Transcript
CFPB FinEx Webinar:  Financial well-being:  Our latest research and how to apply it
March 29, 2023
Presenter:  Laura Schlachtmeyer, Senior Financial Education Content Specialist, CFPB
Facilitator:  Ken McDonnell, Financial Education Program Analyst, CFPB
 
 >>Mr. Ken McDonnell:  Today we're going to go over financial well-being, how this applies in the workplace.  We'll be going over our scale, so you learn how to take a measurement of financial well-being, and we will also have our latest research findings and also how those findings have guided us into other ideas and areas for further research.
 
Press the next slide, please.  So, first of all, I'd like to start out with a disclaimer.  As many of know, we are required to say that this presentation is being made by a CFPB representative on behalf of the Bureau.  It does not constitute legal interpretation, guidance, or advice of the CFPB, and any opinions or views stated by the presenter are the presenters own and may not represent the Bureau's views. 
 
Next, please.  So here's going to be our agenda for today.  We'll start off with defining financial well-being.  Then we want to do a spotlight on financial well-being in the workplace, and we'll go over why it's important for us to look at the workplace.  Then we're going to go into a measure of financial well-being how you can come up with a score for this, and then we're going to go over some of our latest research findings, looking at it, comparing 2017 to 2020, and then also some ideas for further research that we'd be very interested in learning from all of you.
 
Next slide, please.  Next slide, please.  So financial well-being is—in its simplest definitions, have a sense of having financial security and financial freedom of choice in the present as well as for the future.  So this very simple graphic here illustrates to you in a very simple, easy way what financial well-being is.  If you're in the present and you're looking for freedom, financial well-being would have financial freedom to make choices so that you may enjoy your life.  Or if you're looking for in the future and want freedom, that you feel that you are on track to meet your financial goals, whatever those goals may be, they could be retirement.  They could be a home purchase.  They could be starting a family.  The beauty of this is that the goals are decided by you.  This just gives a good overall framework for which to understand what financial well-being is.
 
Next slide, please.  Now, in past research, we have looked at what are the influencers of financial well-being, and first and foremost is financial skill.  And this is how you find process and use relevant financial information, and this is a place where a lot of you financial educators can come and have a big impact on individuals' lives and help them develop their financial skills.
 
And having those skills then translates into your financial behavior.  These are your day-to-day actions that take you to a secure place for your financial life.  So it's great to have the skill, but you also have to exercise it, and as we all probably know, it's an ongoing day-to-day situation.
 
Then these two combined, your financial skill and your behavior, will then lead into what your financial situation is, and these are the objective facts of your financial life.  So you can determine whether you're on track right now, or if I'm not on track, and if I'm not on track, how can I get to there?  And again, that's where the skill comes in handy.  So you can apply your behaviors to then improve your financial situation.
 
And then that takes you to our final place of financial well-being, and that is where you would perceive your financial security and freedom of choice, again, defined as how you want to define this. 
 
Next slide, please.  So I would like to start out by putting a spotlight on financial well-being in the workplace.
 
Next slide, please.  So workers and financial well-being by look at the workplace, and so when a worker at any level of an organization is going through money stress, it can show up and manifest in various ways.  In the workplace, this could be through productivity loss.  It could also lead to poor health outcomes for the individual, which could lead to absenteeism or presenteeism.  It could also impact their job satisfaction.  Someone who is preoccupied with a financial matter at home will not be focused in their job, and that negative emotion could carry over into their work world, which could lead someone to overreacting to minor situations.

Next slide, please.  So how does financial well-being affect business metrics?  So what we discovered over the years is financial well-being has moved from something nice to have to an essential offering.  In the past, what we found, that employers were previously going to their 401(k) plan service provider to get financial education tools and resources, but those tended to be focused on retirement.  Today there are many more organizations out there that are specialized financial well-being providers, and they offer a diversity of different services to help an individual, not just get on track for retirement but manage a mortgage, manage credit, getting established.

So when working with employees on personal finance issues, one of the things that we have discovered is that empathy is incredibly important.  Many employees could be experiencing a wide range of negative emotions when they're dealing with financial stress from shame to guilt to frustration.  Demonstrating empathy towards their situation could help them overcome these negative emotions, overcoming those emotions, that negativity, and then being able to focus on developing positive outcomes.  Financial stress has been found to be a factor that could negatively impact an employee's work performance.  It is really unrealistic for employers to think that employees are not bringing this stress factor with them into their jobs.  An employee that is stressed about being unable to pay their bills is not well focused on their work.  If not addressed, a situation like this could have long-term impacts, as we've identified, such as absenteeism, presenteeism, low work quality, potential workplace accidents, and increased health care costs to the physical manifestations of stress.

