Defining, measuring and predicting financial capability … · Defining, measuring and predicting financial ... Explanation of the main statistical techniques employed 43 ... , while

Defining,measuringandpredicting

financialcapabilityintheUK

Technicalreport

AndreaFinney,SocialResearchandStatistics

October2016

AtechnicalreportproducedincollaborationwiththeMoneyAdviceService’sFinancialCapabilityresearchteam,Antony

Elliott(OBE)andProfessorElaineKempson(CBE).

i

Acknowledgementsandcredits

ThisreportwaswrittenbyAndreaFinney,DirectorofSocialResearchandStatisticsandhonorarySeniorResearchFellowof

theUniversityofBristol’sPersonalFinanceResearchCentre.Theanalysisonwhichitisbasedwasproducedinclose

collaborationwiththeMoneyAdviceService’sInsightandEvaluationteamandAntonyElliott(Fairbanking)andProfessor

ElaineKempson(PersonalFinanceResearchCentre,memberoftheFinancialCapabilityBoard).

TheauthorwouldliketothankAntony,ElaineandespeciallyChrisPhillips,HelenPitmanandNickWatkins(MoneyAdvice

Service)andClaireFrew(formerlyoftheMoneyAdviceService)fortheirconsideredinputandsupportthroughoutthe

analysisprocess,aswellastheFinancialCapabilityBoardfortheircommentsonanearlydraftofthecomponentsanalysis.

TomClarke(MoneyAdviceService)hasalsoprovidedvaluablecommentonthenear-completedraftofthisreport.Thanks

arealsoextendedtoCobaltSkyandGfKfortheirinputintothepreparationofthedatasetandearlieranalysis.Warm

thanksalsogotothemanysurveyrespondentswhocompletedthe2015financialcapabilityquestionnaireandallofthe

interviewerswhocollecteddatafacetofacewithrespondents.

Theauthortakesresponsibilityfortheproductionofthereportandanyerrorsitmaycontain.Anyopinionsexpressedare

thoseoftheauthorandmaynotrepresenttheofficialviewsoftheMoneyAdviceServiceoranyotherorganisation.

ii

Glossaryofstatisticalterms

Confidenceinterval

Aconfidenceintervalistherangeinwhichthetruevalueinapopulationislikelytoliebasedontheestimate

producedfromasample.Thenormalconventionisthatthereisa95percentlikelihoodthatthetruevaluewill

lieinthisrange.Theconceptiscloselyrelatedtostatisticalsignificance(seebelow).

Correlation

Acorrelationisastatisticalmeasureofthestrengthofco-dependence,orrelationship,betweentwomeasures.

Acorrelationcoefficientvariesbetweenavalueof-1.0(aperfectinverserelationship),through0(no

relationship)to1.0(aperfectpositiverelationship).

Mean

Ameanisameasureofthedistributionofscoresonascalevariablewhichrepresentsthearithmeticalaverage

ofallscoreswithinasample.

Median

Amedianisameasureofthedistributionofscoresonascalevariablewhichrepresentsthemiddlevalueifall

thescoreswithinasampleweretobeplacedinascendingorder.

Multipleregressionanalysis

Multipleregressionanalysisidentifieswhichofasetofindependentvariables(characteristicsofindividualsand

theirhouseholds)areindependentlyassociatedwithacontinuousdependentvariable(inthiscase,financial

capabilitycomponentscores).Italsoestimatesthecombinedpoweroftheindependentvariablesinpredicting

scoresonthedependentvariable.SeeAppendix1formoredetails.

Principalcomponentsanalysis

Principlecomponentsanalysis(PCA)isanexploratorymultivariatetechniqueforreducingalargesetofvariables

intoasmallersetofunderlyingcomponents.SeeAppendix1formoredetails.

Statisticalsignificance

Statisticalsignificanceisameasureofthelikelihoodthatafindingobservedbasedonasampleisrepresentative

ofthepopulationfromwhichitisdrawn.Theusualconventionistoauseathresholdof95percentlikelihood.

iii

1. Contents1. Introduction 1

Aconceptualframeworkforfinancialcapability 1

Reportstructureandoverviewoffindings 2

2. Derivingcomponentsoffinancialcapability 5

Initialallocationofvariablestotheconceptualframework 6

Exploringrelationshipsbetweenvariablesandrefiningcomponents 6

Manualreplicationoftheresultingcomponents 7

LevelsoffinancialcapabilityintheUK 10

Chaptersummary 12

3. Relationshipsbetweencomponentsoffinancialcapability 13

Correlationsbetweenfinancialcapabilitycomponents 13

Influenceofbehavioursandenablersandinhibitorsonoutcomes 15

Currentfinancialwellbeing 15

Longer-termfinancialsecurity 18

Influenceofenablersandinhibitorsonbehaviours 19

Managescredituse 19

Activesaver 20

Keepstrack 20

Buildingresilience 21

Workstowardsgoals 22

Chaptersummary 22

4. Explainingvariationsinlevelsoffinancialcapability 23

Variationsinfinancialcapabilityscoresbykeysocio-economiccharacteristics 24

Theinfluenceofmediatorsonenablersandinhibitors 28

Theinfluenceofmediatorsonfinancialcapabilitybehaviours 33

Behaviours:managingwelldaytoday 35

Behaviours:managingandpreparingforlifeevents 35

Theinfluenceofmediatorsonfinancialcapabilityoutcomes 37

Chaptersummary 40

5. Summaryandconclusions 41

Appendices 42

Appendix1:Explanationofthemainstatisticaltechniquesemployed 43

Principalcomponentsanalysis 43

Regressionanalysis 43

AppendixTableA1:Financialcapabilitycomponentscoresbykeycharacteristicsoftheindividual 45

AppendixTableA2:Financialcapabilitycomponentscoresbykeycharacteristicsofthehousehold 49

AppendixTableA3:Regressiontopredictscoresonenablerandinhibitorcomponents,byallpersonaland

householdcharacteristics 51

AppendixTableA4:Regressiontopredictscoresonbehaviourcomponents,byenablersandinhibitorsandall

personalandhouseholdcharacteristics 54

AppendixTableA5:Regressiontopredictscoresonoutcomecomponents,bybehaviours,enablersand

inhibitorsandallpersonalandhouseholdcharacteristics 57

1

1. IntroductionTheMoneyAdviceService’s2015surveyoffinancialcapabilitywasundertakenbyGfKandachievedanationally

representativequotasampleofsome3,461respondentsacrosstheUK.1Thepurposeoftheanalysisreportedherewasto

derivecomponentswhichcapturedifferentaspectsoffinancialcapabilityandexplorelevelsandpatternsoffinancial

capabilitybasedonthese.

Assuch,thisreportdescribestheprocessofderiving13financialcapabilitycomponentsbasedonacombinationof

theoreticalunderpinningandstatisticalanalysis.Themean(average)anddistributionofscoresforeachcomponentacross

thepopulationoftheUKarereported,alongwithbreakdownsbykeydemographicandsocio-economicgroups.The

relationshipsbetweenthecomponentsareexplored,includingtounderstandthepredictivepowerofcomponentsatlower

levelsoftheframeworkonthescoresofcomponentsateachofthehigherlevels.Arangeofpotentialmediators,including

demographicandsocio-economiccharacteristics,aretestedtounderstandtheiradditionalinfluenceonfinancialcapability

scores.

ThecomponentscanbereplicatedfordatacollectionandmeasurementinfutureeditionsoftheFinancialCapability

Survey.However,theparticularfocusofthedevelopmentofthe2015surveyandtheresultingconstraintsofthequestions

includedalsomeansthatithasnotbeenpossibletocoverallpotentialdimensionsoffinancialcapabilityinthecomponents

(oranalysis)producedhere.Equally,somecomponentsmaybeimprovedinthefuturewiththeavailabilityofnew

questionsoralternativequestionwording.Forexample,ithasnotbeenpossibletoadequatelyrepresentinsurance

provision,pensionsavingorhouseholdsapproachestomaximisingincomewithinthecomponents.2

Aconceptualframeworkforfinancialcapability

Componentshavebeenderivedstatistically,andreconstructedmanually,toreflectanaprioriconceptualframework–

developedinitiallybyProfessorElaineKempsonandmodifiedslightlytoreflecttheMoneyAdviceService’spreferred

terminology–whichdescribesthreeprincipallevelsoffinancialcapability:

n Financialwellbeingoutcomes;

n Financiallycapablebehaviours;and

n Financialcapabilityenablersandinhibitors.

Accordingtothisframework,financialcapabilityenablersandinhibitorsarehypothesisedtoinfluencefinancially

capablebehaviours,whilefinanciallycapablebehaviours,inturn,areassumedtoinfluencefinancialwellbeing

outcomes.Inpractice,someenablersandinhibitorsmayalsodirectlyinfluenceoutcomes.Theconceptual

frameworkalsoidentifiestheroleofmediatingandotherexplanatoryfactorssuchasdemographics,suchas

incomeandage,infinancialcapability,whichmayintervene(ormediate)atanyleveloftheframework.The

frameworkisshowndiagrammaticallyinFigure1.

1ThisexcludesboostersamplesforthedevolvednationsoftheUK,whichareanalysedseparately.2Inrelationtoinsurance,wehaveonlybeenabletoincludeameasureofwhetherpeoplehaveuptothreedifferenttypesoflossprotection:wills,home

contentsandlifeinsurance.Inrelationtopensionsaving,wehaveonlybeenabletoincludemeasures,includingattitudinalmeasureswhichrelate

generallytoplanningandsavingforretirement.Andinrelationtomaximisingincome,wehaveonlybeenabletoincludeanattitudinalquestiononthe

importanceofshoppingaroundtomakemoneygofurther.

2

Figure1:Aconceptualframeworkforunderstandingfinancialcapability

FrameworkdevelopedbyElaineKempson(forpublicationinforthcomingwork)andmodifiedforreferencehereincollaborationwiththeMoneyAdvice

Service.

Reportstructureandoverviewoffindings

Chapter2describestheprocessofderivingcomponentsoffinancialcapability,whichrepresentcompositemeasuresofthe

underlyingconstructsoffinancialcapabilityrepresentedinthedata.Thirteencomponents,producedthroughamixtureof

statisticalanalysisandmanualreconstruction,havebeenshowntoberobustfinancialcapabilitycomponentsfallingunder

theaprioriconceptualframeworkoffinancialcapabilityoutcomes,behavioursandenablersandinhibitors.Outcome

componentsencompasscurrentandlonger-termfinancialwellbeing,andbehavioursreflectdaytodayfinancial

managementandmanagingandpreparingforlifeevents.Enablersandinhibitors,meanwhile,representanindividual’s

backgroundskills,attitudes,knowledgeandfinancialdisposition.Theresultingcomponentshavebeendesignedtoapply

universallyacrossthepopulation(regardlessof,forexample,retirementstatusanddebtproblems).

AsChapter2describesindetail,theresultingcomponentsare:

Outcomes

1. Currentfinancialwellbeing

2. Longer-termfinancialsecurity

Behaviours

Manageswelldaytoday(‘daytoday’)

1. Managescredituse

2. Activesaver

3. Keepstrack

Managesandpreparesforlifeevents(‘lifeevents’)

1. Buildingresilience

2. Workstowardsgoals

Enabler/inhibitor1

Enabler/inhibitor2

Enabler/inhibitor4

Enabler/inhibitor3

Enabler/inhibitor…1

Behaviour1

Behaviour2

Behaviour…

Outcome1

Outcome…

Mediator1 Mediator4

Mediator2 Mediator5

Mediator3 Mediator…

3

Enablersandinhibitors

1. Savingmindset

2. Financialnumeracy

3. Internetengagement

4. Financialconfidence

5. Self-controlledspending

6. Financialengagement

Witheachcomponentbeingscoredonascalerangingfromapossibleminimumof0andamaximumof10,Chapter2also

describeshowtheaveragescoresvariedacrosstheresultingcomponents.Itfindsthattheyvariedinwayswhichcan

reasonablybeexpected,basedonpreviousresearchandexperientialevidenceworkingwithpeoplewithlowfinancial

capabilityanddebtproblems.Forexample,averagecurrentfinancialwellbeingscoresarefarhigherthanthoseforlonger-

termfinancialsecurity.

Chapter3exploresthedeterminantsoffinancialcapability,acrossallofthecomponents.Itdoessousingmultiple

regressionanalysis,astatisticalmethodwhichenablestheindependenteffectsofmultiplecharacteristicsonanoutcome

(inthiscase,financialcapability)tobeassessedatthesametime,whilesimultaneouslycontrollingfortheeffectsofallof

theothercharacteristicsincludedintheanalysis.Theanalysisstartswithaconsiderationofthepairwisecorrelations

betweenallofthecomponentsbeforeidentifyingtheindependentimportanceofcomponentsatlowerlevelsofthe

conceptualframeworkininfluencingthoseatthehigherlevels.

Chapter3findsthatcorrelationsbetweenpairsofcomponentstendtobelowoverall,andparticularlybetween

componentswithinthesameleveloftheconceptualmodel.Wherecorrelationsarehighertheyaremostlyhigherbetween

thebehaviouralcomponentsandthelonger-termfinancialsecurityoutcome.Financiallycapablebehavioursareimportant

predictorsoffinancialcapabilityoutcomes,especiallymanagingcredituseinrelationtocurrentwellbeingandbuilding

resilienceinrelationtolonger-termsecurity.

Inturn,enablerandinhibitorcomponentsaremoderatelyimportantdeterminantsofmostfinanciallycapablebehaviours

aswellascurrentfinancialwellbeing.Financialconfidenceisparticularlyimportant,beingasignificantpredictorofthreeof

thebehaviours–‘managescredituse’,‘activesaver’and‘buildingresilience’–andthestrongestoftheenablersand

inhibitorsinpredicting‘currentfinancialwellbeing’and‘longer-termfinancialsecurity’.Assuch,mostfinanciallycapable

behavioursaremoderatelywellexplainedbyenablerandinhibitorcomponents.

Chapter4exploresthewiderdeterminantsoffinancialcapability.Itshowsthataveragescoresvariedbyarangeofkey

personalandhouseholddemographicandsocio-economiccharacteristics,againusuallyinadirectionwhichmightbe

expected.Forexample,scoresoncurrentfinancialwellbeingrangedfrom7.0outofapossible10amongpeopleaged25to

34to8.8amongthoseaged75andover,whilelonger-termfinancialsecurityrangedfrom1.9amongtheunemployedto

4.6amongthepart-timeself-employedand4.7amongretirees.

However,chapter4alsoextendstheregressionanalysisfromchapter3toincludeananalysisofthefactorswhichare

independentlyassociatedwithcomponentscoreswhenawiderangeofpersonalandhouseholdcharacteristicsarealso

considered.Itfindsthatenablersandinhibitorsaremostlyonlymoderatelywellexplainedbythewiderangeof

demographiccharacteristicsandothermediatingfactorsconsidered(whichincludeattitudinalandothermeasureswhich

couldnotbeincludedintheconstructionofthecomponents).Thisistruewiththeexceptionof‘Internetengagement’

(partlybydefinitionwhenincludingthenumberofInternet-enableddevicesahouseholdhasaccesstoasamediator)and

arguablyof‘financialnumeracy’.Nonetheless,theadditionofenablersandinhibitorsandwidermediatingfactorsimproves

ourabilitytoexplainstatistically,andthereforeunderstand,variationsinfinancialwellbeingbehavioursandoutcomes,

bothcurrentandforthelongerterm.

Notably,wefindthattheenablersandinhibitorstogetherexplainthelargestshareofvariationincurrentfinancial

wellbeingontheirown(33percent),followedbythekeymediators(meansandpressures)andothermediators(each26

percent),withthebehavioursexplainingasimilar,25percent.However,whenthebehavioursandenablersandinhibitors

arebothincluded,theytogetheraccountforsome44percentofthevariationincurrentfinancialwellbeingscores,with

themediatorssubsequentlyaddingonlyafurther13percentagepointstotheexplainedvariation.Conversely,thesetof

behaviouralcomponentsexplainthelargestshareoflonger-termfinancialsecurityintheirownright(43percent),withthe

enablersandinhibitors(24percent)andkeymediators(30percent)playingarelativelysmallrolebythemselves,andthe

othermediatorsalsoexplainingalargeshare(39percent).Whenincludedtogether,thebehaviouralandenablerand

inhibitorcomponentsexplain51percentofthevariation,takingintoaccounttheoverlapbetweentheminpredicting

longer-termfinancialsecurity;andwhenincludedinadditiontothesecomponentsinastep-wisefashion,themediators

overalladdanother14percentagepointsofexplanatorypower.

4

Amongthekeydemographicmeasures,socio-economicfactors,andespeciallyhouseholdincome,playanimportantroleon

financialcapabilityscoresatalllevelsoftheconceptualmodel.Someone’sageandtenureareparticularlyimportant

determinantsofthetwooutcomecomponents,withethnicityalsoplayingarole,albeitmuchmoreweakly.Characteristics

ofanindividual’sfinancialmanagementapproachandsituation,suchastheirresponsibilityformanagingtheirhousehold’s

financesandtheiraccesstoacurrentaccount,areparticularlyimportantforexplainingtheirlevelsoffinancialcapabilityon

theenablerandinhibitorcomponents,althoughtheeffectsoftheseindividualmeasuresareweakerwhenpredicting

behaviourandoutcomescores,presumablybecausetheireffectsarelargelyaccountedforbytheenablersandinhibitorsat

thesehigherlevelsoftheconceptualframework.Althoughthisreporthasnotattemptedtoexplorethedeterminantsof

financialcapabilitywithinsubgroupsofthepopulation(e.g.bylifestageorincomelevel),itislikelythattherelative

importanceofthesedemographicandothermediatingfactorscouldvaryconsiderablybysubgroup.

Chapter5summarisestheresultsanddrawssomeoverarchingconclusionsfromthem.Inparticular,itconcludesthat

financialcapabilitywellbeingoutcomesarewellexplainedbyfinanciallycapablebehavioursandenablersandinhibitors.In

turn,behavioursaremoderatelywellexplainedbyenablersandinhibitors.Thisistrueeveninthepresenceofother

potentiallymediatingfactors,othercharacteristicsassociatedwiththeindividualandtheirhousehold,althoughthesealso

addtoourabilitytoexplainvariationsinfinancialwellbeingoutcomes.Thistendstosupportthedesignofaconceptual

frameworkwhichdistinguishesdifferentfinancialcapabilitylevelsandseesawiderrangeofinfluenceswhichimpactat

eachlevel.

5

2. Derivingcomponentsof

financialcapability

Ourapproachtotheconstructionoffinancialcapabilitycomponentswasamulti-stageanditerativeprocesswhichbegan

withconsiderationoftheconceptualmodeldevelopedbyProfessorElaineKempsonandmodifiedcollaborativelywiththe

MoneyAdviceServicereflectprevailingterminologywithintheService.AsillustratedinFigure1,thisframework

distinguishes:

n Outcomemeasures

n Behaviouralmeasures

n Enablerandinhibitormeasures,and

n Mediator(orexplanatoryorcontrol)measures.

Assuch,theprocesspartlyreflectsatheoretical,ornormative,approachtothederivationoffinancialcapability

components,butitisalsostronglydata-drivenwithinthisframework.Thederivationprocessresultedin13components

whichcanbereplicatedfordatacollectionandmeasurementinfutureeditionsoftheFinancialCapabilitySurvey.

Anecessarilyiterativeprocess,anoverviewoftheapproachwetooktodefiningandrefiningthecomponents,alongwith

thefinalanalysisweundertookisshowninFigure2below.

Figure2:Overviewoftheprocessofdefiningandanalysingthefinancialcapabilitycomponents

Wedrawoutthekeystagesfromthisprocessinthesectionswhichfollow.

