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https://learn.extension.org/events/2591
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2014-48770-22587 and 2015-48770-24368.
What is Financial Fitness & How is it Measured?
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MFLN Intro
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Dr. J. Michael Collins • Faculty Director at the Center for Financial Security
at the University of Wisconsin. • Associate Professor at the La Follete School of Public
Affairs and at the School of Human Ecology. • Family Economics Specialist for UW-Extension and
Cooperative Extension • Collins studies consumer decision-making in the
financial marketplace, including the role of public policy in influencing credit, savings and investment choices.
Today’s Presenter
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What is Financial Fitness & How is it Measured? Dr. J. Michael Collins, University of Wisconsin-Madison
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+Time for a poll
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Common Goal
§ Help people be “better off” § Independence § Control § Stability
§ How can people better manage the
resources they have to reach a higher level of well-being?
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Ideal Outcomes
§ Develop stronger financial skills
§ Empower to adapt to new economic contexts
§ Increased self-efficacy and self-control
§ More focused attention and reduced inattention
§ Support planned, goal-driven financial behaviors
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Challenge for Field
1. What are the outcomes?
2. What is the return on investment? …costs and benefits
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n Measures we use all the time § Weight or blood pressure
§ Weight for monitoring heart function § Weight for competing in diet competition
n Tests - use only sometimes § MRI or blood draw
Both are important, but have different purposes and uses
§ Likely we are more focused on frequent “all the time” type measures
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Measuring as a Task
Pros Cons
Self Reported Survey
Can be collected in service delivery
Self-report bias; lack of cooperation, especially for
follow-up—need incentives.
Credit report/score Widely used
Proprietary ; 'thin' files; slow to change.
Account balances
Directly observe behavior; validity
Very “noisy” snapshot; requires client consent
Public records Accessible Low probability events;
uneven reporting. 13
Three Legs of Financial Fitness
§ Financial Literacy § Knowing What to Do
§ Financial Capability § Skills to Do
§ Financial Inclusion § Opportunity to Do
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§ Standardized measures? § Health care, public health, nutrition
§ Ex. Outcomes per health care expenditure
§ Financial programs use wide range of outcomes
§ Common “yardsticks” will help. Two examples:
§ Financial Capability Scale (behavior) § Financial Well-being Scale (subjective)
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Measuring Outcomes
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Financial Capability Scale I
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Financial Capability Scale II
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Financial Capability Scale Components: Change Over Time
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+Time for a poll
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Financial Wellbeing
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Social
and
Economic
Environment
Personality & attitudes
Decision context
Knowledge
& skills
Financial well-being
Behavior &
Actions
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Financial Well-‐being I
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Financial Well-‐being II
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Scoring the Financial Well-‐being Scale… Using the Look Up Table
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01
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4FW
B by
Ass
ets
Low FWB Moderate FWB High FWB
01
23
4FW
B by
Fin
anci
al S
tress
Low FWB Moderate FWB High FWB
05,
000
10,0
0015
,000
FWB
by E
mer
Sav
ings
Low FWB Moderate FWB High FWB
0.5
11.
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2.5
FWB
by D
ebt
Low FWB Moderate FWB High FWB
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§ No measure is perfect § Some measures are better than none § Don’t let the perfect be the enemy of the good.
§ Balancing strategies for collecting data § Self reported data AND Administrative data
§ Not about ‘Winners’ and ‘Losers’ § Measures are complements not substitutes § Expect constant improvements and refinements
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Moving Forward
Illustrative Studies… § Retirement Savings Education: Quasi-experiment with employees:
increased retirement deferrals by 47 percent ($30 / month)
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19%
13%
18% 17%
12%
16%
Georgia Idaho Texas
Before ALer
High School Financial Education: 90-Day Loan Delinquency Rate by Graduation Year Before & After State Mandate
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+Time for a poll
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What’s Next? 1. Build Measurement Capacity
§ Training & education § Developing systems
2. Deploy Technology
§ Software, web-based services
3. Practice: Fidelity, Consistency & Quality § Need “rules” (and enforcement) § Context/process, wording, mode, timing
4. Standardization & Aggregation
§ Across time, program and geography 35
Homework
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§ Try the Financial Capability Scale. What is your score (0-8)? http://fyi.uwex.edu/financialcoaching/measures/
§ Try the Financial Well-being Scale. Calculate your score (with the look-up table)
http://www.consumerfinance.gov/data-research/research-reports/financial-well-being-scale/
§ How could you use either scale in your own work with clients?
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Resources
§ Financial Capability Scale Brief § hMp://fyi.uwex.edu/financialcoaching/files/2013/07/
CFS_Research_Outcomes_Brief-‐Coaching-‐MetricsJMC1.pdf
§ Financial Well-‐being Scale Brief § hMp://www.consumerfinance.gov/financial-‐well-‐being
§ Center for Financial Security § hMps://cfs.wisc.edu/ § hMp://fyi.uwex.edu/financialcoaching/
What is one significant thing you learned today?
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Connect with MFLN Personal Finance Online!
MFLN Personal Finance
MFLN Personal Finance @MFLNPF
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MFLN Intro
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Evaluation and Continuing Education Credits/Certificate
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MFLN Personal Finance is offering 1.5 credits for AFC-credentialed participants through AFCPE and CPFC-credentialed participants through FinCert for today’s webinar. Please complete the post-test for today’s session at: https://vte.co1.qualtrics.com/SE/?SID=SV_8eJaDnO5RxbuNyl Must pass post-test with an 80% or higher to receive certificate. Please complete the evaluation after the last VLE event you attend: https://vte.co1.qualtrics.com/jfe/form/SV_d0aEDkKqPE2lJmR
Personal Finance Upcoming Events
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VLE Session 2: Positive Personality Traits of Financially Fit People
• Date: Wednesday, June 15, 2016 • Time: 11 Eastern • Location: learn.extension.org/events/2592
VLE Session 3: Wealth Building With Savings, Investing & Windfalls
• Date: Thursday, June 16, 2016 • Time: 11 Eastern • Location: learn.extension.org/events/2593
VLE Wrap Up Discussion
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• Thursday, June 16, 2016 from 1-1:30pm Eastern • https://learn.extension.org/events/2594 Join us for an interactive discussion of the resources, tools and quizzes shared during the Virtual Learning Event, as well as your own experience as practitioners. Connecting with a mic-enabled headset is encouraged!
www.extension.org/62581
45 This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2014-48770-22587 and 2015-48770-24368.