So this graphic shows you nicely about how all the other different business metrics that can come in can be impacted by an employee's financial stress and how financial well-being and providing these resources and services and demonstrating empathy to an individual can eliminate that stress and then turn this into positive outcomes on the slide.

Next slide, please.  So why look at the workplace for financial well-being?  Well, one of the things is that employers are in a unique position to have an impact on the employees in their workplace.  The nature of the relationship between a worker and the organization is, by definition, financial.  Workers make money decisions at work and related to work.  Workplace is also the only place where many adults get their financial education, and I would like to emphasize that if you think about it, there are a lot of financial decision-making that occurs in the workplace, beyond your paycheck and your taxes and saving for retirement.  You also make health care decisions by your choice of insurance, long-term/short-term disability, life insurance.  There are ways to save money aside for health care benefits.  You could also do this for childcare benefits.  So there's a lot of going-on that can impact you within the workplace where finances play a key role. 
 
And also, employers have an opportunity to go beyond information about just their benefits and retirement.  They need to understand—an understanding of the workforce can help them better support their day-to-day and long-term decisions.  So if an employer would like for their employees to be able to retire on time, they have to be able to help them get to that retirement place.  And so there are many competing needs on an employee's money.  So by employers helping the employees to be better managers of their household budgets and their household finances will help them be able to save for the retirement and be able to move on.  This also increases employee loyalty with the employer.
 
Next slide, please.  So now we're going to go over to measuring financial well-being, and I'd like to pass this on to my colleague, Laura Schlachtmeyer.  Laura?

>>Ms. Laura Schlachtmeyer:  Thanks, Ken, and thank you for that sort of overview of how financial well-being works, what it means, and the impact that it has.  And I will take in this next section some—a look at the financial well-being scale that the CFPB developed so that we could have a metric recognizing that it's difficult to measure something that is a person's perception of how they're doing.  So I'm going to show you how we did that.  
 
If we could start on the next slide, we'll look at the beginnings or the genesis of the financial well-being scale, looking back at the definition that Ken presented to us when we want to find out whether someone is experiencing financial security and financial freedom of choice for now and for the future, and how do you measure something like that?  So we developed and tested a set of questions.  So there's 10 questions in our scale that are intended to measure the presence of financial well-being for an individual.  So what the scale will do is help practitioners and researchers to consistently measure something that might seem to be quite subjective and not something that is observable by an outside person, because it's based on the individual's experiences. 
 
The scale is also a stable metric.  It's less like a Cosmo quiz of, like, how are you feeling today.  It does really reflect the realities of your financial situation.  So it's not something that will change on a day-to-day basis, something that changes when an actual—when something meaningful changes in that person's financial lives.  And the nice thing, everything I'm going to show you about the financial well-being scale is for the public benefit.  It is free.  It is publicly available.  All of our coding is freely available, and we can point you to those resources if you'd like to implement it yourself.
 
Let's take a look at the next slide.  Before we—just to set a little bit of context to it and what you can expect to see, this scale will help you understand a person's financial state.  Obviously, you can also look at other data points if you're particularly interested in how people are doing in terms of credit scores or other kinds of metrics.  There's plenty of other sort of objective metrics, but this adds to that picture of how people are experiencing their financial situation.
 
What the financial well-being scale will not do is diagnose a course of action based on the way the person scores.  Some metrics out there will attempt to do that, will attempt to say, well, gee, because you took the scale, you might need to build your savings more or you might need to work on your credit.  What we find when people take the well-being scale is that they know internally the next steps that they need to do because the scale helps them think about their situation, and the topics that come most to mind, as they answer the questions of the scale actually guide the individual on their next steps, more than probably a diagnose—a diagnostic test could do.  
 
Let's take a look at the next slide, and I'll just—again, the way that we develop the scale is maybe also a little different from how other metrics have been developed.  We started with a series of interviews to be sure that the questions were easily understood and that they zero in on the specific question that we're trying to get an answer to.  Then we applied factor analysis to the bank of questions that we started with to make sure we were selecting the ones that were the most well tuned, and then we proceeded on to rounds of psychometric testing, which was terrific just to test out how robust the questions were in the entire population, and also to reinforce here as we develop the scale, we built a scale that can apply across the board.  So this is not just aimed at working-age people.  It is not aimed just at retirement plan participants or full-time employees or something like that.  This is intended to work for the entire adult population, age 18 and up, regardless of other economic or social factors.  So that makes it more robust than many other metrics.

We'll give an overview on the next slide, please.  This is an overview of the questions in the scale, and we will take a look at the actual implementation of it in a minute.  But if you take a look at the way—at the way we're asking these questions, you'll notice that there's nothing on this page that asks people to go and pull their credit report or go and look at your most recent bank statement or look at the last—the less expenses you incurred.  These are really for a person to ask.  They can answer these questions almost at any time in any place.  You don't have to go and look up any information.  It is really capturing what they feel inside, what their core experiences are for their finance. 
 