Reviewofquestions,

derivationsofvariablesand

allocationtoconceptual

framework


withineachframeworklevel

toidentifyinitialcomponents

Interpretationandselection

ofcomponentsandthe

highestloadingvariablesof

each

Principalcomponents

analysis,reliabilitytestingand

moderationofeachinitial

component

Manualrescalingand

summingofvariablesto

derivefinal,replicable

components

13components

Scoredona0-10scale

Calculationofaveragescoresbycomponent,bivariateanalysisandmultivariateregressionanalysisto

understandvariationsinscores

6

Initialallocationofvariablestotheconceptualframework

Weinitiallycategorisedeveryquestionwithinthequestionnaireinrelationtotheconceptualframework,allocatingeach

questioninturn,normallytoonlyoneandoccasionallytotwocategoriesoftheframework.Withinthebehavioural

category,weadditionallydistinguishedbetweenquestionsrelatingto'managingwelldaytoday'and'preparingforand

managinglifeevents',toreflectthedomainsoutlinedinMoneyAdviceService’sownnormativemodelforunderstanding

financiallycapablebehaviours.

Somequestionscouldnotbeallocatedtoanyofthecategories,eitherbecausetheywerenotfelttoreflect,orbecausethe

initialquestionconstructionmeanttheydidnotquantify,anyaspectoffinancialcapabilityinameaningfulway.These

questionswereeitherremovedorheldbackforfurtherconsiderationasmediating,controlorexplanatorymeasuresforuse

inlaterstagesoftheanalysis.Otherquestionswereremovedwhichrelatedtoratherspecificsubsetsoftherespondents,

forexamplethoseinretirementorthosewhoreporteddebtproblems.Itwasnotpossibletoincludethesebecausethe

partialbases,ratherthanthemeaningfulcontentofthesequestions,woulddrivetheidentificationofanyresulting

components.Itwasimportantthatonlyquestionswithuniversalrelevancewereincluded,andthatanymorespecialised

questionssetsshouldbeconsideredseparately,outsidethisprocess.

Ournextstepwastoexaminetheoutcome,behaviouralandenablerandinhibitorquestionsinmoredetailtoderive

versionswhichorderedtheresponsecategoriesfromleasttomostfinancialcapable(orviceversa).Insomeinstances,this

involvedcollapsingresponsesacrosstwoormorecloselyrelatedquestions.Inaminorityofinstances,itinvolvedderiving

twovariablesfromasinglequestion,althoughnotallquestionscouldbescaledevenincombination.Inmostinstances,this

alsoinvolvedre-categorisingrespondentswhowereunabletoanswer('don'tknow')orwhodeclinedtoanswer('prefernot

tosay',bothcasesof‘usermissings’)aswellasthosenotroutedtoaquestion(‘systemmissings’).Thiswasessentialfor

ensuringthatweretainedthefullsampleofrespondentsforthenextstageofanalysisandtoincludethemwithinthemost

appropriatevalidresponsecategorywithintheresultingscale.Exceptwheremissingcategoriescouldbere-categorised

basedonclearlogic(e.g.thosewithoutcreditcardswereassumedtobeequivalenttothosewhorepaidtheircreditcards

‘infull’eachmonth),theywereeitherrecodedparsimoniouslytothemiddlevalueofthescaleifattitudinalinnature(e.g.

‘neitheragreenordisagree’)ortothemostcommon(modal),value.3

Thisprocessresultedinthefollowingnumbersofmeasurestotakeforwardforfurtherconsideration:

n Outcome:ninemeasures

n Behavioural

n Managingwelldaytoday:19measures

n Managingandpreparingforlifeevents:ninemeasures

n Enablerandinhibitor:24measures

n Mediating/control/explanatory:32measures

Exploringrelationshipsbetweenvariablesandrefiningcomponents

Foreachofthecategoriesoftheconceptualframework,weusedprincipalcomponentsanalysis,astatisticaltechnique,to

identifyclustersofrelatedsurveymeasures.Inprincipalcomponentsanalysis,theresultingclustersofmeasuresare

indicatedasmeasuringalatent,orunderlying,constructtoagreaterorlesserextent.Theunderlyingconstructsareinturn

interpretedbasedonthemeasures(andthedirectionofthescoringofthosemeasures)whichmapmoststronglyonto

them.

Theresultingconstructs,ourinterimcomponents,fromthisanalysiswereinterpretedandsubjecttoaprocessof

refinement.Thisinvolvedminormodificationstoremovecertainvariableswhichhadnotworkedasintended,ortorevise

theirpositionwithintheconceptualframework.Weakly-loadingmeasures(thoseoflittleimportancetoacomponent)4

werealsoremovedinthisprocess,aswerewholeinterimcomponentswhichcouldnotbeinterpreted.Acomprehensive

reviewofthefullsetofquestionsandmeasuresavailablefromthesurveywasalsoundertakenatthisstage.Thisenabled

ustoidentifyfurther,apparentlyrelated,questionswhichcouldbeaddedtothepoolofquestionsavailableforaparticular

interimcomponent.Particulareffortswerealsomadetoensurefinancialwellbeingoutcomesadequatelyrepresentedboth

currentandlonger-termwellbeing.

3Whilemoresophisticatedmethodsofimputationareavailable,theover-ridingpurposeoftheapproachweundertookwastoensurethatitwassimple,

logicalandreplicable.Fordetailsoftherecodingofspecificmeasures,pleasecontactMoneyAdviceServiceortheauthordirectly.4Aweaklyloadingvariablewasdefinedbyastructuralcoefficientoflessthan.30.

7

Subsequentprincipalcomponentsanalyseswereundertakenforeachinterimcomponentinturn,takingintoaccountthe

revisedpoolsofmeasuresavailableforit.Again,unimportant(weaklyloading)measures,andanywhichsubstantially

weakenedtheinternalreliabilityofacomponent,5wereremoved.Afinalprincipalcomponentsanalysiswasrunoneach

subsetofremainingmeasurestocheckandvalidatetheresultingcomponents.

Thenumberofcomponentsresultingfromthisiterativeprocessofrefinementwasasfollows:

n Outcome:twocomponents,basedonatotaloftenmeasures

n Behavioural

n Managingwelldaytoday:threecomponentsbasedon14measures

n Managingandpreparingforlifeevents:twocomponentsbasedonsixmeasures

n Enablerandinhibitor:sixcomponentsbasedon14measures

Manualreplicationoftheresultingcomponents

Thelaststepintheconstructionofthecomponentswastoderivemanually-scoredscalesbasedonthe13finalised

componentsvalidatedintheprincipalcomponentsanalyses.Thisstepwasnecessarytoensurethattheresulting

componentscanbereconstructedandmeasuredadequatelyforcomparisonsinfutureyears.Themanualreconstruction

alsohastheadvantageofenablingcomparisonsofscoresbetweencomponents,becausetheycanbere-scaledtobe

measuredonequivalent,absolutescales.6Inthisinstance,thescalesforeachresultingcomponentwerescoredfrom0to

10,where0indicateslowestpossiblefinancialcapabilityonthecombinationofvariablesmakingupthecomponent,and10

indicateshighestpossiblecapability.7

5AsmeasuredbyCronbach’sAlpha.6ThisisincontrasttocomponentscoresderiveddirectlyfromPCAwhichare,bydefinition,relativescoresbasedonthesamplefromwhichtheyhave

beenderived.Inotherwords,aPCAscorecanonlybeinterpretedwithreferencetootherpeople’sscoresinthesample:theyareaverage,higherorlower

thanforthesampleasawholeanddonotcarryanabsolutevalue(e.g.8.2outoften).Manuallyre-derivingthecomponentbasedonanabsolute,rather

thanrelative,scalecreatesamoremeaningfulscorefortheinterpretationoftheresultsandforthequantificationoffinancialcapability.Itallowsbothfor

comparisonsacrosssamples,includingfromanyfuturesurveyoffinancialcapability,becauseascoreof8.2inonesamplewillbeequivalentto8.2in

anothersample,anditallowsforcomparisonsacrosscomponentsbecause,subjecttothevalidityofthemeasurescontained,ascoreof8.2onone

componentindicatesanequalleveloffinancialcapabilityasascoreof8.2onanothercomponent.7ThestartingpointforthemanualreconstructionofthecomponentswasthecarefullyderivedvariableswhichwereusedasinputtotheinitialPCAs,

ratherthananyPCAoutput.Thesevariableswereallcategoricalwithcarefullyorderedandnumberedcategoriessuchthatthecategory

numberprovidedtherawscorestoworkwith.Wherenecessary,theorderofthecategorieswasreversed,sothatlowtohighcapabilityoneverymeasure

wasindicatedbylowtohighscoring.Then,individuallyforeachfinalcomponentidentifiedbythePCA,allvariablesidentifiedforinclusionwithinthe

componentwerefirstmultipliedupontoanidenticalrange,basedonthecommondenominatorforthatsetofvariablesandthenumberofcategoriesfor

thatvariable.Next,theresultingscoresweresummedtogetheracrossthevariableswithintheset.Finally,theyweredividedbytheproductofthe

commondenominatorandthenumberofvariablesincludeddividedby10,toproducethecombinedsummedscoreonascaleof0-10,where0wasthe

lowestscoreavailableand10wasmaximumpossiblescore(evenifthetheoreticallyminimumandmaximumscoreswerenotobservedinthedata).

8

Ourinterpretationoftheresultingcomponents,andthemeasureswhichcomprisethem,areshowninTable1.Therelevant

questionnumbersareshowninparentheses,andanasteriskindicatesanattitudinalquestion(forwhichrespondentshad

toratetheiragreement,orsimilar,onascale,e.g.of0to10).

Table1:Resultingfinancialcapabilitycomponentsandtheirconstituentmeasures

FinalOutcomeComponents:Financialwellbeing

1.Currentfinancialwellbeing 2.Longer-termfinancialsecurity

Satisfactionwithfinancialcircumstances(B2)*

Self-reportedburdenofbills/creditcommitments

(C1&C2)

Capacitytopayanunexpectedbillof£300(I10)

Self-reportedkeepingupwithbillsand

commitments(J1)

Numberoftypesofmissedpaymentsorincurred

chargesinlast6months(J3)

Thinkingaboutmyfinancialsituationdoes

notmakemeanxious(O2B)*

Savingstoincomeratio(derived)(respondent

andpartner)

Countofnumberoftypesoflossprotectionfrom:will,

homecontentsandlifeinsurance(E12&E13)

Countoftypesoflonger-termsavingsproducts

held(G1)

Biggestunexpectedbillcouldpay(respondentand

partner)(I9)

Tablecontinues….

FinalBehaviourComponents:Managingwelldaytoday

1.Managescredituse

Levelofplanforpayingdown

debts(D3_2)

Totalunsecuredborrowing(E7)

(respondentandpartner)

Unsecuredborrowingmore/lessthan

average(E8)

Methodofcreditcard

repayments(E10)

Creditcardbalancescomparedwitha

yearago(E11)

Ihatetoborrow–Iwouldmuchrather

saveupinadvance(O2F)*

2.Activesaver

Frequencyofsaving(G3,G2)

Numberoftypesofexpected

expensesavesfor(G7a)

Numberoftypesofunexpected

expensesavesfor(G7b)

3.Keepstrack

Howaccuratelyknowscurrentaccount

balance(F2)

Howoftencheckscurrentaccount

balance(F5)

Whetherkeepstrackofincomeand

expenditure(I1)

Methodsusedtokeeptrackofincome

andexpenditure(I5)

IadjusttheamountofmoneyIspend

onnon-essentialswhenmylife

changes(O4B)*

FinalBehaviourComponents:Managingandpreparingforlifeevents

1.Buildingresilience 2.Workstowardsgoals

Totalsavings(G5,G6)(respondentandpartner)

Numberoftypesofexpectedexpensesaves

for(G7a)

Numberoftypesofunexpectedexpensesaves

for(G7b)

Countofwhatplannedexpensesaresavingfor(G8)

Countoffinancialgoals(D2)

Howspecificplansareforachievinggoals(D3)

9

FinalEnablerandInhibitorComponents

1.Savingmindset 2.Financialnumeracy 3.Internetengagement

Howimportantisittosavemoneyfora

rainyday(O3A)*

Howimportantisittoputasidemoney

foryourretirement(O3B)*

Howimportantisittokeeptrackof

incomeandexpenditure(O3C)*

Howimportantisittoshoparound

inordertomakeyourmoneygofurther

(O3D)*

Financialnumeracyquizcorrect

responses:readabankbalance;

inflationvsinterest;calculate

simpleinterest(N1,N2,N3)

HappytousetheInternettocarryout

daytodaybanking(O2G)*

HoursspentusingInternetinthelast

week(R9)

4.Financialconfidence 5.Self-controlledspending 6.Financialengagement

Howconfidentmanagingyour

money(B3)*

Howconfidentmakingdecisions

financialproducts&services(B4)*

Ioftenbuythingsonimpulse

(O4A)*

Feelunderpressuretospendlike

myfriends(O4C)*

Iprefertolivefortodayratherthan

planfortomorrow(O2A)*

NothingIdowillmakemuch

differencetomyfinancial

situation(O2C)*

Iamtoobusytosortoutmyfinances

atthemoment(O2D)*

*Indicatesattitudinalquestionswithresponsescalesofagree/disagree,likeme/notlikeme,important/notimportant,confident/notconfident.

OfparticularnotefromTable1isthattheoutcome‘currentfinancialwellbeing’andthebehaviour‘managescredituse’are

jointlybasedonthemostmeasures,eachbeingacompositeofsixmeasures.Themoremeasurescomponentscomprisethe

morelikelytheyaretoberobusttotheconceptstheyrepresent.Onlyonecomponent(theenablerandinhibitor‘financial

numeracy’)isbasedonasinglemeasure;however,thismeasureinturnisderivedfromthreesurveyquestions.Therestare

basedontwotofivemeasures.

Itisimportanttopointoutthatthemeasuresof‘numberoftypesofexpectedexpensesavesfor’(G7a),and‘numberof

typesofunexpectedexpensesavesfor’(G7b)areusedintheconstructionoftwocomponents.Thesearethe‘managing

moneydaytoday’behaviourcomponentof‘activesaver’andthe‘managingandpreparingforlifeevents’behaviour

componentof‘buildingresilience’(whichismadeupentirelyofsaving-basedmeasures).Thedecisiontoincludethese

measuresintwoprincipalcomponentsanalysesreflectedtheviewthattheywererelevanttobothbehaviouraldomainsin

theconceptualframework.Theprincipalcomponentsanalysesconfirmedthattheywererelevanttoboth.

Additionally,enablerandinhibitorcomponents2and3were,duringtheinitialstageofrefinement,splitoutmanuallyfrom

asinglecomponentreturnedbytheprincipalcomponentsanalysis.Thesinglecomponentwasdifficulttointerpret,andour

abilitytodistinguishfinancialnumeracyfromInternetengagementwasdeemedtobeofparamountimportance.

Thescoresfortheresultingcomponentsandtheirdistributioninthepopulationarediscussedinthenextsection.

10

LevelsoffinancialcapabilityintheUK

Inthissection,weexamineaveragefinancialcapabilityscoresacrossthe13componentsdescribedintheprevioussection.

ThedescriptivestatisticsacrosstheUK,includingthearithmeticaverage(mean)scoresfortheresulting13components,are

showninTable2.

Table2:DescriptivestatisticsoffinancialcapabilityscoresintheUK

No.ofderivedvariables Min Max Mean StdDev Median

Outcomes

1.Currentfinancialwellbeing 6 0 10 7.5 1.83 7.6

2.Longer-termfinancialsecurity 4 0 10 3.8 2.32 3.3

Behaviours:managingwelldaytoday

1.Managescredituse 6 0.3 10 7.3 1.65 7.6

2.Activesaver 3 0 10 3.3 2.49 3.3

3.Keepstrack 5 0.4 10 6.9 1.78 7.1

Behaviours:Managingandpreparingforlifeevents

1.Buildingresilience 4 0 10 2.1 2.34 1.8

2.Workstowardsgoals 2 0 10 3.6 2.77 4.2


1.Savingmindset 4 0 10 7.9 1.82 8.1

2.Financialnumeracy 1 0 10 6.8 3.64 6.7

3.Internetengagement 2 0 10 5.9 2.91 6.3

4.Financialconfidence 2 0 10 7.3 1.99 7.5

5.Self-controlledspending 2 0 10 6.4 2.56 6.5

6.Financialengagement 3 0 10 6.2 2.20 6.7

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation

Ofparticularinterestisthatscoresforallbuttwoofthecomponentsspanthefullrangefrom0to10,theexceptionsbeing:

thedaytodaybehaviours‘managescredituse’,whichrangesfrom1.8to9.6,and‘keepstrack’,whichrangesfrom0.4to

10accordingtothedataonwhichtheseresultsarebased.Inotherwords,atleastonepersoninthesampleonwhichthese

populationestimatesarebasedscoredtheminimumandatleastonescoredthemaximum,exceptforthesetwomeasures.

Thisneednothavebeenthecaseonthisoccasionandmaynotbethecaseifthesamequestionsareaskedinfutureyears.

AlsoofnoteisthevariationinthemeanvaluesbycomponentshowninTable2.Somecomponentsscorefairlyhighlyon

average,includingtheoutcomemeasure‘currentfinancialwellbeing’whichscored7.5(onaverageacrossthepopulation),

daytodaybehaviour‘managescredituse’,whichscoredanestimated7.3,andtheenablerandinhibitor‘savingmindset’,

whichscored7.9outofapossible10inthepopulation.Thiscontrastswiththelifeeventbehaviour‘buildingresilience’,

whichscoredonly2.1outofapossible10.

Onthewhole,adultsintheUKscoredpoorlyonthebehaviourswhichwerederivedtorepresentmanagingandpreparing

forlifeevents,butrelativelywelloverallontheenablerandinhibitorcomponentsandmostlywellinrelationtothe

behavioursderivedtoreflectmanagingwelldaytoday.Thissuggeststhatpeople’sintentionsforbuildingfinancial

wellbeingmaybepositivebutthematerialrealisationofthis,inprovidingforlongertermbenefitislessclear,perhapsdue

tolimitedfinancialresources,circumstancesorwiderskills.Thehighcurrentfinancialwellbeingoutcomescorecontrasted

withlowlonger-termfinancialsecuritywouldalsoappeartoshowacleardistinctionbetweenpeople’smanagementof

theirshorttermfinancescomparedwiththeirapproachtoplanningahead.

11

Figure3showsthedistributionofscoresoneachcomponentgraphically.

Figure3:ThedistributionoffinancialcapabilityscoresintheUK

Outcomes

1.Currentfinancialwellbeing

2.Longer-termfinancialsecurity

Behaviours

Manageswelldayto

day

1.Managescredituse

2.Activesaver

3.Keepstrack

Managingand

preparingforlife

events

1.Buildingresilience

2.Workstowardsgoals

Enablersand

inhibitors

1.Savingmindset

2.Financialnumeracy

3.Internetengagement

4.Financialconfidence

5.Self-controlledspending

6.Financialprioritization


EachcomponenthasitsownboxandwhiskerplotinFigure3,inwhichtheboxdescribesthemiddlehalfofthepopulation

(thatis,everyonewithscoreslyingbetweenthe25thand75thpercentiles)andtheverticallineinthemiddleshowsthe

verymiddlevalueinthepopulation(themedian,or50thpercentile).Theboundariesofthewhiskersindicatethevaluesat

theextremesofthedistribution,withanydotsshowingoutliersbeyondtheseextremes.Inotherwords,ahalfofthe

scoreswillfallwithintheboxwhilealmostallscoreswillfallwithintheboundariesindicatedbythewhiskers.

Figure3confirmshowthescoresfor‘longer-termfinancialsecurity’andbothcomponentsrelatingtomanagingand

preparingforlifeevents,andespecially‘buildingresilience’aregenerallytowardsthelowendofthescale(indicatedbythe

box),althoughtherewasasignificantminorityofindividualswhoscoredwellonthesecomponents(indicatedbythe

extendedright-handwhiskers).Thisalsoshowsclearlyhowevenbeingan‘activesaver’(acomponentwhichformspartof

themanagingwelldaytodaybehaviouraldomain)alsoscoresrelativelylow;thisislikelytopartlyreflectthatthe‘building

resilience’and‘activesaver’componentssharetwomeasuresincommon(seeTable1).

Theenablerandinhibitorcomponent‘financialnumeracy’isparticularlynotableforthewiderangeinscoresonthis

measureacrosstheUKpopulation(indicatedbyawidebox,andalowerwhiskerwhichextendsthelengthofthepossible

range,inFigure3).ThisisalsoindicatedinTable2byahighstandarddeviation(astandardisedmeasureofthedistribution

ofscores).

