .09 .12 .02 .18
Note:Correlationsgreaterthan0.07aresignificantatP<0.05andcorrelationsgreaterthan0.1aresignificantatP<0.01.
Correlationsrangefrom-1(anegativerelationship)to1(apositiverelationship)andindicatethestrengthofanassociation.Thehighertheabsolutevalue,thestrongertherelationship.Cohen’s‘ruleofthumb’suggeststhatcorrelationsof0.1(or-0.1)canbeinterpretedassmallorweak,correlationsof0.3asmoderateandcorrelationsof0.5ofhigherasstrong[13].
4Financialself-efficacyreferstopeople’sself-ratedabilitytomanagetheirfinances.Thisrepresentstheirself-ratedabilitytomanagetheirday-to-dayspending,balancesavingswithspendingandtohavemoneysetasideifneeded.ItistheaveragescoreofthethreevariablespresentedinTable6,page13.
Exploring Financial Wellbeing in the Australian Context
30
APPENDIX G: REGRESSION ANALYSIS Appendix G describes the regressionmodelling techniques used to identify
potential.
Linearregressionmodelswereperformedfortheoverall financialwellbeing
measure and the threedimensions (seeAppendixD for details). Covariates
(the “influencers”or independent variables)wereenteredusinga stepwise
approach in two blocks (financial capability items, then
individual/household/communityitems)andeachblockwascomparedusing
changeinR2todeterminewhethertheadditionalblocksignificantlyimproved
thefitofthemodel.Individualcovariateswereforced(i.e.notautomatically
excluded based on fit) as all independent variableswere specified prior to
entry.Recordswithmissingitemswereexcludedusinglistwisedeletion(i.e.
theentirerecordwasexcludedfromtheanalysis).
Allassumptionsforlinearregressionwerecheckedandeachmodelmetthe
assumptionsof linearresidualsandheteroscedasticity.Multicollinearitywas
checked using variance inflation factors (VIF) and although age, number of
children and number of financial dependents had higher scores than other
items,allwereunder4whichisgenerallyacceptedasacut-offforproblematic
multicollinearity. Some multivariate outliers were identified. However,
excludingthesefromtheregressionmodeldidnotsubstantivelychangethe
magnitude of the relationships (changes were largely at the third decimal
place).Therefore,intheinterestsofmaintainingsamplesize,thesecaseswere
retained.
Intheinterestofmodelparsimony,asmallnumberofvariableswereremoved
betweeninitialandfinalmodelswhentheywereconsistentlynotassociated
with significant changes in the coefficients. Note that some items were
retaineddespitenosignificantassociationduetobeingofprimaryresearch
interest(e.g.gender).
Toreducetherisksassociatedwithinflatedalpha,onlyrelationshipsthatwere
significantatp<.001informedthereport.
In the tables below, beta (b) represents the standardised regressioncoefficients.Althoughinferencesofcauseandeffectcannotbemade,these
can be cautiously interpreted as the potential ‘impact’ (the slope of the
regressionline)ofeachinfluenceronfinancialwellbeingaftercontrollingfor
the effects of the other influencers in the model. Beta is expressed in
standardised terms. This means you can compare the beta values across
influencersand identifywhichhavethestrongestrelationshipwithfinancial
wellbeing (controlling for all other influencers). The ‘b’ represents the
unstandardized regressioncoefficient is in interpreted ina similarway tob
Exploring Financial Wellbeing in the Australian Context
31
exceptthatitisexpressedusingtheoriginalscaleofthevariables.Thismakes
itmoredifficult to interpretwhichvariableshavethestrongest relationship
with the dimensions of financial wellbeing. The standard error (SE) is a
measureoftheaccuracyoftheunstandardisedregressioncoefficient.