Let's move ahead to the way we might use the financial well-being scale, so one more slide, please.  And as we have worked with organizations and practitioners who are using the financial well-being scale, there are a few different ways tat you can think about using it.  One of the common ways to use it is just as an initial assessment.  If you are working with a person one-on-one to improve their financial lives, you might use this as an initial—sort of like an intake questionnaire to see how they're doing at the beginning of your engagement with them.  So you can use this scale to get to know this person and to get them started talking about the things that are on their mind about their financial well-being.
 
On the next slide, then you can move to tracking that individual's progress.  So administering the financial well-being scale at different points in time will help you measure whether that person is making progress toward the goals and toward the definition of financial well-being.  Again, as I said before, this is not intended to be like a weekly test or something like that.  The skill results are probably not going to change very quickly, but as you work to make substantial changes in an individual situation, the financial well-being scale score should track those changes as you make progress.
 
On the next slide, the other common way that the financial well-being scale is being used by practitioners is to assess program outcomes.  So, in other words, the scale is administered to participants in a particular program, and that measures the extent to which that program is having an impact on the financial well-being of the people who are participating in it.  So this gives you actually that picture of how effective is the content or the delivery of the program that you're administering to your people.  So you can also report that out when people want to know how effective is your financial well-being program.  This gives you a way to answer that question.  At the same time, it can also help you break down the results among different populations.  So if you're very concerned with the difference in financial well-being between your headquarters' workers in your field workers or your field population or if you are working to compare other types of populations that you care about within your organization, this helps you judge and compare different groups.
 
And then, finally, the next slide says that if you—talks about financial well-being survey research, the other aspect that Ken talked about earlier was the impact that financial well-being can have on other business metrics.  So if you're interested in measuring or having a quantitative way to assess the impact of financial well-being compared to health care costs, compared to absenteeism, something like that, it's hard to track without a metric to define financial well-being.  So this helps you make that connection.

I see that we have a question.  I will pause for a second and answer this question about obtaining participant data to assess program effectiveness.  I'm going to take that to mean how can we obtain participant financial well-being data, and that is the subject of the next section here.  I will talk a little bit about implementing the financial well-being scale.
 
So let's go on to administering the questionnaire.  Thank you.  So we do have—the CFPB has created two different versions of the questionnaire.  There's a long version, a ten-question version and a short version, which is just five questions.  I would think of these also as a stand-alone version and a version that you might incorporate in another vehicle.   So if you are if you are administering the financial well-being sort of one-on-one or as a stand-alone piece, I would use the ten-question version.  It is possible to use the short version if you are implementing it, let's say, as part of your—either your intake process or as part of an annual employee satisfaction survey, something like that.  You can use the short version, and both of those will give you an equivalent financial well-being score.
 
So this is something that is available through the CFPB's website for individuals to answer on their own, but as I said, it is also very freely available.  So you can also take the questions and all of the scoring methodology and incorporate it into your own program, into your own survey, so that you can collect that data and analyze it on your own.
 
Okay.  Let's continue going on in this question about the scale itself, and then I see some other questions are coming up in the chat.  Let's come back to that. Let's take a look at the financial well-being scale as the CFPB has released it, and I will take us to that page on our website.  You can see the URL is right there, consumer-tools/financial-well-being.  So let's take a look at that. 
 
This is the page.  Now we're looking at the Consumer Financial Protection Bureau's website, and on this page is where you will find the ten questions that can be scored.  I also want to call your attention to the fact that the scale is also available in Spanish.  So you can implement it in English and Spanish, and the answers are comparable in both languages.

So let's go ahead and answer these questions.  When it comes to using—answering the questions and using the financial well-being scale on the CFPB website, the data is never saved or stored.  So if an individual is taking it themselves, they will need to either print as a PDF from the website—we have a way to do that so that they can maintain their own scores, but that is not data that the CFPB takes in or maintains. 
 
So let's go through and answer these questions.  Maybe I'll ask Ken to participate in this side of it.  Can—on a scale of completely to not at all, I could handle a major unexpected expense.

>>Mr. McDonnell:  Completely.

>>Ms. Schlachtmeyer:  Completely.
 
I am securing my financial future.  The statement describes me. 

>>Mr. McDonnell:  Completely.

>>Ms. Schlachtmeyer:  Completely.
 
>>Mr. McDonnell:  Thank you, financial education.
  
[Laughter.]
 
>>Ms. Schlachtmeyer:  Because of my money situation, I feel like I will never have the things I want in life.
 
>>Mr. McDonnell:  Not at all.
 
>>Ms. Schlachtmeyer:  I can enjoy life because of the way I'm managing my money completely.
 
>>Mr. McDonnell:  Completely.
 
>>Ms. Schlachtmeyer:   I am just getting by financially. 
 