0 2 4 6 8 10

12

Figure3alsoillustratesthattheenablerandinhibitorcomponent‘savingmindset’isthecomponentwiththehighest

mediancapabilityscore(at8.1,alsoshowninTable2).Thisdemonstratesadesire,ifnotapropensitytosave;itappears

thatpeopledonotalwaysmanagetosaveactivelyorbuildtheirresiliencedespitefeelingpositivelytowardsdoingso.Later

stagesoftheanalysiswillexplorewhetherahousehold’sfinancialresources(suchastheirincome)playsarolein

moderatingtherelationshipbetweentheapparentsavingintentionsandbehaviours.

Ahighmedianscoreontheoutcomecomponent‘currentfinancialwellbeing’isalsoevident(7.6),asisthehighscoreon

theenablerandinhibitor‘financialconfidence’(7.5).Thesetwocomponentsalsoshowcomparativelytightlypackedscores,

althoughthedotsshowntotheleftoftheleft-mostwhiskerfor‘currentfinancialwellbeing’inparticularalsoevidencea

minorityofhouseholdsforwhomstrugglingfinanciallywasareality.

Chaptersummary

Thischapterhasdescribedaniterativeprocesstothederivationofcomponentsoffinancialcapabilitybasedona

combinationofnormative(theory-driven)andstatisticalconsiderations.Theresultingcomponentscanbere-appliedtoany

newdatasetorsamplewhichincludesthesame,underlyingsurveyquestionsandhavebeenmanuallyrescaledwith

possiblescoresonarangefrom0to10.Thechapterhasalsoshownhowtheaveragescoresonthefinancialcapability

componentsvariedintheUKpopulationin2015.Typically,theyvariedinwayswhichcanreasonablybeexpected,basedon

previousresearchandexperientialevidenceworkingwithpeoplewithlowfinancialcapabilityanddebtproblems.For

example,peoplescoredmorehighlyoncurrentfinancialwellbeingthanlonger-termfinancialsecurity,andtheyscored

morehighlyontheirsavingmindsetthantheiractivesavingorbuildingresiliencebehaviours.

13

3. Relationshipsbetweencomponentsof

financialcapability

Inthischapter,weextendourpreviousanalysistoconsidertherelationshipsbetweenthedifferenttypesoffinancial

capabilitycomponentsintheconceptualframeworkusingbothcorrelationandregressionanalyses.Westartbyexploring

thepairwisecorrelationsbetweenthecomponentstoguideourunderstandingofhowtheyrelatetoeachother.

Correlationsbetweenfinancialcapabilitycomponents

Acorrelationisameasureofthestrengthwithwhichdifferentmeasuresco-vary(thatis,howcloselychangeonone

measureoccurswithchangeonanother).Table3showsthecorrelationsbetweeneachpairofcomponents.Lightshading

indicatesthatpairsofcomponentshavemoderatecorrelationswitheachother(acorrelationcoefficientof.30orhigher)

anddarkershadinginturnindicatesthatcomponentshavestrongcorrelations(of.50orhigher).Themajorityofthe

componentscorrelatepositivelywitheachother(inotherwordsasthescoreononeincreasessodoesthescoreonthe

other;anegativesignagainstacorrelationindicatesthatasthescoreononecomponentincreasestheotherdecreases,and

viceversa).

FromTable3,itisaclearthatthemajorityofcomponentsdonotcorrelatehighlywitheachother.Thisisapositivefinding,

whichindicatesthatthecomponentsarelargelydistinctandcapturemoreorlessdifferentaspectsoffinancialcapability.

Thisisparticularlytruewithineach‘block’showninthetable(whichcorrespondstothelevelsdefinedbytheconceptual

modeland,withinthebehaviours,withineithersetofcomponents).Forexample,oftheenablersandinhibitorspairedwith

eachother.Thisisintuitive,andarisesbecauseoftheuseofstatisticalmethods(principalcomponentsanalysis;PCA)to

helpdefinethecomponentswhichusedthepatternsofunderlyingcorrelationsbetweentheoriginalmeasurestoidentify

discrete(ordifferent)components.Indeed,noneofthepairwisecorrelationsbetweencomponentswithinalevelofthe

conceptualmodelaregreaterthan0.4whenroundedtoonedecimalplace.Thetwooutcomecomponents,‘current

financialwellbeing’and‘longer-termfinancialsecurity’,aremoderatelycorrelatedat0.4,asarethetwolifeevents

behaviouralcomponents,‘buildingresilience’and‘workingtowardsgoals’.Forbothofthesepairs,capabilityonone

measureincreasesbroadlyinlinewiththeother.

Wherewedoseehigherdegreesofcorrelationtheserelatetooutcomecomponentspairedwithcomponentsatother

levelsoftheconceptualmodelandthetwosetsofbehaviouralmeasures.‘Currentfinancialwellbeing’correlates

moderatelystronglywithfinancialconfidence(withacorrelationcoefficientof0.5),and‘longer-termfinancialsecurity’

correlatesmoderatelystronglywith‘activesaver’(0.5)and‘buildingresilience’(0.6),bothofwhichareintuitivegiventhe

compositionofthesecapabilities,andmoremoderatelywith‘financialnumeracy’(0.4).

Inturn,thedaytodaybehaviour,‘activesaver’correlatesparticularlystronglywith‘buildingresilience’(0.8).Again,this

mightbeexpected,becausetheybothfocusonsavingandsharetwocommonmeasures,albeitwithonefocussedmoreon

daytodaysavingandtheotheronlonger-termsavingbehaviour.However,wedonotseeacorrespondinglystrong(or

evenmoderate)correlationbetween‘activesaver’andtheenablerandinhibitor,‘savingmindset’.Interestingly,the

behaviouralcomponentsdonotcorrelatestronglywiththeenablersandinhibitors,apartfromamoderatecorrelation

between‘keepstrack’and‘financialnumeracy’(withacorrelationcoefficientof0.40)andbetween‘workstowardsgoals’

and‘Internetengagement’(0.40).ThelattersuggeststhatgreateruseoftheInternet,includingforbanking,isanimportant

facilitatorofmanagingandpreparingforlifeeventseffectively.

14

Table3:Correlationsbetweenpairsofcomponents

Outcomes Behaviours:managingwelldaytoday

Behaviours:managingandpreparingforlifeevents


1 2 1 2 3 1 2 1 2 3 4 5 6

Outcomes 1.Currentfinancialwellbeing 1.0

2.Longer-termfinancialsecurity 0.4 1.0

Behaviours:managing

welldaytoday

1.Managescredituse 0.4 0.1 1.0

2.Activesaver 0.2 0.5 0.0 1.0

3.Keepstrack -0.1 0.2 -0.1 0.3 1.0

Behaviours:managing

andpreparingforlife

events

1.Buildingresilience 0.2 0.6 0.0 0.8 0.2 1.0

2.Workstowardsgoals -0.1 0.1 -0.2 0.4 0.3 0.4 1.0

Enablersandinhibitors 1.Savingmindset 0.1 0.2 0.1 0.2 0.3 0.2 0.2 1.0

2.Financialnumeracy 0.1 0.4 0.0 0.3 0.4 0.3 0.2 0.2 1.0

3.Internetengagement -0.1 0.2 -0.2 0.3 0.3 0.3 0.4 0.1 0.3 1.0

4.Financialconfidence 0.5 0.3 0.2 0.2 0.1 0.2 0.0 0.1 0.2 0.0 1.0

5.Self-controlledspending 0.3 0.1 0.3 0.0 0.0 -0.1 -0.2 0.1 0.1 -0.2 0.2 1.0

6.Financialengagement 0.3 0.3 0.2 0.3 0.3 0.2 0.2 0.2 0.3 0.2 0.3 0.2 1.0

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.CorrelationsaremeasuredusingPearson’sr.Perfectcorrelationisindicatedbyavalueof1;perfectnon-correlationbyavalueof0.A

negativesignindicatesanegativecorrelation(thescoreononecomponentgoesupasthescoregoesdownontheother);nosignindicatesapositivecorrelation(thescoreononecomponentgoesupasthescorealsogoesup

ontheother).Thecoefficientsshownhavebeenroundedtoonedecimalplace,howevertheshading(lightforcorrelationsabove.30,anddarkforcorrelationsalsoabove.50,regardlessofthesign)takesintoaccountthe

figurestomoredecimalplacesthanshown.

15

Theremainderofthischapterusesregressionanalysistodeterminetheinfluenceofbehaviouralandenablerandinhibitorcomponentsonhowpeoplescoreontheoutcomecomponentsandthentheinfluenceoftheenablerandinhibitorcomponentsonthebehaviouralcomponentscores.Regressionanalysisallowsusdrawstrongerconclusionsabouttheindependentinfluenceofeachcharacteristicandtoconsiderhowwell,aswhole,predictorvariablesexplainthetotalvariationinscoresforanyoutcomemeasure.

Influenceofbehavioursandenablersandinhibitorsonoutcomes

Westartbyusingregressionanalysistoexploretheindependentrelationshipbetween(orinfluenceof)theoutcomesandthebehavioursandenablersandinhibitor,which,accordingtotheconceptualmodelarebelievedtounderpintheoutcomes.

Currentfinancialwellbeing

Table4showstheresultsofaregressionanalysiswhichpredictsscoresonourfirstoutcomecomponent,currentfinancialwellbeing,bythefivebehaviouralcomponents.Takentogether,thefivebehaviouralcomponentsaloneareestimatedtoexplain25percentofthetotalvariationincurrentfinancialwellbeingscoresamongadultsintheUK(indicatedbyanadjustedR-squareof0.25),8which,whenwetakeintoaccountthewiderangeofotherpotentialinfluences(whichmightincludeenablersandinhibitors,aswellasotherfactorssuchasageandincome)appearsquitesubstantial.

Thatsaid,ofprimaryinteresthereisthelevelofsignificanceofeachbehaviouralcomponent(thisbeingindicatedbythenumberofasterisks),9andwhetherthecoefficientispositiveornegative.Incombination,thistellsuswhetherabehaviourisimportantforhelpingtoindependentlypredictthescoreontheoutcomecomponentandthedirectionofthatinfluence.

Table4:Regressiontopredictscoresonoutcome1:Currentfinancialwellbeing,

bybehaviouralcomponents

Behaviouralcomponents

Coeff

p-value

Sig

95%CI

Lower

95%CI

Higher

Managingwelldaytoday

1.Managescredituse 0.44 0.000 *** 0.41 0.48

2.Activesaver 0.25 0.000 *** 0.21 0.29

3.Keepstrack -0.07 0.000 *** -0.11 -0.04

Managingandpreparingforlifeevents

1.Buildingresilience -0.06 0.005 ** -0.10 -0.02

2.Workstowardsgoals -0.07 0.000 *** -0.09 -0.05

Constant 4.33 0.000 *** 4.00 4.68

AdjustedR-Squared 0.25


Asterisks,whichdenotestatisticalsignificance,againsteachofthebehavioursallowustoconcludethatallofthebehavioursarestatisticallyimportant;inotherwords,theyaddsignificantlytothemodel.Increasesinscoresontwoofthecomponents(managescredituseandactivesaver)predictincreasesinscoresoncurrentfinancialwellbeing.Meanwhile,decreases,howeversmall,intheremainingthreebehaviourspredictincreasesincurrentfinancialwellbeing.Thebiggestinfluenceon‘currentfinancialwellbeing’(indicatedbythecoefficient)fromthesecomponentsappearstobethebehaviour

8Theexplanatorypoweroftheregressionanalysishasbeenestimatedbasedonasingleregressionmodelandhasnotbeentestedorvalidatedusingalternativesamples.9Itisimportantthatstatisticalsignificanceandthelevelofstatisticalisnotinterpretedtoodeterministicallyandisusedonlyasaguideastothe‘mostimportant’results.

16

‘managescredituse’which,foreveryone-pointincreaseinscoreonthiscomponent(onarangefrom0to10)resultsina0.44pointincreaseinwellbeing.‘Activesaver’alsohasalargeeffect,of0.25pointsperonepointincrease.

Aone-pointdecreaseonthe‘keepstrack’componentresultsina0.07pointincreaseincurrentfinancialwellbeing.Thismayindicatethatkeepingtrackoffinancescloselymaytendtolowersomeone’ssubjectivewellbeingorthatthosewhoneedtokeepclosetrackarealsothosewhoaremorevulnerabletofinancialdifficultyorbecomingover-indebted.Whilestatisticallysignificant,however,thissmallsizeofeffectisunlikelytobeofpracticalsignificanceininterventionterms.

Whenweaddtheenablerandinhibitorcomponentstotheregressionmodel,thetotalvarianceexplainedbythemodelincreasessubstantiallyto44percent.ThisisshowninTable5,model2(andisgivenbyanR-squaredof0.44),wheremodel1repeatstheanalysisshowninTable4.Thisinformsusthatenablersandinhibitorsareimportantasawholeindirectlyinfluencingcurrentfinancialwellbeing.

Table5:Regressiontopredictscoresonoutcome1:Currentfinancialwellbeing,bybehaviouralandenabler

andinhibitorcomponents

Model1 Model2

Predictor

Coeff

p-value

Sig

Coeff

p-value

Sig

95%CI

Lower

95%CI

Higher


1.Managescredituse 0.44 0.000 *** 0.28 0.000 *** 0.25 0.32

2.Activesaver 0.25 0.000 *** 0.17 0.000 *** 0.13 0.21

3.Keepstrack -0.07 0.000 *** -0.15 0.000 *** -0.17 -0.12


1.Buildingresilience -0.06 0.005 ** -0.04 0.036 -0.08 0.00

2.Workstowardsgoals -0.07 0.000 *** -0.06 0.000 *** -0.08 -0.04


1.Savingmindset -0.05 0.000 ** -0.08 -0.03

2.Financialnumeracy 0.02 0.002 *** 0.01 0.04

3.Internetengagement -0.05 0.000 *** -0.07 -0.03

4.Financialconfidence 0.35 0.000 *** 0.32 0.37

5.Self-controlledspending 0.05 0.000 *** 0.03 0.07

6.Financialengagement 0.14 0.000 *** 0.12 0.17

Constant 4.33 0.000 *** 3.03 0.000 *** 2.68 3.38

AdjustedR-Squared 0.25 0.44

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulationFigure4shows,visually,theimprovementinourabilitytoexplaincurrentfinancialwellbeingwhenenablersandinhibitorsaretakenintoaccount.Thisunderlinestheroleofboththeindividualeffectsofbehaviouralandenablerandinhibitorcomponentsandtheaddedcontributionoftheenablersandinhibitorswhenbehavioursarealreadyaccountedfor.Inparticular,itemphasisestherelativeimportanceoftheenablersandinhibitors(ontheirown,theyaccountfor33percentofthevariationincurrentfinancialwellbeingscores).

17

Figure4:Additiveandindividualeffectsofcomponenttypesoncurrentfinancialwellbeing

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.ThepercentageofvariationexplainedisgivenbytheadjustedR-squaredforeachrespectiveregressionmodel.

Amongtheenablersandinhibitors,‘financialnumeracy’,‘Internetengagement’,‘financialconfidence’,‘self-controlledspending’and‘financialengagement’areallhighlysignificant,and‘savingmindset’isweakerbutstillstatisticallysignificant(Table5,model2).Formostthesecomponents,increasingcapabilityscoresareindependentlyassociatedwithanincreaseincurrentfinancialwellbeing.Theexceptionsare‘savingmindset’and‘Internetengagement’which,whentheinfluenceoftheotherscomponentsistakenintoaccount,areassociatedwithadecreaseinwellbeing,howeversmall(aonepointincreaseineachoftheseinhibitorspredictsa0.06pointdecreaseinwellbeing).Overall,itistheenabler‘financialconfidence’whichhasthelargesteffect;aonepointincreaseinthisisindependentlyassociatedwitha0.35pointincreaseinwellbeingonthescalefrom0to10.RecentresearchamongworkingageCanadianshasshownthatfinancialconfidenceisanimportantpredictorofoutcomesassociatedwithday-to-daymoneyanddebtmanagement(whichcharacterisethecurrentoutcomecomponentof‘currentfinancialwellbeing’)butnotforplanningandsavingoutcomes(whichcharacterisethecurrentmeasureof‘longer-termfinancialsecurity’).10

Theeffectofintroducingtheenablersandinhibitorstothemodelhasbeentomoderatethestrengthofmostofthebehaviouralcomponents(Table5,model2).‘Buildingresilience’hasbecomenon-significantandtheeffectsizes(indicatedbythecoefficients)ofmostoftheremainingbehaviourshavereduced.Thismeansthattheeffectsofthebehaviourcomponentsarepartiallyaccountedforbystrongerandmoredirecteffectsoftheenablersandinhibitors.Nevertheless,aonepointincreaseinmanagingcreditusestillpredictsa0.28pointincreaseinoverallcurrentfinancialwellbeing,whichisfairlysizeable.Thereisoneexception,‘keepstrack’,forwhichthesizeoftheeffecthasincreasedto-0.15;theinclusionofenablersandinhibitorshasservedtoamplifythe(negative)effectof‘keepstrack’oncurrentfinancialwellbeing.Inotherwords,whenyoustripouttheindirectinfluenceoftheenablersandinhibitorsfrom‘keepstrack’,aswehaveconceivedthem,keepingtrackhasaclearerimpactontheoutcome,andanegativeone.Thismayreflectthatthosewhokeeptrackmorecloselyaremoresusceptibletothewidermeansandpressureswhichimpactonthem,andthatkeepingtrackmay,insomerespectsatleast,berepresentingafinancialcapabilityoutcomeaswellasalsodefiningafinanciallycapablebehaviour.Itispossiblethat‘keeps’trackwouldperformquitedifferentinsimilarregressionanalysisifitwerelimitedtoparticularsubgroups(e.g.byincomelevel).

10BorisPalameta,CamNguyen,TaylorShek-waiHuiandDavidGyarmati(2016)Thelinkbetweenfinancialconfidenceandfinancialoutcomesamongworking-agedCanadians.Ottawa:FinancialConsumerAgencyofCanada.

25 25

19

33

0

5

10

15

20

25

30

35

40

45

50

Additiveeffect Behaviours Enablersandinhibitors

Percen

tage(%

)ofvariatio

nexplaine

d

18

Longer-termfinancialsecurity

Turningtooursecondoutcomecomponent,longer-termfinancialsecurity,thebehaviouralcomponentsaloneexplain43percentofthetotalvarianceinthismeasure(Table6,model1).Bothlifeeventbehavioursarehighlystatisticallysignificant,althoughtheeffectsareonlylargefor‘buildingresilience’;foreveryone-pointincreaseinthis,longertermfinancialsecurityispredictedtoincreasebysome0.67points.Thiscorroboratesthehighpairwisecorrelationsbetweenthesevariablesdiscussedabove.Aonepointincreaseinscoreonthecomponent‘workstowardsgoals’isassociatedwitha0.06pointdecreaseinlonger-termfinancialsecurity,whichseemscounterintuitive;itsweakinfluenceispossiblylargelyaccountedforbythepositiveeffectofthe‘buildingresilience’component,suchthatthosewithgoalsbutwithoutsavings(whichcharacterises‘buildingresilience’)struggletoestablishlonger-termfinancialwellbeing.

‘Managescredituse’alsohasapositiveindependenteffectonthisoutcome,anditseffectismoderate(at0.19points;Table6,model1).Theindependenteffectof‘keepstrack’issmall(at0.11points)butsignificantand–unlikeforthecurrentfinancialwellbeingoutcome–itisinthepositivedirection(Table5,model1).Theindependenteffectsof‘activesaver’isweakandnegative(-0.05points).