Table13:Overallfinancialwellbeingregressedonthestudyvariables
Model1:Financialcapability Model 2: Financial capabilityandotherinfluencers
B SE b B SE bVariables
Financialknowledge 0.063 0.024 0.073** 0.024 0.021 0.028
FinancialSelf-efficacy 0.247 0.015 0.514*** 0.203 0.013 0.421***
Financialbehaviour(Impulsivity) -0.029 0.016 -0.047 -0.01 0.015 -0.016
Sumoffinancialbehaviours 0.078 0.013 0.159*** 0.024 0.013 0.049
Doesnotcareaboutmoney 0.061 0.01 0.157*** 0.041 0.009 0.106***
Moneyisnotstressful 0.138 0.017 0.222*** 0.078 0.016 0.125***
Age -0.003 0.006 -0.014
Maritalstatus -0.04 0.033 -0.031
Education -0.004 0.006 -0.015
Disability 0.004 0.036 0.003
Mentalhealth(poorer) -0.025 0.004 -0.19***
Generalhealth 0.04 0.017 0.064*
Cumulatedfinancialshocks -0.069 0.03 -0.049*
Accesstofinancialproductsandservices 0.086 0.031 0.072**
Numberofchildren -0.045 0.018 -0.076*
Numberoffinancialdependents 0.016 0.015 0.034
Housingcost 0.00 0.00 -0.097***
Socialcapital 0.087 0.024 0.088***
Equivalisedhouseholdincome 0.083 0.014 0.153***
Homeowner 0.044 0.037 0.034
Communitysocioeconomicdisadvantage 0.009 0.005 0.042
AdjustedR2 0.56 0.67
PforchangeinadjustedR2 P<.001
*p<.05.**p<.01.***p<.001
Exploring Financial Wellbeing in the Australian Context
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Table14:Feelingfinanciallysecureregressedonthestudyvariables
Model 1: Financialcapability
Model2:Financialcapabilityandotherinfluencers
B SE b B SE bVariables
Financialknowledge 0.015 0.031 0.015 -0.037 0.028 -0.036
FinancialSelf-efficacy 0.228 0.019 0.405*** 0.177 0.017 0.314***
Financialbehaviour(Impulsivity) 0.003 0.021 0.004 0.018 0.019 0.025
Sumoffinancialbehaviours 0.074 0.016 0.13*** 0.006 0.017 0.011
Financialattitude(doesn'tcareaboutmoney) 0.103 0.013 0.228*** 0.078 0.011 0.173***
Financialattitude(moneyisnotstressful) 0.191 0.022 0.262*** 0.124 0.021 0.171***
Age 0.005 0.008 0.025
Maritalstatus -0.068 0.043 -0.046
Education -0.003 0.008 -0.009
Disability 0.015 0.046 0.009
Mentalhealth(poorer) -0.032 0.005 -0.21***
Generalhealth 0.038 0.022 0.051
Cumulatedfinancialshocks -0.121 0.04 -0.074**
Accesstofinancialproductsandservices 0.099 0.04 0.072*
Numberofchildren -0.039 0.024 -0.057
Numberoffinancialdependents 0.026 0.019 0.047
Housingcost 0 0 -0.072**
Socialcapital 0.062 0.032 0.054*
Equivalisedhouseholdincome 0.101 0.019 0.159***
Homeowner 0.092 0.048 0.06
Communitysocioeconomicdisadvantage 0.004 0.006 0.017
AdjustedR2 .47 .59
PforchangeinAdjustedR2 P<.001
*p<.05.**p<.01.***p<.001
Exploring Financial Wellbeing in the Australian Context
33
Table15:Beingincontrolregressedonthestudyvariables
Model1:Financialcapability Model 2: Financial capabilityandotherinfluencers
B SE b B SE bVariables
Financialknowledge 0.161 0.029 0.166*** 0.137 0.029 0.141***
FinancialSelf-efficacy 0.28 0.018 0.519*** 0.254 0.018 0.471***
Financialbehaviour(Impulsivity) -0.06 0.02 -0.088** -0.037 0.02 -0.054
Sumoffinancialbehaviours 0.105 0.016 0.191*** 0.061 0.017 0.111***
Financialattitude(doesn'tcareaboutmoney) 0.012 0.012 0.028 -0.002 0.012 -0.005
Financialattitude(moneyisnotstressful) 0.063 0.021 0.09 0.02 0.022 0.028
Age -0.019 0.008 -0.09*
Maritalstatus 0.013 0.044 0.009
Education -0.021 0.008 -0.07*
Disability -0.063 0.048 -0.041
Mentalhealth(poorer) -0.017 0.005 -0.118***
Generalhealth 0.043 0.023 0.06
Cumulatedfinancialshocks -0.007 0.041 -0.004
Accesstofinancialproductsandservices 0.072 0.042 0.054
Numberofchildren -0.021 0.024 -0.032
Numberoffinancialdependents -0.002 0.02 -0.003
Housingcost -0.000 0.00 -0.017
Socialcapital 0.069 0.033 0.062*
Equivalisedhouseholdincome 0.038 0.02 0.062
Homeowner 0.062 0.05 0.043
Communitysocioeconomicdisadvantage 0.01 0.007 0.04
AdjustedR2 .48 .52