>>Mr. McDonnell:  Not at all.
 
>>Ms. Schlachtmeyer:  I'm concerned that the money I have or will save won't last. 
 
>>Mr. McDonnell:  I'll say very well.

>>Ms. Schlachtmeyer:  How often does this statement apply to you, Ken?   Giving a gift for a wedding, birthday, or other occasion would put a strain on my finances for the month.
 
>>Mr. McDonnell:  Never. 
 
>>Ms. Schlachtmeyer:  I have money left over at the end of the month. 
 
>>Mr. McDonnell:  Often. 
 
>>Ms. Schlachtmeyer:  I am behind with my finances. 
 
>>Mr. McDonnell:  Never.
 
>>Ms. Schlachtmeyer:  And my finances control my life.
  
>>Mr. McDonnell:  Rarely.

>>Ms. Schlachtmeyer:  Great.  And the point I think I want to make about this is that Ken and I might have the exact same—you know, we might have the exact same salary.  We might have the exact same savings level.  We might live in a similar neighborhood.  We might have the same family situation, but we might answer these questions very, very differently based on just our overall attitudes and maybe where we are.  But I want to point out that that is what's capturing sort of the differences between the objective financial data that you might know about somebody and how that person is actually experiencing their financial lives.
 
I'm going to go ahead.

>>Mr. McDonnell:  Mary's response.  Sorry, Laura.  I was laughing.  I see Mary's response in the chat.

>>Ms. Schlachtmeyer:   Oh, I see.  All right.  
 
I went ahead and I selected your age group.  There is slightly different scoring for adults, ages 18 to 61 and 62-plus, and it matters, actually, in this case, whether somebody is reading the questions to themselves or whether they're hearing them read to them.
 
So once I click the financial well-being score button, then we see how Ken's results stack up against the population that's in our database.  The U.S. average is 54, and then Ken's score here with 71.  That puts him on the high side of financial well-being.  And then the rest of this page kind of allows you to take a look at your answers, how did he answer these questions, and take a few next steps based on what you yourself feel is the next good idea for your situation.
 
A few at the bottom have some score comparisons by age, by household income, and by employment status.  Those are very interesting.  We find that people are not always interested in how they stack up against others in their age ranges.  Just fine.  Most of this is very individual and very personal, and nobody wants to necessarily feel compared.  But that information is there if you'd like to look at it.
 
All right.  So let's go back to the presentation, please.  Before I move on to interpreting the scores, are there questions in the chat that we want to get to now?  I'm sorry if I missed some.  Ken, have you been watching?

>>Mr. McDonnell:  Sorry.  I'm on mute. 

>>Ms. Schlachtmeyer:  Kelsey did ask a couple of questions, and I might have mentioned to her that I think some of her questions will get some illumination later on in the presentation.

>>Ms. Schlachtmeyer:  Oh, I see.  What determines one's financial situation aside from just skill and behavior?  Absolutely.  There are factors between skill and behavior.  Yes.  I want to answer that question about what determines your financial situation, aside from both—from just skill and behavior.  Clearly, there are environmental situations, environmental factors that determine what your financial situation is.  Let's say you're in a banking desert.  Let's say you're working for an employer that doesn't have a robust retirement plan or that doesn't allow you to split your paycheck so that you have rainy day savings, that there are just factors that are beyond a person's control, and we should really have—Ken was talking about empathy, but we really do have to understand very well the environment that people find themselves in.  And to the extent that they can exercise skill and behavior inside that environment, they may feel very fine about their financial well-being, but there are also times when that environment works against you and does not allow you to use your skills and to change your behavior and change your financial situation.
 
If there are factors between—yes.  So skill and behavior—when we talk about financial skills, a lot of those have to do with making sure that you are acting on the decisions that you make and keeping yourself on track.  Actually, a financial skill to make sure that you are carrying out your intentions and keeping yourself on track is, in fact, a skill.  So that is something that we try to use financial education to close that gap between skill and actual behavior. 
 
>>Mr. McDonnell:  Laura, there's another question that came through, I think, is very interesting because we get this a good amount of times.  It was about my score at 71.  But if you look at how I answered the questions, you would have thought I would have a score that was above 90.

>>Ms. Schlachtmeyer:  Mm-hmm, mm-hmm.  Whether the score discourages customers, it is very, very unusual to get—I mean, the scale is—and maybe we'll look at this actually.  We'll look at the bell curve of the scale, and that will probably help you see how to interpret the actual number of the score kind of in context, so let's do that.
 
Let's move on to the next slide so we can take a look at how to interpret this.
 
>>Mr. McDonnell:  Okay.
 
>>Ms. Schlachtmeyer:  So the scoring is also very robust and very detailed for the ability to use those ten questions or even the five questions to provide a robust score, and this is based on essentially kind of what they do for standardized tests.  It allows different questions in the scale to contribute differently to the score.  
 