Table6:Regressiontopredictscoresonoutcome2:Longer-termfinancialsecurity,bybehavioural

componentsandbehaviouralandenablerandinhibitorcomponents

Model1 Model2

Predictor Coeff p-value Sig Coeff p-value Sig 95%CI

Lower

95%CI

Higher


1.Managescredituse 0.19 0.000 *** 0.08 0.000 *** 0.04 0.12

2.Activesaver -0.05 0.048 * -0.09 0.000 *** -0.13 -0.05

3.Keepstrack 0.11 0.000 *** -0.01 0.569 -0.05 0.02


1.Buildingresilience 0.67 0.000 *** 0.65 0.000 *** 0.60 0.69

2.Workstowardsgoals -0.06 0.000 *** -0.06 0.000 *** -0.09 -0.04


1.Savingmindset 0.05 0.002 ** 0.02 0.08


3.Internetengagement 0.00 0.721 -0.03 0.02




Constant 0.54 0.007 -0.95 0.000 -1.37 -2.53


3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulationWhentheenablersandinhibitorsaretakenintoaccount,weagainseetheexplainedvariationinscoresfor‘longer-termfinancialsecurity’increaseaswedidfor‘currentfinancialwellbeing’,albeitonlymoderatelythistimefrom43percentto51percent(Table5,model2).Inotherwords,inacontextinwhichbehavioursarealreadytakenintoaccount,enablersandinhibitorsexplainonlyanadditionaleightpercentofexplainedvariationinlonger-termfinancialsecurityscores.Ontheirown,however,theenablersandinhibitorsexplain24percentofthevariationinlonger-termfinancialsecurityscoresandthisisshownvisuallyinFigure5.Thisindicatesthatenablersandinhibitorsplaysomeroleinbothfinancialwellbeingoutcomes,regardlessofindividuals’andhouseholds’prevailingbehaviours.Researchinpsychologyhaslongrecognisedthe

19

gap(andinconsistencies)thatoftenoccursbetweenattitudesandbehaviours.Indeed,behavioursmaybeconstrainedsomewhatbycircumstances.Thisisimportantforsuggestingthatfinancialcapabilityinterventionsshouldnotfocusexclusivelyonbehaviouralfactorsaloneandinsteadalsoaimtochangeminds,skillsandoutlooks.

Figure5:Additiveandindividualeffectsofcomponenttypesonlonger-termfinancialsecurity


Withtheaddedinfluenceoftheenablersandinhibitorsonlonger-termfinancialsecurity,wefindthatthenegativeeffectofbeingan‘activesaver’becomesslightlystronger,albeitstillweak(withaonepointincreasein‘activesaver’scorespredictingasmall,0.09point,decreaseinlonger-termfinancialsecurity).Thisimpliesthat,forlonger-termsecurity,prioritisingsavingwhichbuildslonger-termresilienceismorebeneficialthansavingwhichreflectsmoredaytodaymoneymanagementbehaviours(i.e.‘activesaver’)andthatbuildingresilienceisinturnlikelytobedrivenbyagreatercapacitytoputmoneyawayforthelonger-term(perhapsdrivenbywealthandhigherdisposableincomes).Instead,itappearsthatpeople’sintentionstosave,asrepresentedby‘savingmindset’and‘self-controlledspending’aremoreimportant.

Additionally,‘keepstrack’hasbecomenon-significantasapredictoroflonger-termfinancialsecuritywhenenablesandinhibitorsarecontrolledfor.‘Buildingresilience’remainshighlysignificant,withaonepointincreasein‘buildingresilience’stillindependentlyassociatedwithalarge(0.65point)increaseinlonger-termfinancialsecurity.

Withtheexceptionof‘Internetengagement’,alloftheenablersandinhibitorsarealsopositivelypredictiveoflonger-termfinancialsecurity.Nonetheless,theeffectsizesarecomparativelysmall,althoughthe0.19pointeffectof‘financialconfidence’marksthisenableroutinparticular.

InfluenceofenablersandinhibitorsonbehavioursNowourfocusturnstoexploringtheinfluenceoftheenablersandinhibitorsonthebehaviouralcomponents.Westartwiththefirstofthefivebehaviours,‘managescredituse’.

Managescredituse

Table7showsthat‘managescredituse’ismoderatelywellpredictedbythesetofenablerandinhibitors,explaining18percentofthevarianceinadults’scoresonthisbehaviour.Allareindependentlyrelatedtomanagingcredituse,although‘financialengagement’,whichwerecallreflectstheextenttowhichsomeonefeelsincontrolandprioritisesthefuture,isonlyweaklysignificant(indicatedbyoneasteriskonly).

Althoughalltheremainingenablersandinhibitorsexertonlyasmallinfluence,thelargeroftheseare‘self-controlledspending’(exertinga0.15increasein‘managescredituse’),‘self-controlledspending’(0.12points)and‘Internetengagement’.‘Internetengagement’isassociatedwitha0.10pointdecreaseforeveryonepointincreaseinthis.ThismayreflectthatInternetengagementislikelytobemediatedbyanumberoffactors,includingage,withagealsobeingalikelyfactorincredituse(astheanalysiswillexplorefurtherbelow).‘Financialnumeracy’isalsonegativelyassociatedwithmanagingcredituse(albeitassociatedwithonlyaverysmalleffectof-0.03points),whichmayagainreflecthiddencomplexityaroundwhoisusingcredit,whyandinwhatcircumstances.

42 42

8

24

0

5

10

15

20

25

30

35

40

45

50

55

Additiveeffect Behaviours Enablersandinhibitors

Percen

tageofvariatio

nexplaine

d

20

Table7:Regressiontopredictscoresonmanagingwelldaytodaybehaviour1:Managescredituse,by

enablerandinhibitorcomponents

Predictor:Enablersandinhibitors Coeff p-value Sig 95%CI

Lower

95%CI

Higher

1.Savingmindset 0.05 0.000 *** 0.02 0.08

2.Financialnumeracy -0.03 0.000 *** -0.04 -0.01

3.Internetengagement -0.10 0.000 *** -0.11 -0.08



6.Financialengagement 0.07 0.049 * 0.05 0.09

Constant 5.49 0.000 5.21 5.77



Activesaver

Allsevenenablersandinhibitorsarestatisticallysignificantpredictorsofthedaytodaybehaviourcomponent‘activesaver’(Table8),explainingasimilar,moderateproportionofthevarianceinscores(20percent)aswesawfor‘managescredituse’.Inthiscase,‘self-controlledspending’appearstobeaninhibitorofactivesaving,negativelypredictingscoresonthiscomponent,althoughitseffectissmall(0.07points).However,thisisnottoimplythatonenecessarilycausestheother(orthedirectionofanysuchrelationship).Thatsaid,thisinverserelationshipof‘self-controlledspending’with‘activesaver’isunexpected.Itmightbederivedfromtheindirectinfluenceofhighdisposableincomes,whichcansimultaneouslymakerestrainingspendinglessnecessaryandactivesavingmorepossible.Alternatively,itmaybethatthosewhofeelunderpressuretospend(andwhoindeedmightstruggletocurbtheirspending)finditmoreimportanttoputinplacemechanismstosavedaytoday.

Table8:Regressiontopredictscoresonmanagingwelldaytodaybehaviour2:Activesaver,byenablerand

inhibitorcomponents


Lower

95%CI

Higher

1.Savingmindset 0.18 0.000 *** 0.14 0.23


3.Internetengagement 0.16 0.000 *** 0.14 0.19


5.Self-controlledspending -0.07 0.000 *** -0.10 -0.04


Constant -1.58 0.000 -2.02 -1.15


3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulationAsweshouldexpect(ifpeoplearetoactinawayconsistentwiththeirattitudes)areasonablylarge,positive,effectderivesfromthe‘savingmindset’enabler(withaonepointincreasein‘savingmindset’predictinga0.18pointincreaseinactivesaving,allotherenablersandinhibitorsbeingequal).Repeatingthepointabove,whilstitisasignificantandpositiveeffectitalsoshowsanapparent‘drop-off’fromintentiontoexecution.‘Internetengagement’and‘financialconfidence’alsoexert

21

amoderatepositiveinfluence(of0.16points).Thelargereffectoverall,however,comesfrom‘financialengagement’,isindependentlyassociatedwitha0.23pointincreaseinactivesavingperonepointincrease.

Keepstrack

Theenablersandinhibitorstogetherexplain22percentof‘keepstrack’(Table9).Whileallarestatisticallysignificantpredictorsofkeepingtrack,‘self-controlledspending’isagainaninhibitor.Evenso,theireffectsarerelativelysmall,thebiggerenablerbeing‘savingmindset’,whichisassociatedwithakeepingtrackimprovementof0.16pointsforeachonepointincrease.Here,‘financialengagement’exertsapositiveinfluence(of0.10pointperpoint)onkeepingtrack,whichappearsintuitive,and‘financialnumeracy’and‘Internetengagement’arealsomoderatelyimportantenablers.

Table9:Regressiontopredictscoresonmanagingwelldaytodaybehaviour3:Keepstrack,byenablerand

inhibitorcomponents


Lower

95%CI

Higher

1.Savingmindset 0.16 0.000 *** 0.13 0.19



4.Financialconfidence 0.05 0.001 ** 0.02 0.07



Constant 3.66 0.000 3.35 3.97



Buildingresilience

Theenablerandinhibitorcomponentsalsoexplainamoderate18percentofthevariationinscoresonthelifeeventsbehaviour,‘buildingresilience’(Table10).Aswesawfor‘activesaver’,allarehighlysignificantpredictorsofbuildingresilience.Andallexcept‘self-controlledspending’areapparentenablers,withacomparativelylargeinfluenceof‘Internetengagement’(0.16points),althoughthismightbemediatedbyotherfactors(especiallylifestageandincome).

Table10:Regressiontopredictscoresonmanagingandpreparingforlifeeventsbehaviour1:Building

resilience,byenablerandinhibitorcomponents


Lower

95%CI

Higher

1.Savingmindset 0.12 0.000 *** 0.08 0.16






Constant -1.63 0.000 -2.05 -1.22



22

Workstowardsgoals

Some23percentofthevariationinscoresonthe‘workstowardsgoals’component(Table11)isexplainedbytheenablersandinhibitors.Againwesee‘self-controlledspending’actingasaninhibitortoworkingtowardsgoals,withothersappearingtoenableit.Notably,theeffectof‘self-controlledspending’iscomparativelylarge,witheveryonepointincreaseinthisinhibitorassociatedwitha0.24pointdecreaseinthebehaviour.Again,itisreasonabletohypothesisethatthisismediatedbylowdisposableincomeandtheneedtoexertrestrainttoavoidfallingintoarrearswithbillsortorepayarrearsthathaveaccrued.

Notably,‘financialconfidence’isnotastatisticallysignificantpredictorinthiscaseand‘financialnumeracy’isonlyweaklysignificantcontributingonlyasmallindependenteffectof0.03pointsperonepointincrease.Thelarger,positive,effectsonworkingtowardsgoalsareassociatedwith‘Internetengagement’(0.27points)and‘financialengagement’(0.23points).

Table11:Regressiontopredictscoresonmanagingandpreparingforlifeeventsbehaviour2:Workstowards

goals,byenablerandinhibitorcomponents


Lower

95%CI

Higher

1.Savingmindset 0.15 0.000 *** 0.10 0.20

2.Financialnumeracy 0.03 0.047 * 0.00 0.05


4.Financialconfidence 0.01 0.628 -0.03 0.05



Constant 0.74 0.003 ** 0.26 1.21



ChaptersummaryTheanalysishasfoundthatbehaviouralandenablerandinhibitorcomponentstogetheraccountforamoderatelyhighshareofthevariationinscoresonthetwofinancialwellbeingoutcomecomponents.Inrelationtothecurrentfinancialwellbeing,themoreimportantcomponentsarethebehaviour,‘managescredituse’andespeciallytheenabler,‘financialconfidence’.Forlonger-termfinancialsecurity,‘buildingresilience’wasfarmoreimportantwith‘financialconfidence’alsoexertingamoderateinfluence.

Theexplanatorypoweroftheenablersandinhibitorsonbehaviourswasgenerallymuchlowerthanthecombinedeffectoftheenablersandbehavioursontheoutcomes.Nonetheless,‘keepstrack’and‘workstowardsgoals’werecomparativelyimportantforpredictingbehaviours.

‘Savingmindset’wasafairlyimportantenablerofseveralofthebehaviouralcomponents,aswere‘financialengagement’and‘Internetengagement’.‘Self-controlledspending’wasnegativelyassociatedwithseveralbehaviouralcomponentsbut,withtheexceptionof‘workstowardsgoals’,onlycomparativelyweaklyso.‘Financialnumeracy’and‘Internetengagement’alsoappearedtoactasinhibitorsofthe‘managescredituse’behaviour,whichthoughinitiallycounter-intuitivemaybespuriousin(oratleastindirect)natureandinsteadreflecttheroleofotherfactorssuchasageandincomeorhiddencomplexitiesaroundthecontextinwhichpeopleusecredit.

Thenextchapterexploreswhichexplanatory,mediatorandothercontrolvariablesplayaroleinpredictingpeople’sscoresontheenablerandinhibitorcomponents.Italsoexplorestheadditiveeffectofthesecharacteristicsoverandabovetheinfluenceofthecomponentscoresonthebehaviouralandoutcomecomponentsatthehigherlevelsoftheconceptualframeworkthatarereportedinthischapter.

23

4. Explainingvariationsinlevelsoffinancialcapability

Chapter3hasalreadyconsideredtheroleplayedbycomponentsoffinancialcapabilityfromlowerlevelsoftheconceptualframeworkonscoresonthecomponentsathigherlevels.Inthischapter,weagainuseregressionanalysis,butthistimeadditionallyintroduceawiderangeofpersonalandhouseholdsocio-demographicandothercharacteristics(‘mediators’)toexaminetheirpotentialtoexplainvariationinthefinancialcapabilityscores.Thesecharacteristicsare:

Keysocio-economiccharacteristics(‘keymediators’)

n Workstatus

n Householdcomposition11

n Householdincome

n Housingtenure

All‘othermediators’

Othersocio-demographic/economiccharacteristicsofthehousehold

n Mortgage/rentlastmonth

n SocialclassoftheChiefIncomeEarner(CIE)

n Geography

n Negativelifeevents

n Incomeeachweekormonth

Othersocio-demographic/economiccharacteristicsoftheindividual

n Gender

n Agegroup

n Ethnicity

n Highestlevelofeducationachieved

n Long-standingillnessordisability

n NumberofhoursspentonInternetlastweek

n NumberoftypesofInternet-enableddevicesaccessedbyhousehold

Financialmanagementcharacteristicsoftheindividual

n ChiefIncomeEarnerinhousehold

n Responsibilityformanagingthehouseholdfinances

n Unbanked:nocurrentaccountinownnameorjointly

n Thinkofmoneyinpots

n Typesofpeoplediscusshouseholdfinancesopenlywith

n Infosourcesusedinlastyear

n Regularlyreadsthefinancialpages

11Acontrolvariable,whichreflectspost-hocre-categorisationofhouseholdcomposition,wasalsoincludedineachregression,butisnotshownintheresultstablesbecauseitisnotofsubstantiveinterest.Householdcompositionisincludedinthekeysocio-economiccharacteristicsbecauseofitsimpactondisposableincome.

24

Beforeweundertakefurtherregressionanalysis,however,weconsiderhowfinancialcapabilityscores,acrossall13components,varybysomeofthecharacteristicswhicharelikelytobestreflecthouseholds’meansandpressures.Thesearethe‘keymediators’referredtoabove.Thiswillgiveusanindicationofforwhichtypesofhouseholdsandwhichtypesofpeoplefinancialcapabilityishighandlow,andinrelationtowhichcomponents.Thisprovidesaninitialoverviewofwhichgroupsmightbeparticularlyimportanttargetsforandbeneficiariesoffinancialcapabilityinterventions.

Then,ourmainfocuswillbeonidentifyingwhichfactors–whetherthesearebehaviouralorenablerandinhibitorcomponentsorthesewidercharacteristics–aremostimportantforpredictingpeople’sscoresontheoutcomemeasures‘currentfinancialwellbeing’and‘longer-termfinancialsecurity’.However,wewillstartbyexploringtheireffectontheenablersandinhibitorsandthenthebehavioursbeforefinallyconsideringtheoutcomecomponents,inordertobuildupourpicture,sequentially.

Variationsinfinancialcapabilityscoresbykeysocio-economic

characteristicsThispreliminaryanalysisconsidershowfinancialcapabilityisdistributedacrossthepopulationoftheUKbyanumberofcharacteristicsoftherespondentandtheirhousehold.Inparticular,wehaveexaminedhowthemeanaveragescoresforeachofthecomponentsvarybytheindividual’slifestage(specificallyinrelationtowhethertheywereofworkingorretirementage),whetherornottheylivealone(andthen,byextension,thecompositionoftheirhousehold),andtheirhousehold’stotalincomeandhousingtenure(Figures6-9).Notethatthesepreliminaryfindingsarebasedonbivariateanalysisandthereforedonotcontrolfortheeffectsofotherpotentialmediators(whichthelatersectionsdocontrolfor).

Inrelationtolifestage,avisualinspectionofFigure6indicatesthatthegreatestvariationincomponentscoresisforthepreparingforandmanaginglifeevent’sbehaviourcomponent2‘workstowardsgoals’.Adultsofworkingage(mean4.2)scoredmorethantwiceashighlyasthoseofretirementage(mean1.9)on‘workstowardsgoals’.Althoughthebreakdownisnotshown,thisgapwidenedevenfurtherwhenpeople’sactualworkingstatuswastakenintoaccount,withtheaveragescoreamongthedefactoretiredscoredfallingto1.7.

Thegapbetweenthescoresofthoseofworkingandretirementageisalsodistinctforthetwofinancialwellbeingoutcomemeasures,especially‘currentfinancialwellbeing’,andenablerandinhibitorcomponent5‘self-controlledspending’,albeitwiththoseofretirementagescoringbetteronbothofthese(Figure6).Adultsofretirementagescored1.4pointshigheratameanof8.6thanthosebelowstatepensionage(mean7.2)inrelationto‘currentfinancialwellbeingand1.5pointshigherat7.6pointsthanthoseofretirementage(mean6.0;Figure6).Whereotherstatisticallysignificantdifferencesbylifestageareevidencedthedifferencesareagainnotallinthesamedirection.12Thoseofworkingagescoredbetteron,‘activesaver’and‘keepstrack’whilethoseofretirementageweremorecapableonaverageon‘managescredituse’and‘Internetengagement’,‘financialconfidence’and‘self-controlledspending’(enablersandinhibitors3,4and5).13

12Statisticalsignificancetestingreferredtointhissectionwasundertakenusingaone-wayanalysisofvariance(ANOVA).13Theapparentvariationsbylifestageforlifeeventsbehaviour1andenablersandinhibitors1,2and6arenotstatisticallysignificant.

25

Figure6:Meanaveragefinancialcapabilityscores,byindividuals’life-stage

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.

Key:Outcomes1.Currentfinancialwellbeing,2.Longer-termfinancialsecurity;DayBehaviours:Managingwelldaytoday1.Managescredituse,2.Activesaver,3.Keepstrack;LifeBehaviours:Managingandpreparingforlifeevents1.Buildingresilience,2.Workstowardsgoals;Enablersandinhibitors1.Savingmindset,2.Financialnumeracy,3.Internetengagement,4.Financialconfidence,5.Self-controlledspending,6.Financialengagement

Wehavealsoexaminedthevariationinfinancialcapabilityscoresbyhouseholdcomposition(Figure7).Thefirstbarineachofthesechartsshowssingleadulthousehold(thatis,someonewholivealone).Thedifferencesincomponentscoresdependingonwhetherornotsomeonelivedaloneweremostlymodestornon-significant.14However,thereisnotablevariationforthemanagingandpreparingforlifeeventsbehaviour‘workstowardsgoals’;thiswassubstantiallyhigheramongthosewithotherhouseholdmembers(4.0)thanthoselivingalone(2.5).Thisisintuitiveandlikelytobelinkedtolifestage.

Amongtheremaininggroups,wefinddifferentdegreesofvariationacrossthecomponents,thoughineachcasethevariationacrossallthegroupsisstatisticallysignificant.Assuch,thereisnoonehouseholdgroupwhichstandsoutasbeingparticularlycapableorincapableacrossthemeasures.Insteadforexample,wecanseethatcoupleswithchildrenunderage18scoredcomparativelywellatthelifeeventsbehaviours‘buildingresilience’and‘workstowardsgoals’(whichappearstobeanintuitivefinding),andattheenablerandinhibitorcomponents‘financialnumeracy’and‘Internetengagement’.Theyscoredcomparativelypoorlyattheenablerandinhibitor‘self-controlledspending’,alongsideloneparents,whoalsoscoredrelativelypoorlyonbothoutcomecomponentsbutrelativelywellon‘savingmindset’.Multi-adulthouseholdstendedtoscoreinthemiddleoftherangeonthemajorityofthecomponents.