PforchangeinAdjustedR2 P<.001
*p<.05.**p<.01.***p<.001
Exploring Financial Wellbeing in the Australian Context
34
Table16:Meetingexpensesregressedonthestudyvariables
Model1:Financialcapability Model 2: Financial capabilityandotherinfluencers
B SE b B SE bVariables
Financialknowledge 0.013 0.033 0.013 -0.026 0.03 -0.026
FinancialSelf-efficacy 0.234 0.02 0.419*** 0.177 0.019 0.318***
Financialbehaviour(Impulsivity) -0.029 0.023 -0.042 -0.01 0.021 -0.015
Sumoffinancialbehaviours 0.054 0.018 0.095** 0.005 0.018 0.01
Financialattitude(doesn'tcareaboutmoney) 0.067 0.014 0.15*** 0.047 0.012 0.104***
Financialattitude(moneyisnotstressful) 0.161 0.024 0.223*** 0.089 0.023 0.124***
Age 0.006 0.008 0.025
Maritalstatus -0.063 0.047 -0.043
Education 0.012 0.009 0.039
Disability 0.059 0.051 0.037
Mentalhealth(poorer) -0.025 0.005 -0.166***
Generalhealth 0.04 0.024 0.055
Cumulatedfinancialshocks -0.078 0.043 -0.048
Accesstofinancialproductsandservices 0.086 0.044 0.062
Numberofchildren -0.074 0.026 -0.108**
Numberoffinancialdependents 0.024 0.021 0.044
Housingcost 0.00 0.00 -0.163***
Socialcapital 0.129 0.034 0.113***
Equivalisedhouseholdincome 0.111 0.021 0.177***
Homeowner -0.02 0.053 -0.013
Communitysocioeconomicdisadvantage 0.014 0.007 0.052
AdjustedR2 0.37 0.51
PforchangeinAdjustedR2 P<.001
*p<.05.**p<.01.***p<.001
Exploring Financial Wellbeing in the Australian Context
35
APPENDIX H: TOWARDS A MEASUREMENT SYSTEM FOR FINANCIAL WELLBEING Thefirststepindevelopinganymeasurementsystemistodefinetheconstruct
understudy,orinthisinstance,theoutcomesandsub-outcomes.Ourprimary
goalwas todefineandconceptualise financialwellbeing.Thiswasachieved
throughascopingreviewandqualitativeresearchtoidentifythedimensions
(outcomes) and sub-dimensions (sub-outcomes). Existing validated
assessment tools were then selected to measure the sub-outcomes. This
effectivelystartedthe journeyfordevelopingameasurementsysteminthe
Australian context. Here we describe two key principles that guided the
selectionofmeasuresandconsidersomeoftheirstrengthsandlimitations.
Objectivity and subjectivity
Ourmeasuresof financialwellbeingweresubjective innature,whichwasa
necessity given our use of an online self-reported survey. Some of these
subjectivemeasureswereusedasproxiestocaptureobjectivedimensionsof
financialwellbeing.Forinstance,participantswereaskedtheirlevelofsavings
comparedtotheir income,theextenttheywereabletomanagetheirdebt,
andtheextenttheycouldmeettheirlivingexpenses.Thesequestionscould
alsobemeasuredobjectivelyifthedata(e.g.bankingrecords)wereavailable.
Ofcourse,thisisnoteasilyachievedwithaself-reportsurveyandevenasking
fordollarvalueshasshowntobeunsuccessfulasdemonstratedbyashiftto
use of income bands rather than actual dollar values. Firstly, people are
inaccurate at reporting their income, assets and liabilities [14, 15], which
affectsthevalidityofthesemeasures.Second,itcanresultinhigherratesof
missingdata,whichdepletestheavailablesamplesizeforanalysis.However,
thecollectionofobjectivedatamaybepreferredinsomeinstances.Inone-on-
onesituations, financialcounsellorsare likelytobeabletocollectobjective
financial data. Likewise, some financial institutions are nowdeveloping the
capacitytoanalyseobjectivecustomerdataalongsidesubjectivemeasuresof
financialsatisfactionandperceivedcontroloverfinances.
Thereare two implicationshere.Firstly,our resultsdescribing thepotential
influencersoffinancialwellbeingshouldbeinterpretedwithsomecaution,as
withanycross-sectionalself-reportedsurvey.Second,thedevelopmentofa
financial wellbeing measurement system should be flexible enough to
incorporate subjective measures, objective measures or a combination of
both,dependingonthecontextthedataiscollectedin.