Let's take a look on the next slide a little bit more about the interpretation.  So when you see—this might help to see that the majority of people are going to be sort of in the middle of this bell curve from very low to very high scores as we looked at—as you saw on the website page.  The U.S. average for financial well-being when was first issued in 2016 was 54, and that is medium high.  And that is right about where the median population is.  So Ken's score of 71 does actually put him on the very high range of financial well-being.  It is equally unusual for people to have a very low financial well-being on the very low end of the scale.  By putting it on this sort of 1-to-100 scale, it does feel like people should be aiming for 100, but it's not like a letter grade.  It's not like a school grade like that.  It is really a curve where most people find themselves in the middle ranges.  Does that help to answer that question, I hope?
 
Let's go on and let's take a look at the connections between financial well-being score.  When we developed the financial well-being scale, we administered it nationwide, and at the same time that we administered the scale, we asked additional questions about people's objective financial situation.  So these are some of the things that we found were associated with higher financial well-being at the time that we conducted this survey.  So having a higher level of liquid savings, having lack of a negative experience with debt or credit, and then there were some money skills, day-to-day money management habits that people displayed and like a habit of savings, for example, and then something that we call "financial self-efficacy" or self-confidence.  That is the attitude that a person has when they feel that their efforts will produce a change that they want to see.  So having that level of financial self-efficacy going into this question helps—is associated with that person having a higher sense of their financial well-being.
 
When you talked earlier about the difference between skill and behavior and then the person's actual financial situation influencing their financial well-being score, if you go back to that sort of path that we looked at, the financial situation explains about 70 percent of your financial well-being score on the scale.  So that is the connection.  Not everything is based on objective financial data, but it's very connected.
 
Let's go on to the next slide and look at a little bit of how we've seen the scale help in the workplace.  One example, of course, is to help evaluate the impact of the program.  So whether you are using add-ons that are available through a retirement plan provider or whether you have taken on board specialist and financial wellness benefits, regardless of the content or the provider or the medium of that program, you can use the scale to evaluate how it's having impact on your people.  Then you can take a look at the scale results to see if there are immediate issues with financial well-being, if financial well-being is lower among populations that have not adopted your programs or that are particular demographic groups that you're interested in, as we find most financial—many financial well-being benefits appeal to workers who are already thinking about this on a regular basis, and the financial well-being scale can help expose folks that may not be already using planning techniques or financial planning in their lives.
 
And when people—when you're looking at your organization in terms of what is most needed in your population, you can take a look at what might be needed.  The context that workers bring with them to the workplace is also an impact on their financial well-being and on those other metrics that we had talked about before, and this may be a way to address diversity, equity, and inclusion efforts by making sure that the financial wellness benefits and the engagement with those benefits is equitable in the workplace.
 
Let's continue to the next slide.  So when you gather and analyze this date on your side to see whether people are reporting high financial well-being, then you can look forward to what the next steps would be.  Can you hypothesize what the reason is for a low level of financial well-being across the board or in specific populations?  What kinds of other benefits or support or details can you provide?  And obviously, having a benchmark for your workforce compared to the national averages can help you examine where people are relatively low or relatively high.
 
Differences among the groups that you see in the populations that you're serving can influence the way you communicate out, could even influence your choice of resources and programs that you provide, and then if you are able to compare and benchmark against peers, you can look at that information from financial well-being and use that to relate to program satisfaction. 
 
If we also use—yes, thank you—the financial well-being scale can also be an education tool itself, and it can help people, first, begin to enter the topic.  It's often a difficult discussion to get started, but even if you are not intending to implement a full financial wellness program, you can help people get started on their own by encouraging them to take the financial well-being scale and get them get themselves started.

So a self-service strategy can use this.  You can direct people to take the questionnaire themselves on the ConsumerFinance.gov site and then follow through and, based on the score that they're seeing or the feedback that they—or the feelings that they're experiencing, then they can take that forward and make their own decisions.
 
If I might pause here for additional questions, but I know we want to move on to look at the latest research numbers.  So are there questions that we should answer before moving on, or should I turn it back to Ken for the latest research?
 
>>Mr. McDonnell:  Hold on.  Let me check for questions.
 
>>Ms. Schlachtmeyer:  Okay.
 
>>Mr. McDonnell:   Here from Jason, is there a suggested benchmark for what is the significant increase or decrease of the financial wellness score to indicate financial wellness programs impact?  Also, is there a certain time frame suggested to wait until a reassessment? 

>>Ms. Schlachtmeyer:  Right.  I think the time frame for reassessment is probably no shorter than 6 months.  So it's probably 6 months or a year, and to see an increase or decrease of—I think we say like 2 to 5 points is a measurable impact.  So I would look to increase a financial well-being score of 2 to 5 points over 6 to 12 months, and that would be a program that shows a lot of impact actually. 
 