14Onlytheapparentvariationsbylivingalonefor‘longer-termfinancialsecurity’and‘savingmindset’arenotstatisticallysignificant.

0.01.02.03.04.05.06.07.08.09.010.0

1 2 1 2 3 1 2 1 2 3 4 5 6

Lifestage

Workingage Retirementage

Behaviours:daytoday

Behaviours:lifeevents

EnablersandinhibitorsOutcomes

26

Figure7:Meanaveragefinancialcapabilityscores,byhouseholdcomposition



Finally,wehaveconsideredtheeffectonfinancialcapabilityscoresofbothhouseholdincomeandtenure(Figures8and9respectively).Intermsofincome,weagainseesomeofthemostmarkedvariationinscoresinrelationtotheoutcome‘longer-termfinancialsecurity’andthetwolifeeventbehaviouralcomponents‘workstowardsgoals’.Substantialvariationisobservedforthemanagingwelldaytodaybehaviour‘activesaver’andtheenablerandinhibitor‘financialnumeracy’.Ineachcaseimprovedscoresarefoundforpeoplelivinginhouseholdswiththehigherincomes.Commensurate,iflessmarked,variationsbyincomearealsoobservedfortheenablersandinhibitors‘savingmindset’,‘financialconfidence’and‘financialengagement’.Fortheremainingcomponents,thevariationbyincomelevelisratherlessclearandinconsistentinthedirectionoftheeffect.15

15Onlytheapparentvariationbyincomeforenablerandinhibitorcomponent‘self-controlledspending’isnotstatisticallysignificant.

0.0

2.0

4.0

6.0

8.0

10.0

1 2 1 2 3 1 2 1 2 3 4 5 6

Householdcomposition

Singleadulthousehold Couple,nochildren Loneparentwithchildrenunder18Couplewithchildrenunder18 Multi-adultwithchildrenunder18 Multi-adult,nochildren

Outcomes Behaviours:day today


EnablersandInhibitors

27

Figure8:Meanaveragefinancialcapabilityscores,bytotalhouseholdincome



Figure9:Meanaveragefinancialcapabilityscores,byhousingtenure



0.0

2.0

4.0

6.0

8.0

10.0

1 2 1 2 3 1 2 1 2 3 4 5 6

Housingtenure

Ownoutright Ownwithmortgage(inc.part/sharedownership)Rentitfromaprivatelandlord RentitfromasociallandlordLivewithparents

Outcomes Behaviours:daytoday

Behaviour:lifeevents


0.01.02.03.04.05.06.07.08.09.010.0

1 2 1 2 3 1 2 1 2 3 4 5 6

Householdincome

£13,449orless £13,500- £34,999 £34,999-£50,000 £50,000ormore

Outcomes Behaviours:daytoday



28

Wealsoseestatisticallysignificantvariationsinscoresbyhousingtenureforeachofthecomponents(Figure9,above).Inparticular,peoplerentingtheirhomesfromasociallandlordscoredparticularlypoorlyonaverageonbothoutcomecomponents,the‘activesaver’,‘buildingresilience’and‘workstowardsgoals’behaviouralcomponentsandtheenablersandinhibitors‘financialnumeracy’,‘Internetengagement’and,toalesserextent,‘financialengagement’.Thisislikelytoreflectothercharacteristicsofthisgroup,particularlytheirtypicallymuchlowerincomesthanothers.Peoplerentingfromasociallandlordnonethelessscoredcomparativelywellon‘managescredituse’,possiblyreflectingtheirexclusionfrommainstreamcredit,and‘self-controlledspending’,possiblyoutofnecessity.Thoseowningtheirhomesoutrighttendedtobeatortowardsthetopoftherangeoneachofthecomponents,theexceptionbeingtheenabler‘Internetengagement’,wherebothvariablesarecorrelatedwithage.

Aswehaveseeninthissection,averagescoresvariedsomewhatbykeymeasuresofthekeymeansandpressuresofthehousehold,andparticularlystronglybythesocio-economiccircumstancesoftheindividualandtheirhousehold.Asmightbeexpected,thosegroupsappearingtobebetter-offfinanciallyconsistentlyscoredbetteroncomponentsateachleveloftheconceptualframework.However,thisanalysishasnotcontrolledfortheeffectsofotherpotentialmediators,andthisiswhyweuseregressionanalysisinlatersectionsofthereport.

Thenextsectionexaminesthedeterminantsoffinancialcapabilityoneachofthecomponents,drawingonthesocio-demographicmeasuresconsideredaboveaswellasawiderangeofotherexplanatoryandmediatorvariablesandtakingintoaccount,whereappropriate,otherfinancialcapabilitycomponents.

Westartbyexploringtheireffectontheenablersandinhibitorsandthenthebehavioursbeforefinallyconsideringtheoutcomecomponents.Examiningtheeffectsonthecomponentsinreverseorderwillhelpustounderstandhowthesepersonalandhouseholdcharacteristicsmightalsomoderatetheeffectsofthelower-levelcomponentsonthehigher-levelcomponentswhichwesawinthepreviouschapter.Notethatmostofthesocio-demographicandeconomiccharacteristicsarecategorical(nominal)innature.Therefore,incontrasttotheregressionanalysiswesawearlierwhereweconsideredtheeffectsofcomponentscoresonothercomponents,theinterpretationofcategoricalmeasuresisslightlydifferent.Here,wesetareferencecategoryagainstwhichthechangeinthescoreintheenablerormediatorisshownforeachcategorycomparedwiththereferencecategory(seetheAppendix1formoreinformation).Also,althoughweconsidertheinfluenceofkeysocio-demographiccharacteristics,thechaptercontinuestofocusonanalysisoftheUKpopulationasawholeratherthanlimitingtheanalysistoparticularsubgroupstocontrolfortheseinfluences.

TheinfluenceofmediatorsonenablersandinhibitorsTable12showsanextractoftheresultsofregressionmodelsforallsixoftheenablersandinhibitorsforthesubsetofkeysocio-economiccharacteristicsoftheindividualandtheirhousehold.AppendixTableA3showsthefullresultswithallofthecharacteristics.Ineachcase,thevaluesshownarethecoefficientsbut,forpresentationalpurposes,wehaveremovedthep-valuesandsignificancelevelsandinsteadindicatedthesignificancelevelsbyshadingthecorrespondingcoefficient(withthedarkestshadingcorrespondingtothehighestlevelofstatisticalsignificance).Thecoefficientsforthemeasureswhicharecategoricalinnature(i.e.groups)indicatealevelofchangeintheenablerthatisindependentlyassociatedwithaswitchfromthereferencecategorytothecategoryshown.So,forexample,beinginfullorpart-timeeducationortrainingisassociatedwithadecreasein‘savingmindset’byoveraquarterofapoint(-0.29points;Table12;column1)comparedwithbeinginfull-timeemployment.Itisimportanttopointoutthatalthoughtheanalysisidentifiescharacteristicsaspredictorsordeterminantsofthecomponentstheyarenonethelessonlyindependent‘correlates’ofthecomponents,andthedirectionoftheeffectisnotprovenstatisticallybytheregressionanalysis.

Despitethesignificantindependentrelationshipofthecharacteristicswiththeenablersandinhibitors,theR-squaredforeachmodelshowsthatthecharacteristics,incombination,tendtoexplaintheenablersandinhibitorsonlymoderatelywell.36percentofthevariationinscoreson‘financialnumeracy’isexplainedbythem(Table12;column2).Butthisistheexception,andonly13percentand14percentofthe‘savingmindset’and‘financialengagement’areaccountedfor(columns1and6).

Therelativeimportanceofthekeysocio-economiccharacterisesisevidentfromTable12.Statisticallysignificanteffectsofthedifferentcategoriesofthesemeasures,indicatedbytheshadingandthedarkshadinginparticular,arecommonwithinhouseholdincomeand,toalesserextent,workstatus.

Almostwithoutexception,livinginahouseholdwithanannualincomeoflessthan£50,000scoredsignificantlylesswellontheenablerandinhibitorcomponents,allotherthingsbeingequal.Thisiscertainlythecaseforthelower-incomegroups,withtheeffectonscorestendingtorangeinsizeacrosstheincomecategories,withthelowestincomesscoringtheleastwell.Mostnotably,thoselivinginhouseholdwithincomesoflessthan£13,500predictadecreasein‘financialnumeracy’of0.81points(Table12,column2)andadecreasein‘financialengagement’ofsome1.15pointsallothersthingsbeingequal,comparedwiththosewiththehighestincomes(column6).

29

Thepictureisrathermoremixedfortheotherkeysocio-economiccharacteristics.Mostnotably,beingself-employedpart-timepredictedanincreasein‘financialnumeracy’ofsome1.13pointscomparedwithbeingafull-timeemployee(Table12,column2)andrentingfromasociallandlorddecreasedscoresonthisenablerby0.77pointscomparedwithoutrightownership(Table12,column2).Beingunemployeddecreased‘financialconfidence’scoresby0.87pointsasdidrentingfromasociallandlordby0.80points(column4).Andbeingaloneparentpredictedadecreasein‘self-controlledspending’scoresby0.79pointscomparedwithcoupleswithoutchildren(column5).

Table12:Regressiontopredictscoresonenablerandinhibitorcomponents,bykey

socio-economiccharacteristics

1.Saving

mindset

2.Financial

numeracy

3.Internet

engagement

4.Financial

confidence

5.Self-

controlled

spending

6.Financial

engagement

Workstatus(refisemployedfulltime)

Fullorpart-timeeducation/training -0.29 0.36 0.13 -0.12 -0.32 0.00

Employedparttime 0.11 0.37 0.18 -0.12 0.15 0.06

Self-employedfulltime -0.09 0.65 0.17 -0.29 -0.06 0.11

Self-employedparttime 0.15 1.13 0.57 -0.27 0.47 -0.50

Retiredfrompaidwork 0.13 0.41 -0.03 0.19 0.30 0.56

Unemployed -0.15 0.62 -0.04 -0.87 0.43 0.02

Notworkingforanyotherreason 0.08 0.62 0.04 -0.07 0.58 0.39

Householdcomposition(refiscouple,nochildren) Singleadulthousehold 0.09 0.07 -0.09 0.00 -0.29 -0.05

Loneparentwithchild(ren)under18 0.46 -0.05 -0.12 -0.05 -0.79 -0.14

Couplewithchild(ren)under18 0.26 -0.01 -0.01 -0.24 -0.48 -0.46

Multi-adultwithchild(ren)under18 0.11 -0.03 -0.19 -0.30 0.09 -0.07

Multi-adult,nochildren -0.01 -0.19 -0.00 -0.19 -0.50 -0.40

Householdincome(refis£50,000ormore)

Lessthan£13,500 -0.27 -0.81 -0.47 -0.48 -0.54 -1.15

£15,000butlessthan£35,000 -0.10 -0.47 -0.31 -0.44 -0.36 -0.76

£35,000butlessthan£50,000 -0.05 0.10 -0.31 -0.24 -0.26 -0.45

Housingtenure(refisownoutright)

Ownwithamortgage -0.37 -0.24 -0.07 -0.52 -0.18 -0.25

Rentfromprivatelandlord -0.53 -0.26 -0.07 -0.80 -0.26 -0.37

RentfromLocalauthorityorhousingassociation -0.26 -0.77 0.01 -0.32 -0.04 -0.51

Livewithparents/otherfamily -0.06 0.25 -0.14 -0.34 -0.24 0.26

Someotherarrangements -0.12 0.70 -0.08 -0.51 -0.30 -0.17

Allothercharacteristics(seeAppendixTableA3)

Constant 7.64 7.10 1.54 8.00 8.26 6.00

AdjustedR-Squared 0.13 0.36 0.49 0.18 0.19 0.14

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.Theshadingindicatesstatisticalsignificance,wherelightshadingindicatesp<0.05,mediumshadingindicatesp<0.01,anddarkshadingindicatesp<0.001.

30

Othersocio-demographicandeconomiccharacteristicsofthehouseholdwerecomparativelyunimportantinpredictingscoresontheenablerandinhibitorcomponents(AppendixTableA3),atleastcomparedwiththeremainingsetsofmeasures.Amongthem,themostimportantsocio-demographicandeconomiccharacteristicsacrossthecomponentswhenviewedasawholewereage,broadethnicgrouping,reportinghavingalong-standingillnessordisabilityandthenumberoftypesofInternet-enableddevicesavailabletotheindividual.Notably,capabilitytendedtoincreasewithincreasingageandwashigherforthosewithoutillnessordisability,althoughthepatternwaslessclearbyethnicityandInternetdevices(withcapabilitymostly,butnotalways,higherthemoretypesofdeviceshouseholdsused).Whereeducationlevelwasstatisticallysignificant,capabilityscoresalsotendedtobehigheramongthosewithhighereducationalqualifications(AppendixTableA3).

Table13:Regressiontopredictscoresonenablerandinhibitorcomponents,byfinancialmanagement

characteristicsoftheindividual

1.Saving

mindset

2.Financial

numeracy

3.Internet

engagement

4.Financial

confidence

5.Self-

controlled

spending

6.Financial

engagement

ChiefIncomeEarnerinhousehold(refismyself)

Mejointly -0.27 -0.01 0.00 -0.05 -0.20 -0.10

Someoneelse 0.05 0.20 -0.03 -0.01 0.01 0.18

Responsibilityformanagingthehouseholdfinances(refispartner/spousemostly)

Memostly(includingn/a,nopartner) 0.19 0.81 0.17 1.10 0.21 0.43

Mejointly 0.06 0.59 0.11 0.89 0.02 0.31

Nocurrentaccountinownnameorjointly

(refisbanked)

-0.42 -0.95 -0.36 -0.50 -0.07 -0.16

Thinkofmoneyinpots(high=strongagreement) 0.07 -0.08 -0.02 0.08 -0.04 0.04

Typesofpeoplediscusshouseholdfinancesopenlywith(refisnone)

One 0.28 0.26 0.08 0.09 -0.04 0.41

Two 0.38 0.62 0.14 0.08 0.08 0.42

Infosourcesusedinlastyear(refisnone)

Adviser/adviceagency 0.10 0.92 0.30 -0.14 -0.07 0.40

Activeuseofwebsites,comparisons 0.09 0.93 0.34 -0.31 -0.26 0.11

Passiveuseoffinancialpages,TV,radioandsocialmedia

0.08 0.77 -0.41 -0.14 -1.08 0.24

Friends/family -0.13 0.34 0.06 -0.35 -0.77 0.14

Regularlyreadsthefinancialpages

(high=stronglydisagree)

-0.11 0.07 -0.08 -0.24 0.05 -0.03


Constant 7.64 7.10 1.54 8.00 8.26 6.00


3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.Theshadingindicatesstatisticalsignificance,wherelightshadingindicatesp<0.05,mediumshadingindicatesp<0.01,anddarkshadingindicatesp<0.001.Eachcoefficientshowsthechangeinscoreonthecomponentforthisgroupcomparedwithitsreference(ref)category.

31

Withtheexceptionof‘financialnumeracy’,forwhichcapabilityincreasedwiththeincreasingnumberofhoursspentontheInternetinthelastweek,timespentusingtheInternettendednottoplayaclearrole.16Notably,however,littleornoInternethoursspentwasassociatedwithhigher‘self-controlledspending’scores,whichmaybeareflectionofthosewiththefewestresourcestobemoreinclinedwatchtheirspending(AppendixTableA3;column5).

Finally,individualfinancialmanagementcharacteristicsassociatedwiththerespondentwerealsomostlysignificantlypredictiveofcapabilityontheenablerandinhibitorcomponents,andoftenstronglyso(AppendixTableA3).Nonetheless,theseeffectswerenotalwaysconsistent.

Useofprofessionalfinancialormoneyadvisersandtheactiveuseoffinancialwebsitesandcomparisonsitesbothindependentlyincreasedfinancialnumeracyscoresbynearlyonepointcomparedwithusingnoinformationsources(Table13).Conversely,thepassiveuseofavailableinformationandconsultingwithfriendsandfamilypredicteddecreasesin‘self-controlledspending’scorescomparedwithusingnoinformationsources.Havingjointorprimaryresponsibilityformanagingthehouseholdfinancespredictedincreasesin‘financialconfidence’by0.89and1.10pointsrespectively,comparedwithapartnerorspousebeingmostlyresponsible.

Collectively,demographic,socio-economicandothercharacteristicsexplainedonlyamoderateamountofvariationinenablerandinhibitorscoresin2015(Table12;AppendixTableA3).Only13percentofthevariationin‘savingmindset’,wasexplained,risingto36percentofthevariationin‘financialnumeracy’.Theexception,however,is‘Internetengagement’,49percentofwhichisexplained;thisisexplainedlargelybytheinclusionofthenumberoftypesofInternet-enableddeviceshouseholdshadaccessto,whichwouldbeexpectedtocorrelatehighlywithhoursspentusingtheInternetinthelastweek,whichisoneofthetwosurveymeasuresdefiningthiscomponent).

ThefullresultsareshowninAppendixTableA3,andthedashboardbelow(Table14)summarisestheregressionresultsbycomponent,highlightingsomeofthemostimportantcharacteristicsindependentlyassociatedwitheachone.17Takingeachoftheenablerandinhibitorcomponentsinturn:

1. ‘Savingmindset’wasonlymoderatelywellexplainedbytheavailablecharacteristics(13percent.Althoughseveralcharacteristicswereassociatedwithstatisticallysignificantchangesinscores,noneappearedtobeoflargepracticalimportancetothecomponent.Thissuggeststhatunderlying,factors(suchaspersonalitytype)notcapturedbythesurveymeasuresareimportantfordeterminingsomeone’ssavingmindset.Oritmaybethat‘savingmindset’isimportantinitsownrightwhenpredictingfinancialcapabilitybehavioursandoutcomes.

2. ‘Financialnumeracy’wasfairlywellexplainedbytheavailablecharacteristics(36percent)andparticularlystronglyexplainedbysocio-demographicandeconomiccharacteristicsoftheindividual.Thisincludestheirworkstatus,age,ethnicityandmeasuresofInternetactivityandaccess.Factorsassociatedwiththeirfinancialmanagementalsoappearimportantwithcurrentaccountownershipandactiveuseofinformationsourcesandadviserspredictinghigherfinancialnumeracyscores.

3. ‘Internetengagement’waswell-explainedbythemeasuresavailable(49percent),albeitpartlyduetotheinclusionofthenumberoftypesofInternet-enableddevisesavailableinthehousehold(which,asnotedaboveshouldbeexpectedtocorrelatehighlywithoneofthetwomeasurescomprisingthiscomponent).Youngeradultsandthoseworkingself-employedpart-timethosescoredwellonthiscomponent,whilethosewiththelowesthouseholdincomes,vocationalqualificationsandthosewithchiefincomeearnersdrawnfromthelowestsocialclassscoredpoorlyallotherthingsbeingequal.Ethnicityandresponsibilityforfinancialmanagementalsoplayedarole.

4. ‘Financialconfidence’wasmoderatelywellexplainedbytheavailablemeasures(18percent),althoughafewcharacteristicsnonethelessappeartobeofquitehighpracticalsignificancetocomponents.Thisincludesseveralofthefinancialmanagementmeasures,especiallyresponsibilityformanagingfinanceswithinthehousehold,andthekeydemographicandsocio-economiccharacteristicsandhighlevelsofrentandmortgagepaymentsespeciallybeingassociatedwithsignificantlylowerscoresonthiscomponent,independentlyofotherfactors.

16ThenumberofhoursspentontheInternetinthelastweekwasnotincludedintheregressionanalysisof‘Internetengagement’,becauseadifferentversionofthesamemeasurewasincludedinthecompositionofthiscomponent.17Thishasbeeninterpretedbasedonthelevelofstatisticalsignificanceandthesizeoftheeffect(coefficient),incombination.