Exploring Financial Wellbeing in the Australian Context
36
Time dimension – now versus the future
Theliteratureandourqualitativeresearchhighlightedtheimportanceofthe
time dimension in measuring financial wellbeing. This was achieved both
directlyandindirectly.Forinstance,thebeingincontroldimensionassessed
controlnowandinthefuture(e.g.bysettinggoalsforthefuture).Thefeeling
financially secure dimension assessed satisfaction with and worries over
currentfinancialcircumstances.Thecomfortablymeetingexpensesdimension
drawsonCSI’sfinancialresilienceresearch(Muiretal,2016).Itasksquestions
aboutcurrentfinancialcircumstanceswithone’sfutureresilienceinmind.
However, the measure could have been strengthened with additional
questionsassessingthebeingincontroldimension.AsnotedinAppendixA,
oneoftheoriginalsurveyitemsassessedhowmuchcontrolparticipantshad
over financialdecision-making in thehousehold.However,due to thesmall
numberofpeoplereportinglimitedcontrol(andthelackofassociationofthis
measurewiththeotherdimensionsoffinancialwellbeing),themeasurewas
notputforwardinthefinalmodel.Futureresearchneedstodrawonmeasures
thatexhibitmorevarianceandaccountforthefactthatnotallpeoplewantto
beincontroloftheirfinances.
Future directions
Thereareseveralstepsneededtofullydevelopameasurementsystemthat
falloutsidethescopeoftheresearch.Thesestepsareoutlinedbelow.
Are we measuring the same thing over time?
Test-retestreliabilityisanassessmentofameasure’sconsistencyoverashort
periodoftime.Itisusuallyundertakenbyadministeringthesurveyattwotime
intervals(ormore)andtheresultscorrelatedtotestwhetherthesameresults
areproduced.Suchinformationcanprovideinformationon,forexample,the
extentthatmoodstatemaybe influencingtheresults.Generatingthisdata
wouldbeparticularly importantfordevelopingthefeelingfinanciallysecure
dimensionas itassesseshowpeopleperceiveasituation,andthiscouldbe
potentially biased by the mood they are in at the time. Therefore, it is
recommended that future development of the financialwellbeingmeasure
includesatestre-testreliabilityassessment.
Are we measuring what we think we are measuring?
There are numerous methods for assessing the validity of a measure. For
example,criterionvalidityinvolvesbeingabletopredictsomekindoffuture
externalandobjectiveevent,usingmeasurementscores[16].Establishingan
objective and external criterion for financial wellbeing is challenging, but
Exploring Financial Wellbeing in the Australian Context
37
would provide valuable evidence on the validity of themeasure. Potential
criteriacouldinclude:
• Usingameasureoffinancialwellbeingtopredictthefutureuseof
financialadviceservices
Thisassumesthatpeoplewhoscorehighon,forexample,thebeingcontrol
dimensionwouldbemorelikelytousefinancialadviceservicesinthefuture
thanpeoplewhoscoredlowonexercisingcontrol
• PredictionoffuturerelianceonsuperannuationversustheAge
Pensioninretirement.
Thisassumesthatpeoplewhoexercisecontrolandcomfortablyhaveenough
throughoutworkinglifewillbemorelikelytobeself-sufficientinretirement,
aftercontrollingforincomeandotherfactors
• Predictingoverallwellbeing
Itiswellknownthatoverallwellbeinghasmanydimensionssuchhealthand
socialparticipationaswellasfinancialwellbeing.Demonstratingthatfinancial
wellbeingplaysa role in shaping futurewellbeing ingeneralwouldprovide
supportforthevalidityofthemeasureandforunderstandingwhatrepresents
“good”financialwellbeing.
What is good financial wellbeing?
Althoughourmeasureof financialwellbeingcomprisedvalidatedmeasures,
they do not specifically tell us what represents good or poor financial
wellbeing.Oneway this couldbe achieved is through longitudinal research
comparing how financial wellbeing scores predict other outcomes such as
overall wellbeing. This information would help establish, for example, a
thresholdoffinancialwellbeingwherefutureprobablementalillnesscanbe
avoided.
Another important step is benchmarking indicators of financial wellbeing
againstthepopulation.Forinstance,ourfinancialsatisfactionmeasureisused
intheHouseholdIncomeandLabourDynamicsAustraliasurveyandthreeof
thefour“havingenough”itemshavenationaldatabehindthem.Beingableto
benchmark a target group against the population and understanding what
representsgoodfinancialwellbeingcanhelpintheestablishmentoftargets
andbenchmarksforwhatrepresentsgoodfinancialwellbeing.
Exploring Financial Wellbeing in the Australian Context
38
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