>>Mr. McDonnell:  Thank you, Laura.  That's all for now.
 
>>Ms. Schlachtmeyer:  Great.  Then back to you for our latest updates.
 
>>Mr. McDonnell:  Thank you, Laura.  I'm going to drop here into the chat, a link to the report that I'm going to highlight just a couple of data points on here, but you can access the full report there in the chat section.
 
Next slide, please.  Excellent.  So as we've highlighted here already, I wanted to show some other key points.  The financial well-being scores that will reflect differences in underlying financial circumstances beyond traditional measures, that we find that the score varies across various adult populations.  
 
As questions have been asked, yes,  there are socioeconomic characteristics that are associated with being financially well-being.  Savings and financial cushions provide the greatest difference between people at different levels of financial well-being, and the savings was one that really stuck out to us.  We found that those individuals who had an emergency savings plan across all other demographics did report that they had a higher financial well-being score.
 
And also, we find that certain experiences with debt and credit were strongly associated with financial well-being.  For example, being denied credit or being contacted by a debt collector would negatively impact your score.  But if you had, say, just successfully got a mortgage and you successfully got a car loan, you may be feeling a lot better about your personal finances.  So there are a couple of situations that can impact how you were feeling at that moment.
 
Next slide, please.  So there's the report that I put into the chat.  We looked at two different points of time, in 2017 and 2020, and like I said, the data comes from the financial well-being scale scores were added to the Federal Reserve Board's Survey of Household Economics and Decision-making.  And so we had two different data points, one for 2017 and one for 2020.  And what we wanted to be able to do is see what happened to individuals.  Was there any movement?  And we're happy to report that on average, financial well-being scores increased by one point, from 54 to 55, between the two data points.  And we believe that this increase is likely due to the very large amount of government stimulus that was provided during the COVID-19 response, this being in the forms of increased unemployment benefits, student loan abatement, mortgage abatements, a lot of direct payments out to individuals from the government.  These also added into individual sense of well-being, and not surprisingly for some, the largest increases were experienced by those who are in higher income levels.
 
But while we have the positives, there are also some negatives.  We did find that many Americans are still struggling.  We found that one in ten adults had a low or very low financial well-being score in 2020.  Also about one-third of Americans saw a decline in their financial well-being. 
 
Next slide, please.  So here's looking at—these are all Americans, and we looked at from 2017 to 2020, and you'll see where the movement occurred here.  So you'll see in the positive side, the percentage of Americans who had high or very high financial well-being increased from 38 percent in 2017 to 42 percent by 2020.  And those are the two greenish bars on the far right.

Also, amongst Americans in 2017 who said they had low or very low financial well-being scores went from 13 percent down to 10 percent by 2020, and those are represented by the two orange bars over to the far left. 
 
So we see here overall, there was what we'd like to think is good, positive movement coming out of this.

Next slide, please.  So when we go down into some of the demographics, here's where we may find some very interesting differences.  What you're finding here that—while both genders, male and female, experienced an increase in their financial well-being scores, it increased higher, faster for men, up 2. 1 points, as opposed to women who only increased by 0.8.  What we also found that when looked by race and ethnicity again, as in gender, everyone did go up, but white non-Hispanic went up further than any of the other races.  And it started from a higher point.  White non-Hispanics went up 1.7 points, but they started at a higher point, compared down to multiracial individuals who only increased by 0.8 percent.
 
And we found that age was also a factor here.  Younger individuals, those who are under the age of 62, increased by 1. 1 points, but those who are older, age 62-plus, went up by 2 points.  Now, the other thing to notice here is that the financial well-being score at age, for those age 62 and older, started at a much higher point than those who are younger.
 
Next slide, please.  And here we see that the growth—but we're not surprised by this, that financial well-being scores are higher for higher income.  And in this one, what is interesting to see is the middle branches here, the 50- to 75,000 and the 75,000 to 99,000, increased at a faster rate than those who are making over 100,000.  Also good to see that those were making less than 25 000, they did increase by 1 point, but also they did start from a much lower level than from any of the other Income brackets here.  
 
So what we're seeing is a good movement up, but we believe a lot of this is attributed into the government stimulus.  Remember these questions were asked in 2020 when a lot of the stimulus was still new and a lot of this was still coming into everyone, a lot of those checks that they got for tax refunds.  So what will be very interesting in the future is to revisit this and looking at it from 2023 or 2024 and then comparing it into these years to see if there's been any decline.

We did have someone ask a question on what would have been the impact of inflation.  That is a very excellent question, and I believe it's something that we would like to see some research on as we're still in the high inflation mode.  I think we're going to have to wait a little bit on that question to see what kind of impact.