32

Table14:Determinantsofenablerandinhibitorcomponentscores:dashboard

1:‘Savingmindset’ Varianceexplained=13%

Keydeterminantsofcomponentscoresinclude:n Beingaloneparent(-0.46points),comparedwithcouple,nochildrenn Rentingthehomefromasociallandlord(-0.53points),comparedwithowningoutrightn HavingaccesstonoInternet-ableddevice(-0.48points),comparedwiththree

2.‘Financialnumeracy’ Varianceexplained=36%

Keydeterminantsofcomponentscores,include:n Havingnoqualifications(-1.73points),comparedwithahigherdegreen UsingtheInternetfor30+hoursinthelastweek(+1.24points),comparedwithnonen Beingself-employedpart-time(-1.13points),comparedwithfull-timeemployeesn BeingfromaBlackorminorityethnicgroup(-1.10points),comparedwithbeingWhiten Beingaged18-24yearsold(-1.08points),comparedwith75andover

3.‘Internetengagement’ Varianceexplained=49%

Keydeterminantsofcomponentscores,include:n Havingno(-2.99points)oronlyone(-1.00points)Internet-enableddevice,comparedwiththreeormoren Beingyounger,andespeciallyaged18-24yearsold(+2.47points),comparedwith75andovern Beingself-employedpart-time(+1.11points),comparedwithfull-timeemployees.n Beingmostlyresponsibleformanagingthehouseholdfinances(+0.82points),comparedwithpartnerorspousen Havingvocationalqualifications(-0.73),comparedwithahigherdegreen Makingactiveuseofwebsitesandcomparisonsites(+0.71points),comparedwithusingnoinformationsourcesn BeingfromaBlackorminorityethnicgroup(-0.50points),comparedwithbeingWhite

4.‘Financialconfidence’ Varianceexplained=18%

Keydeterminantsofcomponentscores,include:n Havingprimaryresponsibilityformanagingthehousehold’sfinances(+1.10points),comparedwiththepartneror

spousehavingprimaryresponsibilityn Beingunemployed(-0.87points),comparedwithfull-timeemployeesn Rentingthehomefromasociallandlord(-0.80points),comparedwithowningoutrightn -0.24pointsperonepointincreaseinagreementthatyou‘regularlyreadthefinancialpages’

5.‘Self-controlledspending’ Varianceexplained=19%

Keydeterminantsofcomponentscores,include:n Beingaged18-24(-2.26points)or25-34(-2.14points),comparedwith75andovern Passiveuseoffinancialpagesetc.(-1.08points),comparedwithusingnonen UsingtheInternetfor6-7hoursinthelastweek(+1.00points),comparedwithnone

6.‘Financialengagement’ Varianceexplained=14%

Keydeterminantsofcomponentscores,include:n Havingahouseholdincomeoflessthan£13,500(+0.47points),comparedwith£50,000ormoren Rentingthehomefromasociallandlord(-0.51points),comparedwithowningoutrightn Reportinghavingalong-standingillnessordisability(-0.47points),comparedwithnonen Openlydiscussinghouseholdfinanceswithtwopeople(+0.41points),comparedwithnone

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.Thelistofkeydeterminantsisnotexhaustiveofallstatisticallysignificantdeterminants,andisinsteadaselectionofthosewithhighpracticaland/orstatisticalsignificanceforillustrationpurposes.

33

5. ‘Self-controlledspending’wasmoderatelywellexplainedbytheavailablecharacteristics,drawnfromthevarioustypesofcharacteristics(19percent).ThisincludestheirageandInternethoursandaccessanduseoffinancialandmoneyinformationsources,withtheuseofwrittenandweb-basedinformationsourcesanduseofinformationfromfamilyandfriendsbeingindependentlyassociatedwithworsescoresonthiscomponentthanthoseusingnosourcesatall.

6. ‘Financialengagement’wasonlymoderatelyexplainedbythesocio-demographicandothermeasures(14percent).Evenso,certainsocio-economicfactorsareofrelativelyhighimportance,particularlyhouseholdincomeand–independentlyofthis–housingtenure.Collectively,financialmanagementcharacteristicswereofseeminglyrelativeimportanceandthosewithlong-standingillnessesordisabilitiesscoredlesswellallotherthingsequal.Again,thissuggests‘financialengagement’maybecomparativelyimportantinitsownrightwhenunderstandingthedeterminantsofbehaviouralandoutcomecomponents

TheinfluenceofmediatorsonfinancialcapabilitybehavioursWehaveundertakensimilarregressionanalysistoidentifytheinfluenceofthekeysocio-demographicandotherdeterminantsofscoresonthefinanciallycapablebehaviourcomponents.Byretainingthesetofenablerandinhibitorcomponentsintheregression,wecanfirstexplorehowtheinfluenceoftheenablersandinhibitors,lastexploredinChapter3(tables7-11)isaffectedbytheinclusionofamuchwidersetofpredictors(Table15;AppendixTableA4).

Overall,themajorityremainedstatisticallysignificantpredictorsoffinancialcapabilityscoresacrossthebehaviouralcomponents,althoughmostwereattenuated(thatis,theireffectsareweakened).Inparticular,theeffectofthe‘Internetengagement’wasstronglymoderated(andnolongersignificantforthreeofthebehaviouralcomponents)inthepresenceofthemediators,andweunderstandthistobebecauseoneofthemeasuresdefiningthiscomponentisincludedseparatelywithintheregressionanalysis(AppendixTableA4).

‘Financialnumeracy’wasstronglymoderatedbytheothermediatorsinrelationtothelifeeventbehaviour‘buildingresilience’(thecoefficientforthisenablerfallingfrom0.11to0.03).Otherwise,wetendtoseemoderateattenuationoftheenablers,wheretheyremainstatisticallysignificant.‘Financialnumeracy’wasnolongerasignificantpredictorof‘managescredituse’,‘activesaver’and‘workstowardsgoals’;‘financialconfidencewasnolongerasignificantpredictorof‘keepstrack’and‘workstowardsgoals’;and‘self-controlledspending’wasnolongerpredictiveof‘activesaver’or‘keepstrack’.Nonetheless,thefindingthatenablersandinhibitorsremainsignificantpredictorsofthebehavioursoverandabovetheinfluenceofdemographicandothercharacteristicsconfirmsthatthesecomponentscapturedistinctcharacteristicsoftheindividualwhichareimportantforunderstandingfinanciallycapablebehaviours.Thoughsmall(exertingonlya0.04pointincreaseforeverypoint),theinfluenceof‘financialengagement’on‘managescredituse’wasslightlyhigherinthepresenceofothermediators(upfrom0.02).

Amongthewiderrangeofmediatorsincludedintheanalysis,workstatusandhouseholdincome,thetypeofareainwhichsomeonelivedandseveralofthefinancialmanagementcharacteristicsoftheindividual(especiallythetendencytothinkofmoneyintermsof‘pots’andinformationsourcesusedinthelastyear)wereofstrongestindependentimportanceoverallacrossthebehaviouralcomponents.ThenumberofhoursspentontheInternetwasalsoimportantforpredictingscoresonthetwolifeeventsbehaviouralcomponents,withmoderateandhighernumberofhoursimprovingscoresonthesecomponents(byupto0.88pointson‘workstowardsgoals’scoresifusingtheInternetfor8-10hoursinthelastweek).

Theinclusionofthemediatorvariablesintheregressionanalysisimprovedtheexplanatorypoweroftheanalysisofthebehaviouralcomponentsstatisticallysignificantlycomparedwiththeenablersandinhibitorsalone.Inpracticalterms,theimprovementwasmoderatesuchthat,foreach,capabilitybecamereasonablywellexplainedbyalltheavailablemeasures:rangingfrom26percentof‘managescredituse’(from18percentwithoutthemediators)to39percentof‘workstowardsgoals’(from23percent).Evenso,wemightconcludethatthekeydemographicsareuseful,butnotasimportantasenablersandinhibitors,forpredictingfinanciallycapablebehaviours.

34

Table15:Regressiontopredictscoresonbehaviouralcomponents,byenablerandinhibitorcomponentsand

financialmanagementcharacteristicsoftheindividual

1.Manages

credituse

2.Active

saver

3.Keeps

track

1.Building

resilience

2.Works

towards

goals

Enablersandinhibitors 1.Savingmindset 0.06 0.13 0.10 0.09 0.122.Financialnumeracy -0.03 -0.01 0.08 0.03 0.013.Internetengagement -0.04 0.01 0.09 0.03 -0.014.Financialconfidence 0.06 0.10 0.02 0.06 0.045.Self-controlledspending 0.09 -0.01 -0.01 -0.04 -0.116.Financialengagement 0.03 0.16 0.09 0.08 0.16

FinancialmanagementcharacteristicsoftheindividualChiefIncomeEarnerinhousehold(refismyself)Mejointly 0.00 -0.05 0.07 0.00 0.19Someoneelse 0.09 0.01 0.00 0.03 0.10Responsibilityformanagingthehouseholdfinances(refispartner/spousemostly)Memostly(includingn/a,nopartner) -0.17 0.46 0.54 0.40 -0.18Mejointly -0.19 0.33 0.33 0.34 -0.17Nocurrentaccountinownnameorjointly

(refisbanked)

0.09 -0.22 -0.17 -0.07 0.02

Thinkofmoneyinpots(high=strong

agreement)

0.02 0.09 0.11 0.05 0.10

Typesofpeoplediscusshouseholdfinancesopenlywith(refisnone)One 0.07 0.05 0.17 0.04 0.09Two -0.08 0.29 0.29 0.28 0.67Infosourcesusedinlastyear(refisnone) Adviser/adviceagency -0.24 0.68 0.35 0.84 0.95Activeuseofwebsites,comparisons -0.33 0.45 0.21 0.56 0.58Passiveuseoffinancialpages,TV,radioandsocialmedia

-0.38 0.42 0.03 0.07 0.79

Friends/family 0.10 0.22 0.03 0.27 0.36Regularlyreadsthefinancialpages

(papers/online)(high=stronglydisagree)

-0.03 -0.12 -0.04 -0.10 -0.13


Constant 6.05 0.66 3.36 0.50 1.22AdjustedR-Squared 0.26 0.31 0.33 0.32 0.39

3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.Lightshadingindicatesp<0.05,mediumshadingindicatesp<0.01,anddarkshadingindicatesp<0.001.

35

Thefindingsforeachbehaviourcomponentaresummarisedinturnasfollows,andthekeystatisticsandpredictorsareshowninTable16.


1. ‘Managescredituse’wasmoderatelywellexplainedbythefullsetofmeasuresavailable,at26percent.Theenablersmadeupthelargestshareofinfluenceoverthisbehaviour,althoughnoneindividuallycontributedalargeamountofvariationinscores;‘self-controlledspending’and‘financialconfidence’contributeda0.12pointand0.10pointincreaserespectivelyperonepointincreaseintheseenablers.Keysocio-economiccharacteristicswerecomparativelyimportant,particularlyworkstatus,aswastheuseofmoneyandfinancialinformationsourcesinthelastyear,withtheactiveuseofinformationandadviceloweringscoresonthiscomponent.Thislastfindingappearscounter-intuitive,butonlyindicatesthatthosestrugglingtomanagetheircreditusewasindependentlyassociatedwithseekinghelp,notthatseekinghelpcausedpoorermanagementofcredituse;i.e.theymayhaveoccurredconcurrently,andtheymaybeunderpinnedbyacommon,underlyingcauses(e.g.financialdifficulty)notadequatelycapturedintheanalysis.Thisunderlinesthelimitationsofregressionanalysisinidentifyingorderingeffectsorcauseandeffect.

2. ‘Activesaver’wasmoderatelywellexplainedbythefullsetofmeasuresavailable,at31percent.Theenablersandinhibitorswereimportantoverall,with‘financialengagement’improvingactivesaverscoresby0.16pointsforeveryonepointitincreased.‘Savingmindset’and‘financialconfidence’werealsohighlysignificant.Keysocio-economiccharacteristicswerealsoimportant,particularlyworkstatusandhouseholdincome.Theactiveuseofsourcesofinformationandadviceaboutmoneyalsoincreasedscoresonthiscomponent,whilelivinginametropolitanarealoweredactivesaverscores.

3. ‘Keepstrack’wasmoderatelywellexplainedbythefullsetofmeasuresavailable,at33percent.Theenablersandinhibitorswereagaincomparativelyimportant,althoughnone,individually,wasassociatedwithalargechangein‘keepstrack’scores.Demographicandsocio-economicfactorswerecomparativelyunimportant,withtheexceptionofbroadethnicgroupandareaofresidence.Instead,severalofthefinancialmanagementcharacteristicsoftheindividualwerehighlysignificant,especiallyresponsibilityinthehouseholdformanagingfinancesandthetendencytothinkaboutmoneyintermsof‘pots’.


1. ‘Buildingresilience’wasalsomoderatelywellexplainedbythefullsetofmeasuresavailable,at32percent.Theenablersandinhibitorsplayedarelativelysmallrole,withnone,individually,havingalargeinfluence.Themostinfluentialmediatorswereofratherdifferenttypeswithhouseholdincome,thesocialgradeofthehousehold’schiefincomeearner,areaofresidence,hoursspentontheInternetinthelastweekandseveralfinancialmanagementcharacteristicsoftheindividualplayingahighlysignificantrole.Notably,beingawomanwasalsoassociatedwithslightlylower‘buildingresilience’scores,allotherthingsbeingequal,whileexperiencinganegativelifeeventinthelastthreeyears(albeitnotthelast12months)wasassociatedwithanincreaseinscores;thiswasassociatedwitha0.32pointincreaseinbuildingresilience,whichthoughapparentlysmallislikelytobeofpracticalimportance.18

2. ‘Workstowardsgoals’wasreasonablywellexplainedbythefullsetofmeasuresavailable,at39percent.Althoughonlythreeoftheenablersandinhibitors–‘savingmindset’,‘self-controlledspending’and‘financialengagement’–weresignificantpredictorsofscoresonthisbehaviour,theseeachplayedamoderatelystrongrolewithaonepointincreaseinfinancialengagementalonepredictinga0.16pointincreaseinworkstowardsgoals.Alargenumberandwiderangeofothermediatorswerealsoimportantdeterminantsofscores.Manyoftheseareintuitive,forexample,beingyounger,livingathomewithparents,spendingmoretimeontheInternet,experiencingrecentlifeeventsandusingprofessionaladvicewereallindependentlyassociatedwithhigher‘workstowardsgoals’scores,whilebeingretiredorunemployedloweredthem.

18Previousresearchhashighlightedtherolelifeeventsplayinsaving(e.g.SMacKayandEKempson(2003‘SavingsandLifeEvents’DepartmentofWorkandPensionsResearchReport194.Leeds:CorporateDocumentServices.

36

Table16Determinantsofbehaviourcomponentscores:dashboard

Managingwelldaytoday

1:‘Managescredituse’ Varianceexplained=26%(upfrom18%)

Keydeterminantsofcomponentscores:n +0.12pointsperonepointincreasein‘self-controlledspending’n +0.10pointsperonepointincreasein‘financialconfidence’n Beingself-employedpart-time(+0.56points),comparedwithfull-timeemployeesn Livinginahomewithamortgage(-0.38points),comparedwithowningoutrightn Makingactiveuseofwebsitesandcomparisonsites(-0.34points),comparedwithusingnosources

2.‘Activesaver’ Varianceexplained=31%(upfrom20%)

Keydeterminantsofcomponentscores:n +0.16pointsperonepointincreasein‘financialengagement’n Beingunemployed(-1.06points),comparedwithfull-timeemployeesn Havingahouseholdincomeoflessthan£13,500(-0.88points),comparedwith£50,000ormoren Useofprofessionalfinancialormoneyadvisers(+0.68points),comparedwithusingnosourcesn Livinginametropolitanarea(-0.41points),comparedwithanurbanarea

3.‘Keepstrack’ Varianceexplained=33%(upfrom22%)

Keydeterminantsofcomponentscores:n +0.10pointsperonepointincreasein‘savingmindset’n Havingprimaryresponsibilityformanagingthehousehold’sfinances(+0.54points),comparedwiththepartneror

spousehavingprimaryresponsibilityn BeingfromaBlackorminorityethnicgroup(-0.50points),comparedwithbeingWhiten Livinginamixedarea(-0.42points),comparedwithanurbanarean +0.11pointsperonepointincreaseinagreementthatyou‘thinkofmoneyintermsofpots’

Managingandpreparingforlifeevents

1.‘Buildingresilience’ Varianceexplained=32%(upfrom18%)

Keydeterminantsofcomponentscores:n +0.09pointsperonepointincreasein‘savingmindset’n Useofprofessionalfinancialormoneyadvisers(+0.84points),comparedwithusingnosourcesn Havingahouseholdincomeoflessthan£13,500(-0.84points),comparedwith£50,000ormoren Spending8-10hoursontheInternetinthelastweek(+0.68points),comparedwithnonen HavingaChiefIncomeEarnerinsocialgradeE(-0.55points),comparedwithgradeAn Experiencinganegativelifeeventinthelastthreeyears(+0.32points),comparedwithnonen Livinginametropolitanarea(-0.30points),comparedwithanurbanarean Beingfemale(-0.21points),comparedwithbeingmale

2.‘Workstowardsgoals’ Varianceexplained=39%(upfrom23%)

Keydeterminantsofcomponentscores:n +0.16pointsperonepointincreasein‘financialengagement’n Beingretiredfrompaidwork(-1.40points),comparedwithfull-timeemployeesn Spending8-10hoursontheInternetinthelastweek(+0.88points),comparedwithnonen Beingaged18-24(+0.67points),comparedwith75yearsandoldern Discussingfinancesopenlywithtwotypesofpeople(+0.67points),comparedwithnonen Livinginacouplewithchildren(+0.62points),comparedwithacouplewithoutchildrenn Livinginahomewithparent(s)/familymember(s)(+0.44points),comparedwithowningoutrightn Experiencinganegativelifeeventinthelast12months(+0.41points),comparedwithnonen Useofprofessionalfinancialormoneyadvisers(+0.95points),comparedwithusingnosourcesn -0.13pointsperonepointincreaseinagreementthatyou‘regularlyreadthefinancialpages’


37

TheinfluenceofmediatorsonfinancialcapabilityoutcomesAswesawaboveinChapter3(Tables5and6),thefinancialcapabilityoutcomecomponentswerebothalreadywellexplainedbythebehaviourandenablerandinhibitorcomponents.While44percentofthevariationinscoresfor‘currentfinancialwellbeing’wasexplained,some51percentof’longer-termfinancialsecurity’wasexplainedbythesecomponents.Withtheintroductionofothercharacteristicsaspotentialmediators,thesepercentagesincreasedsignificantly,andfairlysubstantially,to57percentand64percentrespectively.Thisconfirmsthatotherfactorswereimportant,butthat,intheirpresence,theeffectofthebehaviourandenablerandinhibitorcomponentswasattenuatedbythem(AppendixTableA5).

Moreover,the‘keymediators’,whichrepresenthouseholds’mainfinancialmeansandpressures,aloneaccountedfor26percentofvariationincurrentfinancialwellbeingscores,andothermediatorsbythemselvesalsoaccountedfor26percentofthevariation(Figure10).Thatsaid,whenincludedwiththebehaviouralcomponentsandtheenablerandinhibitorcomponents,theyonlyaddedeightpercentandfourpercentrespectively(and13percentaltogether)totheoverallexplanatorypoweroftheregressionmodel(figuresmaynotappeartosumcorrectlyduetorounding).

Figure10:Additiveandindividualeffectsofpredictortypesoncurrentfinancialwellbeing


Whenpredictinglonger-termfinancialsecurity,thekeymediatorsontheirownexplain30percentofthevariationinscores,whileothermediatorsaccountforasubstantial39percent(Figure11).Indeed,theindividualcontributionofeachofthesesetsofcharacteristicsisgreaterthanfortheinhibitorsandenablersalone.However,whenbehavioursandenablersandinhibitorsarealsoaccountedfor,theycontributeonlyanadditional11percentandtwopercentrespectivelytoourabilitytoexplainthevariationinlonger-termfinancialsecurity(14percentaltogether,takingintoaccounttherounding).Thisunderlinestheprimaryimportanceofthefinancialcapabilitycomponentsintheirownright.

25 25

19

33

8

26

4

26

0

5

10

15

20

25

30

35

40

45

50

55

60

Additiveeffect Behaviours Enablersandinhibitors Keymediators Othermediators

Percen

tage(%

)ofvariatio

nexplaine

d

38

Figure11:Additiveandindividualeffectsofpredictortypesonlonger-termfinancialsecurity


Table17:Regressiontopredictscoresonoutcomecomponents,bybehaviouralandenablerand

inhibitorcomponents

1.Currentfinancial

wellbeing

2.Longer-term

financialsecurity

Behaviours:managingwelldaytoday 1.Managescredituse 0.26 0.10

2.Activesaver 0.14 -0.08

3.Keepstrack -0.09 -0.01


1.Buildingresilience -0.03 0.56

2.Workstowardsgoals -0.03 -0.01

Enablersandinhibitors 1.Savingmindset -0.05 0.02

2.Financialnumeracy 0.00 0.05

3.Internetengagement 0.00 0.02

4.Financialconfidence 0.29 0.09

5.Self-controlledspending 0.03 0.01

6.Financialengagement 0.11 0.05

Allothercharacteristics(seeAppendixTableA5) Constant 5.86 2.81


3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.Lightshadingindicatesp<0.05,mediumshadingindicatesp<0.01,anddarkshadingindicatesp<0.001.

43 43

8

24

11

30

2

39

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

Additiveeffect Behaviours Enablersandinhibitors Keymediators Othermediators

Percen

tageofvariatio

nexplaine

d

39

Assuch,thebehaviourandenablerandinhibitorcomponentsremainthemostimportantsetofpredictorsofbothoutcomecomponents,andmostremainhighlystatisticallysignificant(Table17;AppendixTableA5).Ofthosewhichwerepreviouslystatisticallysignificant,only‘financialnumeracy’and‘Internetengagement’havebecomeinsignificantpredictorsof‘currentfinancialwellbeing’inthepresenceoftheadditionalmediators;and‘workstowardsgoals’,‘savingmindset’and‘self-controlledspending’havebecomeinsignificantinrelationto‘longer-termfinancialsecurity’.Thissuggeststhatfactorsotherthantheseenablersareimportantfordrivingfinancialcapabilityoutcomes.

Infact,theanalysisshowsthatawiderangeofotherfactorswereimportantpredictorsofoutcomescores(AppendixTableA5).Thesearedrawnfromacrossthetypesofcharacteristicsincludedintheanalysis,butlargelyfromthekeysocio-economiccharacteristics,asweshouldexpectgiventhenatureoftheoutcomecomponents,andothersocio-demographicandeconomiccharacteristicsoftheindividualandtheirhousehold.Householdincome,housingtenureandworkstatuswereparticularlyimportantandstrongfactorsforpredictingscoresonbothoutcomecomponents,aswerethesocialgradeofthehousehold’schiefincomeearner,ageandethnicity.Comparedwithwhatwefoundinrelationtothelower-levelcomponentsandthebehaviouralcomponentsinparticular,financialmanagementcharacteristicsoftheindividualplayedalessclearroleandare,presumably,accountedthereforebythesignificantinfluenceoffinancialcapabilitycomponentsthemselves.

Table18:Determinantsofoutcomecomponentscores:dashboard

1:‘Currentfinancialwellbeing’ Varianceexplained=57%(upfrom44%)

Keydeterminantsofcomponentscores:n +0.29pointsperonepointincreasein‘financialconfidence’n +0.26pointsperonepointincreasein‘managescredituse’n Beingunemployed(-0.86points),comparedwithfull-timeemployeesn Havingahouseholdincomeoflessthan£13,500(-0.74points),comparedwith£50,000ormoren Rentingthehomefromasociallandlord(-0.72points),comparedwithowningoutrightn Experiencinganegativelifeeventinthelast12months(-0.65points),comparedwithnonen Beingaged35-54(-0.58points)comparedwith75andovern Makingactiveuseofinformationsources(-0.29points),comparedwithusingnosourcesn Havingalong-standingillnessordisability(-0.31points)comparedwithnone

2.‘Longer-termfinancialsecurity’ Varianceexplained=64%(upfrom51%)

Keydeterminantsofcomponentscores:n +0.56pointsperonepointincreasein‘buildingresilience’n +0.10pointsperonepointincreasein‘managescredituse’n +0.09pointsperonepointincreasein‘financialconfidence’n Rentingthehomefromaprivatelandlord(-1.23points),comparedwithowningoutrightn Beingaged18-24(-1.04points)comparedwith75andovern Beingself-employedpart-time(+0.58points),comparedwithfull-timeemployeesn Havingahouseholdincomeoflessthan£13,500(-0.50points),comparedwith£50,000ormoren HavingaChiefIncomeEarnerfromsocialgradeE(-0.50points),comparedwithgradeAn BeingfromaBlackorminorityethnicgroup(-0.42points),comparedwithbeingWhiten -0.10pointsperonepointincreaseinagreementthatyou‘regularlyreadthefinancialpages’


40

Table18selectstheheadlinefindingsforeachoutcomecomponent.Takingeachcomponentinturnwecansummarisethefindingsasfollows:

1. ‘Currentfinancialwellbeing’waswellexplainedbyacombinationoffinancialcapabilitycomponentsandwidermediatingfactors.High‘financialconfidence’and‘managescredituse’scoresbothcontributesignificantimprovementstocurrentfinancialwellbeing,allotherthingsbeingequal.Strugglingwithcurrentwellbeingwasdrivenstronglybypoorscoresonmostofthecapabilitycomponents,aswellasunemploymentand,toalesserextent,full-timeself-employmentandalowincome(compoundedbynon-homeownershipandlowersocialgradesofthechiefincomeearner).Currentfinancialwellbeingscoresarelowerduringpeople’smiddle,family-rearingyears(25-54),amongpeoplefromaWhitebackgroundandthosewithoutalong-termillnessordisability,allotherthingsbeingequal.HavingaccesstofewertypesofInternet-enableddevicewasindependently(albeitonlyweakly)associatedwithreducedcurrentwellbeingscoreswhenotherfactors(includingscoresonthe‘Internetengagement’component)weretakenintoaccount.Thesamewastruefortheuseofprofessionalmoneyorfinancialadvisersandactiveuseofinformationsources,which,again,perhapsreflectsthatthoseinfinancialdifficultyaremorelikelytoneed,andthereforeseek,helpwithmoney,ratherthaninformationsources‘causing’poorerwellbeingoutcomes.

2. ‘Longer-termfinancialsecurity’wasparticularlywellexplainedbytheavailablemeasures.Thiswasdrivenlargelybysomeone’s‘buildingresilience’capabilityscore,aswellastheirage(thatis,beingyoungerorolder,butnotthemiddleyears),housingtenureandincome.Thoselivinginhomesrentedfromaprivatelandlordscoredparticularlybadly,allthingsbeingequal,closelyfollowedbythoselivinginhomerentedfromalocalauthorityorhousingassociationlandlord.Beingretiredfrompaidworkorworkingpart-time(self-employedorasanemployee)reducedscoressignificantlyforthisoutcomeandbeingdrawnfromaBlackorminorityethnicgroupwasalsoindependentlyassociatedwithareducedlonger-termsecurityscore.Notbeingthechiefincomeearnerforthehouseholdandagreementthatyou‘regularlyreadthefinancialpages’alsopredictedlowerlonger-termsecurityscores,while,conversely,theuseofprofessionaladviserspredictedasmallincreaseinscore.

ChaptersummaryFinancialcapabilitywellbeingoutcomesarewell-explainedbyfinanciallycapablebehavioursandenablersandinhibitors.Thisholdstrueeveninthepresenceofotherpotentiallymediatingfactors,othercharacteristicsassociatedwiththeindividualandtheirhousehold,althoughthesefactorsaddtoourabilitytoexplainvariationsinoutcomescores.Socio-economiccharacteristicsareparticularlyimportantasmediatingfactorsinwellbeingoutcomesandotherhouseholddemographicandsocio-economiccharacteristicsarealsoimportantforexplainingcurrentfinancialwellbeing.Thisisthecaseeventhoughthosesamecharacteristicsoftenhelptopredictscoresoncomponentsatthelowerlevelsofconceptualmodel,theeffectsofwhicharealsoimportantforpredictingfinancialcapabilityoutcomesintheirownright.Conversely,financialmanagementcharacteristicsoftheindividualareparticularlystrongdeterminantsoftheenablerandinhibitorcomponents,buttheydonotcomethroughsostronglyaspredictorsathigherlevelsoftheconceptualmodel,presumablybecausetheenablerandinhibitorcomponentsaccountwellforthem.

41

5. Summaryandconclusions

Thirteencomponentsoffinancialcapabilityproducedthroughamixtureofstatisticalanalysisandmanualreconstructionhavebeenshowntoberobustcomponentsfallingunderthecollaboratively-definedframeworkoffinancialcapabilityoutcomes,behavioursandenablersandinhibitors.Thecomponentsalsoapplyuniversallyacrossthepopulation(regardlessof,forexample,retirementstatusanddebtproblems,whichmightbesubjecttoseparateexplorationandadditionaloutcomes).

Crucially,thecomponentsderivedhereareamenabletoreconstructioninfutureeditionsoftheMoneyAdviceService’sFinancialCapabilitySurvey,assumingthatthequestionsonwhichthemeasuresandcomponentsarebasedareaskedinthesamewayandinthesameorder,withthesamequestionfilteringandrouting.Theprocessofsiftingandderivingmeasuresforuseinthefinancialcapabilitycomponentshasindirectlyidentifiedsurveyquestionsforpotentialremovalfromfuturewavesofthesurvey(notwithstandingthosequestionsadditionallyidentifiedforuseasexplanatoryormediatorvariables),therebyenablingshorteningofthesurveyfordatacollection.

Averagescoresonthesecomponentsvariedin2015inwayswhichcanreasonablybeexpected,basedonpreviousresearchandexperientialevidenceworkingwithpeoplewithlowfinancialcapabilityanddebtproblems.Forexample,currentfinancialwellbeingscoresarehigherthanthoseforlonger-termfinancialsecurity(7.6comparedwith3.3)andtheaveragescoreforsomeone’sintentiontosave(ortheirorientationtowardssaving)isgreateronaggregatethantheirpropensitytosaveactively(8.1comparedwith3.3).Theyalsovarybyarangeofpersonalandhouseholddemographicandsocio-economiccharacteristics,againusuallyinwayswhichmightbeexpected.Inparticular,allcomponentsarerelevanttoagreaterorlesserextenttoallindividualsbylifestage,householdcomposition,incomelevelandhousingtenure(allcharacteristicswhichmighthaveinfluencedtheroutingandthereforeapplicabilityofsurveyquestions),makingthemamenabletorobustanalysisacrossthewholepopulationoftheUK.

Correlationsbetweenpairsoffinancialcapabilitycomponentstendtobelowoverall,andparticularlybetweencomponentswithinthesameleveloftheconceptualmodel.Wherecorrelationsarehighertheyaremostlybetweenthebehaviourcomponentsandthelonger-termfinancialsecurityoutcome.

Financialcapabilitywellbeingoutcomesarewellexplainedbyfinanciallycapablebehavioursandenablersandinhibitors.Inturn,behavioursaremoderatelywellexplainedbyenablersandinhibitors.Thisistrueeveninthepresenceofotherpotentiallymediatingfactors,othercharacteristicsassociatedwiththeindividualandtheirhousehold.Thistendstosupportthedesignofaconceptualframeworkwhichdistinguishesdifferentfinancialcapabilitylevelsandseesawiderrangeofinfluenceswhichimpactateachlevel.

However,thesemediatingfactorsdoaddtoourabilitytoexplainvariationsinoutcomescores.Socio-economiccharacteristicsareparticularlyimportantindeterminingwellbeingoutcomesandotherhouseholddemographicandsocio-economiccharacteristicsarealsoimportantforexplainingcurrentfinancialwellbeinginparticular.Thisisthecaseeventhoughthosesamecharacteristicsoftenhelptopredictscoresoncomponentsatthelowerlevelsofconceptualmodel,theeffectsofwhicharealsoimportantforpredictingfinancialcapabilityoutcomesintheirownright.Conversely,financialmanagementcharacteristicsoftheindividualareparticularlystrongdeterminantsoftheenablerandinhibitorcomponents,buttheydonotcomethroughsostronglyaspredictorsathigherlevelsoftheconceptualmodel,presumablybecausetheenablerandinhibitorcomponentsaccountwellforthem.

Althoughcautionmustbetakenwheninterpretingthedirectionofanyrelationshipsofbehaviours,enablersandinhibitors(andothermediators)withfinancialwellbeingoutcomes,evenwherethesearefoundtobeindependentofotherfactors,thefindingsatleastsuggestthatschemeswhichimprovefinanciallycapablebehaviourswithinthepopulationoftheUKislikelytobeaneffectivemeansofimprovingfinancialwellbeingoutcomes.Inturn,interventionswhichhelptoshapeindividuals’attitudesandoutlooktowardsmoneyandfinancesandbuildtheirfinancialknowledge(includingnumeracy)andconfidence,reflectedintheenablersandinhibitors,willhelptoproducemorefinanciallycapablebehaviours.

Evenso,thereareseveralsocio-economicandothermediatingfactorswhichwillservetoconstrainfinancialwellbeingoutcomes,eveninthepresenceoffinanciallycapableattitude,orientations,skillsandbehaviours.Mostnotablythesereflectthefinancialresourcesavailabletoanindividual(their(disposable)incomes,reflectingtheirhousingtenuresandcosts)aswellastheirlifestage.Therearealsosomegroups,notablyBlackandminorityethnicgroupsandthosewithlong-standingillnessesordisabilities,whosecurrentandfuturewellbeingappearscompromisedevenaccountingforanydifferencesintheirfinancialbehavioursanddispositions.

42

Appendices

Appendix1:Explanationofthemainstatisticaltechniquesemployed 43

Principalcomponentsanalysis 43

Regressionanalysis 43

AppendixTableA1:Financialcapabilitycomponentscoresbykeycharacteristicsoftheindividual 45

AppendixTableA2:Financialcapabilitycomponentscoresbykeycharacteristicsofthehousehold 49

AppendixTableA3:Regressiontopredictscoresonenablerandinhibitorcomponents,byallpersonalandhouseholdcharacteristics 51

AppendixTableA4:Regressiontopredictscoresonbehaviourcomponents,byenablersandinhibitorsandallpersonalandhouseholdcharacteristics 54

AppendixTableA5:Regressiontopredictscoresonoutcomecomponents,bybehaviours,enablersandinhibitorsandallpersonalandhouseholdcharacteristics 57

43

Appendix1:Explanationofthemainstatisticaltechniquesemployed


Aprinciplecomponentsanalysis(PCA)isamultivariatetechniqueforexploringthecommonunderlyingcomponentsofasetofvariables.Itisatypeofexploratoryfactoranalysisanditidentifiesthehidden(latent)variables(‘components’)underlyingasetofdatabutwhicharenotthemselvesamenabletodirectmeasurement.Itreflectstheideathatasetofmeasures–suchassurveyquestions–isgreaterthanthesumofitsindividualpartsandthatarangeoflatentcommonfactorsinturnhelpstoexplainthevariationsintheobservedmeasures.Tothisend,itisalsoatechniqueforthereductionofdata,wheretheremaybeanunmanageablenumberofseeminglydisparatevariables,toasmallersetofmoremeaningfulconstructswithoutlosingtherichnessofthedata.

ThenumberofcomponentsreturnedbyaPCAisequivalenttothenumberofmeasuresenteredintoit.Selectingthenumberoffactorstotakeforwardtoadequatelyrepresentyourdataisacomplexprocesswhichultimatelyneedstobedonebyjudgement.Severaldiagnosticapproachesareavailabletoaidthisdecision,andthemostimportantdiagnosticstatistictoinformourselectionwastheeigenvalue(whichisanindividualcomponent’ssubstantiveshareofthetotalvariationrepresentedbytheoriginalmeasures;ifitisgreaterthan1thenitrepresentstheequivalentofatleastoneoriginalmeasure),comparedagainstaMonteCarloparallelrun(whichestimatesthenumberoffactorsandtheirassociatedeigenvaluesbasedonrandomsampling),andascreeplotwhichshowsthefallawayinthesizeoftheeigenvaluewitheachsuccessivefactor.

Theresultingcomponentsmustthenbeinterpreted,andthisisundertakenwithreferencetotheobservedvariableswhichrelatetoeachcomponentmostclosely(measuredusingatypeofregressioncoefficient,seebelow,androtatedaroundanaxistoemphasestheapparentdifferencesbetweenthecomponents,inthisinstanceusingorthogonalrotation).Nosinglevariablecanadequatelycapturearesultingcomponent(otherwise,itwillbeidenticaltotheoriginalvariable),butitisinsteadbestmeasuredbyacombinationofrelevantvariables.Thisiswhythecomponentsoffinancialcapabilitywhicharereportedinthisreportareallcomposites(withtheexclusionof‘financialnumeracy’whichisthesimplesumofcorrectanswerstoasetofquestions).

Inthecurrentstudy,aPCAwasundertakenforeachdistinctlevelofaconceptualframework(seeChapter1).PCAwasundertakenonunweighteddata.

Regressionanalysis

Regressionanalysisisastatisticaltechniqueforexploringtherelationshipsbetweenmeasures.Insimpleregressionanassumptionismadethatasingleindependent(predictor)variablehaslinear(straightline)relationshipwithadependent(outcome)variable;forexample,agewithInternetengagement.Theregressionmodelestimatesthestrengthanddirection(i.e.upordown)ofchangeintheoutcomevariablethatisassociatedwithone-unitchange(upordown)inthevalueofthepredictorvariableandtheminimumpossiblevalue(knownasthe‘constant’)oftheoutcomewhenthevalueofthepredictorisequivalenttozero.Thisisgivenbythecoefficient.Aregressioncoefficientdiffersslightlyfromthecoefficientreturnedinacorrelationanalysis,whichissimplyameasureofthestrengthanddirectionofrelationshipbetweentwomeasures(acorrelationdoesnotquantifytheeffectofchangeinonemeasureontheother).

Multipleregressionisanextensionofthiswhichsimultaneouslyconsiderstherelationshipofseveralpredictorvariableswiththeoutcomevariable.Thishastheadvantageofenablingtheindependentrelationshipofeachpredictorvariablewiththeoutcometobeestimatedwhilesimultaneouslycontrollingfortheeffectsofalloftheotherpredictorsincludedintheanalysis.Thisresultsinanestimateoftheuniqueinfluenceofonecomponent(oranyothercharacteristics)onanother,intermsofthesizeofthatrelationshipandwhetherornotitisstatisticallysignificantandwhetheranimprovementinoneisalsoassociatedwithanimprovement–oradeterioration–intheother.Thisenablesstrongerconclusionsabouttheinfluenceofeachcharacteristictobedrawn;however,andcause-and-effectrelationshipremainsunknownexceptinrelationtoanytheoreticalassumptionsorinterpretationswhichcanbedrawnfromthefindings.Thesizeanddirectionoftherelationshipisgivenbythe‘coefficient’,withanegativesign(-)indicatingthatasthescoreonapredictormeasureincreasesthescoreontheoutcomedecreases.Thestatisticalsignificanceofthecoefficientisgivenbythep-value(probability),whichhasbeenindicatedwithasterisks(‘*’)orcellshadingwithintablesforeaseofinterpretation(seestatisticalsignificance,below).

Asingleasterisk(‘*’)indicatesthatacorrelationissufficientlystrongoraregressioncoefficientissufficientlylargetobestatisticallysignificantatthefivepercentlevelofsignificance(p<0.5).Twoasterisks(‘**’)indicatesignificanceattheonepercentlevel(p<0.01).Threeasterisks(‘***’)indicatesignificanceatthehighestlevelofsignificancereportedhere,the0.1percentlevel(p<0.001).Insometables,asteriskshavebeenreplacedbysuccessivelydarkershadesofcellcolourto

44

representthesamesignificancethresholds.Whileaparticularestimatemaybestatisticallysignificant,thisdoesnotnecessarilymeanthatitisofpracticalsignificance(orimportance).

Theinterpretationoftheregressioncoefficientdiffersslightlydependingonwhetherthepredictorisascalevariable(asinthecaseofourcomponents)oracategoricalvariable(asinthecaseofsomeone’sworkstatus,forexample).Forstatisticallysignificantscalevariables,aone-pointincreaseinthevalueofthepredictorisassociatedwithchangeintheoutcomescorebythevaluegivenbythecoefficient.Forstatisticallysignificantcategoricalvariables,itisnecessarytoselecta‘referencecategory’(e.g.full-timework)andswitchingfromthisreferencecategorytoanothergroupofinterestisassociatedwithachangeintheoutcomescorebytheamountgivenbythecoefficient.