But as we did here, asking these questions in 2020, I think it would be very illuminating to get answers to people's questions on that now while we're experiencing this high inflation and then do it in a couple of years once inflation tones down and see what kind of changes would occur in individual's financial well-being scores.

May I have the next slide, please?  So this is where we get into some interesting things.  I would love to have everyone's input on some of these things.  Laura and I engaged in a series of what we call "strategic engagements" with employers, 401(k) service providers, financial well-being service providers, benefit consulting groups, to get an idea of what's going on out in the field within the workplace context with regards to financial well-being or financial wellness benefits.  And here's some of the things that we've learned.  Those who are earning lower compensation, we're looking at groups who need some special attention, and there are challenges in reaching some of these people.  So those who earn lower compensation, these individuals will tend to be less engaged, and they're not taking full advantage of the benefits being offered.  So the questions come around to why.  Why aren't they fully engaged?  Why aren't they taking advantage of these benefits?  And how can we help them?  How can we improve that?  We'd like to see some more research on gaining access.  Getting understanding of those two questions will be able to help us improve those who have lower compensation.
 
Looking at near retirees, speaking as a near retiree myself, these are individuals who are going to need help planning for the effects of aging, including physical and cognitive decline.  There will be issues for this group who have been saving for all their lives towards retirement now having to shift that mentality to spend down.  And how are you going to do that?  When do I trigger this?  These are some very key questions that are going to need some further research. 
 
Looking at family and extended family, many workers may need support in thinking about their financial situations holistically, and this will be parents with children, even with young children.  You may want to be able to help them.  How am I going to be able to explain financial concepts to a 4-year-old?  How am I going to be able to help my teenager transition out into the work world?  Also, are you a person in the family who everyone tends to turn to when they need money or they need financial advice?  How do you manage that?  How are you able to say no at times when you need to say no?  And so all these factors will come and impact an individual's financial wellness score.
 
And also we're going to look at workers who have historically been left out.  They may need our help overcoming structural barriers and unequal access to information benefits and support.  So there are many minority groups out there that have been shunted aside to have structural barriers that have been put in place.  So we need to remove those barriers.  Removing the barriers is only part of the story.  Once we've removed them, now we have to build up their confidence, let them know that this is available for them.  They can take advantage of this, and then also give them the guidance on how to be able to go and take advantage of these.  We did hear from some service providers that financial wellness is being seen by many employers as a way to address issues around diversity, equity, and inclusion.
 
So these are some of the key questions we would love to get some input from all of you out in the field, all of you researchers out there who are looking for topics to do.  We would very much like any of your thoughts and input at any of these, and the next slide will be the—oh.
 
First, the questionnaire, you can see our online questionnaire, the link for that there, and also a link for how to use the scale and how to use the scores.
 
And on more slide, please.  Now we can go into some more questions.  Hold on for a second while we go and dig into these.  So what do we have here?  Laura, we have a question here from Jeffrey Ashe.  Do you include savings and saving circles—[unclear]—in your savings analysis?
 

>>Ms. Schlachtmeyer:  Yeah.  I mean, what we are—when we ask about savings, there's usually two parts to this question, and it's really not—we're not digging into people's accounts or anything like that to try to find where they have their money.  We are asking them more do they consider that they have—do they consider that they have liquid savings and then however amount that they have, and do they have a habit of savings?  And those two things are really—they're connected, of course, but those are the things that we look at when we look at savings levels.
 
>>Mr. McDonnell:  Thank you.  We have a couple of questions here on what would be considered the other race.  So we do have broken out by white non-Hispanic, Hispanic, and Black non-Hispanic, and I believe multiracial as well. 
 
>>Ms. Schlachtmeyer:   I think if you click through to that link that that you put in the chat, Ken, there is a question there that spells it out a little bit more.

>>Mr. McDonnell:  Okay.

>>Ms. Schlachtmeyer:  Take a look in the selected.  

>>Mr. McDonnell:  Thank you.

>>Ms. Schlachtmeyer:  Yeah.   There's figure 6.  If you scroll down, it spells out what we asked about.

>>Mr. McDonnell:  Thank you.  In light of Financial Literacy Month in April, are these resources readily available that you recommend sharing with the employees?  

>>Ms. Schlachtmeyer:  What an excellent question.  We have many readily available, freely available resources that you can share with your employees.  One way to do that would be to just start at ConsumerFinance.gov and look at the tools under our consumer resources menu, and you will see there a wealth of information and resources on topics that everybody needs.  So auto loans, credit cards, student loans, all kinds of resources, that you can help yourself to, that you can point your employees to, that you can download and share, that you can repurpose in your employee newsletters, anything that you'd like.  It's all there for sharing.
 
>>Mr. McDonnell:  And if you have any specific questions, say, I'm looking for something on credit—I just put our generic email, FinancialEducation@cfpb.gov—please feel free to shoot an email to that.  I'm the person who monitors that inbox.

We have a question here.  Can you provide some guidance and specifics on structural barriers, different groups are encountering?

>>Ms. Schlachtmeyer:  I mean, the Bureau continues to study this, and a lot of the research that our Office of Research and certainly our other regulations and markets groups look at is where the structure barriers are.  For example, we did an event very recently on assessments, on property assessments—and maybe I'm not using the right term—but that have been a place where historically properties owned by minority property owners have been undervalued relative to their majority white neighbors.  Things like that, the Bureau is continually examining and looking at areas where those barriers exist and what the impact is to people and their finances and their lives.

>>Mr. McDonnell:  Appraisals.  Thank you. 

>>Ms. Schlachtmeyer:  Appraisal.  Thank you.

>>Mr. McDonnell:  Yeah.  Don't you hate that when that word is right on the tip of your tongue?

>>Ms. Schlachtmeyer:  Thank you.

>>Mr. McDonnell:  There's another one.  Have you done any research on the most effective methods to build financial skills?

>>Ms. Schlachtmeyer:   We have reached out to the practitioner community, and there are programs that embody "Five Principles of Effective Financial Education."  So that's a topic for a whole nother webinar, but when we move on, I'll put in the chat a link to the "Five Principles of Effective Financial Education" that are aimed at building those skills.

>>Mr. McDonnell:  Here's another interesting question.  Are financial education resources under the Consumer Tools tab?  Are they solely U.S.-based, or could they be used or implemented in another country outside of the U.S.?

>>Ms. Schlachtmeyer:  For the most part, they talk about the U.S. financial system.  Some of the principles probably apply to a global audience, especially skill building.  I imagine that those are universal skills, sort of finding trustworthy information, applying that information to your situation, and then using that information to make decisions and follow through.  So skill building, I imagine is really universal.  Many of the things that you will find have to do with the way the U.S. financial system works, how our bank accounts work, how our credit scoring system works, things like that.

>>Mr. McDonnell:  How long has the scale been around?  The question—when was the scale developed would be helpful for understanding that to measure performance.

>>Ms. Schlachtmeyer:  Right.  So we began working on this basically at the Bureau's inception.  So the creation of the definition of financial well-being was really underway in about 2014, and then the scale build was built during 2014-2016 and first fielded in 2016.  So the CFPB was the first organization to field the financial well-being scale nationwide, but it has been fielded in other nationwide surveys through other government agencies since then.  It is part of the SHED data collection that happens, I believe, annually and some other nationwide surveys at the same time.  So it has been maintained, and the results are publicly available over the intervening years. 
 
>>Mr. McDonnell:  We do have a question.  Can we break Asians out in our data?
 
>>Ms. Schlachtmeyer:  We do have, yes, Asian or Pacific Islander is one of the recent ethnic groups that we looked at. 

>>Mr. McDonnell:  So it is possible to break that out within our data.

>>Ms. Schlachtmeyer:  Is there enough of your six—yeah. 

>>Mr. McDonnell:   Yeah.  A question for you, then.  On the scale, on the recent research report, how could someone access the SHED data so that if we have some university folks here that would like to be able to manipulate the data themselves?  How can they access that data?

>>Ms. Schlachtmeyer:  Mm-hmm.  Through the SHED, I believe if you scroll down to the very bottom of that link that Ken shared with us, that is at the Federal Reserve.  And the SHED data is, I believe, linked from there, Survey of Household Economics and Decision-making.  In that footnote, you'll see the link to follow up to the Fed.

>>Mr. McDonnell:  Hold on for one second.  I got it, and I will put it into the chat.

>>Ms. Schlachtmeyer:  There we go.

>>Mr. McDonnell:  There we go.  So that is the link to the Federal Reserve SHED data, and we definitely encourage all of you to access the data.  We would love to see some do some report looking at Asians and pull out some more data for all of us to see and what your report would show.  We'd very much like to see these kind of results.

>>Ms. Schlachtmeyer:  I see Heather has also put the Five Principles of Effective Financial Education" in the chat.  So that will help answer that question, and thank you for the SHED link as well, Heather.

>>Mr. McDonnell:  Okay.  That's all we have.  We're running out—we're a little over two o'clock.  For those of you, we didn't get to your specific question, I know Robin will save the questions off of the chat for us.  And so we'll be able to follow up with you.  With that, I would love to thank you all so much for your thoughtful questions, your comments, and for being able to participate with us today, and we look forward to working with you some more in the future.

Any concluding thoughts, Laura? 

>>Ms. Schlachtmeyer:  Thanks to everybody who took part.  I really appreciate your engagement and questions on the topics.

>>Mr. McDonnell:  Excellent.  Thank you all so much.  Take care, and I hope you have a lovely day today.

>>Ms. Schlachtmeyer:  Thanks.
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