Inmultipleregression,theoverallexplanatorypowerofasetofpredictorvariablesinpredictinganoutcomeisestimated.Thisisgivenbytheadjustedr-square,whichistheamountofvariance(orvariation)intheoutcomemeasurewhichisexplainedbythepredictorsasawhole.Ther-squareisgivenasaproportionandcanbeeasilyconvertedtodescribethepercentageofvariationexplainedbytheavailablecharacteristics.Assuch,itprovidesanestimateofthetotaleffectsize.Ther-squarevaluecanvarywidelyinsocialscience,andinsurvey-basedsocialresearchanr-squareofaslittleas0.10(explaining10percentofthevariationinaphenomenon)canstillhaveimportantimplicationsforpracticeandpolicy.

Regressionanalysiswasundertakenweighted.

45

AppendixTableA1:Financialcapabilitycomponentscoresbykeycharacteristicsoftheindividual Outcomes Behaviours:managingwell

daytodayBehaviours:managingandpreparingforlifeevents


Meanscore

1.Current

financial

wellbeing

2.Longer-term

financialsecurity

1.Manages

credituse

2.Activesaver

3.Keepstrack

1.Building

resilience

2.Works

towardsgoals

1.Savingm

indset

2.Financial

numeracy

3.Internet

engagement

4.Financial

confidence

5.Self-controlled

spending

6.Financial

engagement

n(un-w

eighted)

Gender

Male 7.7 3.9 7.4 3.4 6.8 2.3 3.6 7.8 7.1 5.9 7.4 6.5 6.2 1,712

Female 7.4 3.6 7.4 3.2 6.9 2.0 3.6 8.0 6.5 5.6 7.1 6.3 6.2 1,747

Agegroup

18-24 7.1 2.4 7.3 3.4 6.9 2.1 4.9 7.4 6.1 7.0 6.6 5.0 6.0 744

25-34 7.0 3.0 7.0 3.5 6.9 2.1 4.7 7.7 6.1 6.7 7.0 5.2 6.1 525

35-54 7.2 3.9 7.1 3.6 7.0 2.4 4.0 8.1 7.3 6.4 7.1 6.4 6.3 1,147

55-74 8.1 4.6 7.8 3.1 6.9 2.1 2.8 8.1 7.2 5.0 7.8 7.2 6.4 882

75+ 8.8 4.2 8.4 2.3 5.9 1.4 1.0 7.5 5.3 1.7 7.7 8.2 5.7 159

EthnicityWhite 7.6 3.9 7.4 3.3 7.0 2.2 3.6 7.9 7.0 7.3 7.3 6.5 6.2 3,030

Blackorminority

ethnicgroup

6.9 2.6 7.3 3.1 6.2 1.8 4.0 7.9 5.1 6.7 6.7 6.0 6.0 384

Long-standingillnessordisabilityYes 7.1 3.6 7.5 2.7 6.8 1.8 2.8 7.7 6.1 5.1 7.0 6.6 5.7 734

No 7.7 3.9 7.4 3.5 6.9 2.2 3.8 8.0 7.0 5.9 7.3 6.3 6.4 2,603

Don'tknow 7.4 2.6 7.3 2.6 5.8 1.2 3.4 6.7 4.3 6.0 6.9 6.8 5.7 124

Lifestage:workingageRetirementage 8.6 4.7 8.1 2.8 6.5 1.9 1.9 7.9 6.6 7.9 7.9 7.6 6.3 684

Workingage 7.2 3.5 7.2 3.4 7.0 2.2 4.2 7.9 6.8 7.0 7.0 6.0 6.2 2,777

Tablecontinues…

46

continued…

Outcomes Behaviours:managingwellday

todayBehaviours:

managingand

preparingfor

lifeevents


Meanscore 1.Current

financial

wellbeing

2.Longer-term

financial

security

1.Manages

credituse

2.Activesaver

3.Keepstrack

1.Building

resilience

2.Works

towardsgoals

1.Saving

mindset

2.Financial

numeracy

3.Internet

engagement

4.Financial

confidence

5.Self-

controlled

spending

6.Financial

engagement

n(un-w

eighted)

HighestlevelofeducationachievedUniversityhigher

degreelevel

7.6 4.3 7.1 4.1 7.2 2.9 4.7 8.1 7.8 7.2 7.3 5.8 6.6 530

Firstdegreelevel 7.5 4.4 7.3 4.2 7.2 3.0 4.4 8.3 8.1 7.0 7.2 6.3 6.8 602

Diplomasinhigher

educationor

equivalent

7.5 3.8 7.3 3.5 7.0 2.2 4.2 8.1 7.1 6.4 7.4 6.2 6.5 357

A-Levelorequivalent 7.3 3.8 7.3 3.5 7.0 2.5 4.3 7.9 7.3 6.6 7.1 5.9 6.3 603

Vocational

qualifications

7.5 3.6 7.4 3.1 6.9 1.9 3.2 7.8 7.4 5.3 7.3 6.8 6.2 281

GCSE/O-Level/CSE 7.4 3.5 7.4 3.0 6.9 1.8 3.3 7.9 6.8 5.6 7.2 6.5 5.8 405

Other,includingstill

studying

7.7 2.8 7.6 2.3 6.0 1.1 3.1 7.0 3.9 5.3 7.0 6.9 5.4 *98

None 8.0 3.3 7.7 2.0 6.0 1.0 1.5 7.4 4.4 2.5 7.4 7.2 5.4 343

Workstatus:retiredfrompaidworkNo 7.2 3.5 7.2 3.4 7.0 2.2 4.2 7.9 6.8 7.1 7.1 6.1 6.2 2,849

Yes,retired 8.6 4.7 8.1 2.8 6.5 1.9 1.7 7.9 6.4 7.9 7.9 7.6 6.3 612

Tablecontinues…

47

…continued


todayBehaviours:

managingand

preparingfor

lifeevents


Meanscore 1.Current

financial

wellbeing

2.Longer-term

financial

security

1.Manages

credituse

2.Activesaver

3.Keepstrack

1.Building

resilience

2.Works

towardsgoals

1.Saving

mindset

2.Financial

numeracy

3.Internet

engagement

4.Financial

confidence

5.Self-

controlled

spending

6.Financial

engagement

n(un-w

eighted)

WorkstatusFullorpart-time

educationortraining

7.1 2.5 7.1 3.0 6.7 2.0 4.8 7.2 6.1 6.9 6.7 5.0 6.1 376

Full-timeemployed 7.5 3.8 7.0 4.0 7.1 2.5 4.6 8.0 7.2 6.6 7.3 6.0 6.4 1,379

Part-timeemployed 7.1 3.8 7.4 3.3 7.2 2.2 4.0 8.1 6.8 6.6 6.9 6.2 6.1 372

Full-timeself-

employed

7.0 3.6 7.3 3.3 6.8 2.2 3.6 7.7 7.2 6.6 7.0 6.2 6.3 117

Part-timeself-

employed

7.1 4.6 7.7 3.0 7.0 2.4 4.0 8.1 8.1 6.6 7.0 6.8 5.8 *69

Retiredfrompaid

work

8.6 4.7 8.1 2.8 6.5 1.9 1.7 7.9 6.4 6.6 7.9 7.6 6.3 606

Unemployed 5.8 1.9 7.7 1.5 6.7 0.8 2.5 7.1 5.4 5.1 5.9 6.5 5.4 156

Notworkingforsome

otherreason

6.8 2.9 7.6 2.3 6.7 1.4 3.0 7.8 5.9 5.3 6.8 6.7 5.8 380

LivesaloneNo 7.5 3.8 7.3 3.4 6.9 2.2 4.0 7.9 6.9 7.2 7.2 6.3 6.3 2,700

Yes,livesalone 7.8 3.8 7.8 2.9 6.7 1.9 2.5 7.8 6.3 7.5 7.5 6.9 5.9 761

ChiefIncomeEarnerinhouseholdMyself 7.6 4.0 7.4 3.3 6.8 2.2 3.4 7.9 6.7 5.5 7.4 6.6 6.1 2,077

Mejointly 7.5 3.6 7.2 3.4 7.0 2.2 4.1 7.7 6.8 6.1 7.2 6.2 6.2 480

Someoneelse 7.5 3.4 7.5 3.2 6.8 2.0 4.0 7.9 6.8 6.2 6.9 6.2 6.4 904

Tablecontinues…

48

…continued


todayBehaviours:

managingand

preparingfor

lifeevents


Meanscore

1.Currentfinancial

wellbeing

2.Longer-term

financialsecurity

1.Managescredituse

2.Activesaver

3.Keepstrack

1.Buildingresilience

2.Workstowards

goals

1.Savingm

indset

2.Financialnumeracy

3.Internet

engagement

4.Financial

confidence

5.Self-controlled

spending

6.Financial

engagement

n(un-w

eighted)

Responsibilityformanagingthehouseholdfinances

Imostlymanagethe

day-to-dayfinances

7.5 3.7 7.4 3.3 6.9 2.2 3.6 7.9 6.7 5.8 7.3 6.4 6.2 2821

Mypartner/spouse

andIjointly

7.8 4.3 7.4 3.5 6.9 2.4 3.8 8.0 7.4 6.1 7.4 6.5 6.5 476

Mypartner/spouse

mostly

7.6 3.6 7.4 2.5 6.1 1.5 3.2 7.8 6.4 4.8 6.4 6.9 6.0 140

IncomeeachweekormonthExactlythesame 7.6 3.7 7.7 3.1 6.8 2.0 3.2 8.1 6.6 5.3 7.4 6.7 6.1 1,175

Roughlythesame 7.6 4.1 7.2 3.6 7.0 2.5 3.9 7.9 7.4 6.0 7.3 6.3 6.4 1,502

Varies 7.2 3.5 7.2 3.2 7.1 2.0 4.0 7.8 6.2 6.0 7.1 6.1 6.0 410

Notrouted 7.5 3.0 7.3 2.6 6.2 1.6 3.4 7.3 5.6 5.9 6.9 6.4 6.3 334

Banked:whetherhascurrentaccountinownnameorjointly(proxyforfinancialinclusion)Unbanked 6.9 2.2 7.4 2.1 5.9 1.0 3.1 7.0 3.7 4.4 6.4 6.1 5.4 198

Banked 7.6 3.9 7.4 3.3 6.9 2.2 3.6 7.9 6.9 5.8 7.3 6.4 6.3 3,263

All 7.5 3.8 7.3 3.3 6.9 2.1 3.6 7.9 6.8 5.8 7.3 6.4 6.2 3,461

Basedon3,461respondents(fullsample),weighted.Missingcategories(e.g.don'tknow;'other')withfewerthan50casesarenotshown

*Treatwithcautionduetolowbase(<100)

49

AppendixTableA2:Financialcapabilitycomponentscoresbykeycharacteristicsofthehousehold Outcomes Behaviours:managingwell

daytodayBehaviours:managingandpreparingforlifeevents


Meanscore

1.Current

financial

wellbeing

2.Longer-

term

financial

security

1.Manages

credituse

2.Active

saver

3.Keepstrack

1.Building

resilience

2.Works

towardsgoals

1.Saving

mindset

2.Financial

numeracy

3.Internet

engagement

4.Financial

confidence

5.Self-

controlled

spending

6.Financial

engagement

n(un-

weighted)

HouseholdcompositionSingleadulthousehold 7.8 3.8 7.8 2.9 6.7 1.9 2.5 7.8 6.3 4.5 7.5 6.9 5.9 761Couple,nochildren 8.0 4.4 7.6 3.5 6.9 2.3 3.5 8.0 7.3 5.9 7.6 6.8 6.6 922Loneparentwithchildrenunder18 6.2 3.2 6.8 3.2 7.3 2.0 3.8 8.4 6.6 5.7 7.1 5.6 6.0 *74Couplewithchildrenunder18 7.1 4.1 6.7 4.1 7.4 2.8 4.9 8.4 7.7 6.8 7.3 5.9 6.3 199Multi-adultwithchildrenunder18 7.4 3.1 7.5 3.3 6.7 2.1 4.0 7.7 6.5 6.2 6.8 6.2 6.2 923Multi-adult,nochildren 7.0 3.5 6.8 3.3 7.0 2.1 4.5 7.9 6.6 6.3 7.0 5.6 6.1 582Housingtenure Ownoutright 8.6 5.1 8.0 3.3 6.7 2.3 2.8 8.1 7.3 4.9 8.0 7.3 6.6 829Ownwithmortgage(inc.

part/sharedownership)

7.4 4.3 6.9 4.0 7.2 2.7 4.5 8.1 7.5 6.7 7.3 6.2 6.5 947

Rentitfromaprivatelandlord 6.6 2.4 7.1 2.8 6.9 1.7 4.0 7.5 6.3 6.3 6.6 5.8 5.8 657Rentitfromasociallandlord 6.9 2.4 7.7 2.0 6.5 1.1 2.3 7.6 4.9 4.1 7.1 6.7 5.3 641Livewithparents 7.5 2.6 7.6 3.4 6.8 2.1 4.6 7.6 6.5 6.8 6.6 5.4 6.4 347Householdincome

£13,449orless 7.2 3.0 7.7 2.4 6.5 1.5 2.8 7.5 5.5 7.0 7.0 6.4 5.6 1,083£13,500-£34,999 7.5 3.7 7.4 3.2 6.9 2.0 3.7 8.0 6.8 7.2 7.2 6.4 6.2 1,419£34,999-£50,000 7.8 4.3 7.1 3.8 6.9 2.5 4.1 8.1 7.7 7.4 7.4 6.4 6.6 518£50,000ormore 8.2 5.3 7.3 4.7 7.3 3.5 4.7 8.3 8.4 7.7 7.7 6.5 7.2 441SocialclassofCIEA 8.3 5.0 7.4 4.1 7.1 3.1 4.2 8.2 7.9 6.5 7.6 6.2 6.8 221B 7.8 4.6 7.2 4.1 7.1 2.9 4.5 8.1 8.0 7.1 7.5 6.3 6.8 717C1 7.4 4.0 7.2 3.7 7.1 2.5 4.2 8.0 7.5 6.6 7.3 6.0 6.4 976C2 7.5 3.4 7.4 3.2 6.9 1.9 3.5 7.9 6.3 5.5 7.3 6.5 6.0 525D 7.0 2.9 7.4 2.7 6.6 1.6 3.4 7.6 5.6 5.1 6.8 6.3 5.6 407E 7.6 3.1 7.9 2.1 6.3 1.1 2.0 7.5 5.3 3.6 7.1 7.1 5.7 570 Continues…

50

…continued

Geography Metropolitanarea 7.5 3.3 7.1 3.0 6.5 1.9 3.5 7.8 5.9 5.6 7.2 6.2 6.0 1,140Urban 7.5 4.0 7.0 3.6 7.1 2.4 3.8 7.9 7.2 5.9 7.4 6.4 6.3 1,510Mixed 8.1 4.3 7.2 3.4 6.7 2.3 3.4 8.1 7.1 5.3 7.2 6.8 6.4 235Rural 7.8 4.5 6.9 3.5 7.1 2.4 3.1 8.0 7.5 5.8 7.4 6.9 6.6 246Missing 7.2 3.6 6.9 2.9 6.9 1.7 3.9 8.0 7.0 6.1 6.9 6.3 6.2 330MASSegments Struggling 7.1 2.7 7.5 2.5 6.6 1.5 2.8 7.8 5.4 4.8 7.0 6.5 5.7 854-Over-Burdened 6.6 2.4 7.1 2.6 6.7 1.5 3.7 7.6 5.6 5.9 6.6 5.5 5.9 350-YoungerAdults 6.8 2.0 7.2 2.6 6.8 1.6 4.0 7.6 4.8 6.5 6.6 5.1 5.3 *70-WorkingFamilies 6.8 2.8 7.2 3.1 7.0 1.9 3.5 8.3 5.7 6.3 7.0 6.3 6.1 110-Pre-Retired 7.1 2.8 7.7 2.2 6.7 1.3 2.2 7.9 6.4 4.3 7.2 7.3 5.6 213-Retired 8.3 3.2 8.3 2.3 5.8 1.3 0.9 7.5 3.8 1.8 7.6 7.6 5.6 111Squeezed 7.1 3.3 7.0 3.5 7.0 2.2 4.4 7.9 6.9 6.6 7.0 5.7 6.1 865-YoungerAdults 7.0 2.6 7.2 3.3 6.6 2.0 4.9 7.4 5.6 6.9 7.0 5.1 5.6 323-YoungerFamiliesandCouples 7.0 3.2 6.9 3.7 7.2 2.1 4.9 8.0 7.0 6.9 6.8 5.4 6.4 152-Older 7.3 3.8 6.9 3.6 7.1 2.3 4.0 8.1 7.6 6.4 7.1 6.2 6.2 390Cushioned 8.0 4.6 7.6 3.5 6.9 2.4 3.5 8.0 7.3 5.7 7.6 6.8 6.5 1,547-YoungAdultsinAffluentHomes 7.3 2.7 7.2 4.1 6.8 2.9 5.6 7.3 6.7 7.3 6.5 4.9 6.4 *70-ComfortableYoungerAdults 7.3 3.0 7.2 3.7 6.9 2.2 4.8 7.6 6.4 6.9 6.8 5.3 6.3 361-AffluentCouplesandFamilies 7.5 4.7 7.3 4.5 7.3 3.3 4.7 8.2 8.3 7.3 7.3 6.2 6.8 232-AffluentPre-Retired 8.0 5.1 7.6 3.6 7.0 2.7 3.7 8.2 7.9 6.2 7.7 7.2 6.7 445-ComfortablePre-Retired 7.7 4.5 7.4 3.5 7.4 2.4 4.6 8.2 7.5 6.0 7.7 7.0 6.7 *82-ComfortableRetired 8.6 4.5 8.2 2.5 6.4 1.5 1.4 7.9 6.0 2.5 7.6 7.7 5.7 136-AffluentRetired 8.8 5.4 8.1 3.3 6.8 2.4 2.4 7.8 7.6 4.7 8.2 7.4 6.8 221All 7.5 3.8 7.3 3.3 6.9 2.1 3.6 7.9 6.8 5.8 7.3 6.4 3.2 3,461

Basedon3,461respondents(fullsample),weighted.Missingcategories(e.g.don'tknow;'other')withfewerthan50casesarenotshown.ThosewhocouldnotbeallocatedtoaMASsegmentarealsoexcludedfromthetable.

*Treatwithcautionduetolowbase(<100)

51

AppendixTableA3:Regressiontopredictscoresonenablerandinhibitorcomponents,byallpersonalandhouseholdcharacteristics

1.Saving

mindset

2.Finan

cial

numeracy

3.In

ternet

engagemen

t

4.Finan

cial

confiden

ce

5.Self-

controlled

spen

ding

6.Finan

cial

engagemen

t

Keysocio-economiccharacteristics

Workstatus(refisemployedfulltime) Fullorpart-timeeducation/training -0.29 0.36 0.26 -0.12 -0.32 0.00Employedparttime 0.11 0.37 0.30 -0.12 0.15 0.06Self-employedfulltime -0.09 0.65 0.69 -0.29 -0.06 0.11Self-employedparttime 0.15 1.13 1.11 -0.27 0.47 -0.50Retiredfrompaidwork 0.13 0.41 -0.09 0.19 0.30 0.56Unemployed -0.15 0.62 0.34 -0.87 0.43 0.02Notworkingforanyotherreason 0.08 0.62 0.38 -0.07 0.58 0.39Householdcomposition(refiscouple,nochildren)

Singleadulthousehold 0.09 0.07 -0.41 0.00 -0.29 -0.05Loneparentwithchild(ren)under18 0.46 -0.05 -0.90 -0.05 -0.79 -0.14Couplewithchild(ren)under18 0.26 -0.01 -0.26 -0.24 -0.48 -0.46Multi-adultwithchild(ren)under18 0.11 -0.03 -0.33 -0.30 0.09 -0.07Multi-adult,nochildren -0.01 -0.19 -0.39 -0.19 -0.50 -0.40Householdincome(refis£50,000ormore) Lessthan£13,500 -0.27 -0.81 -0.62 -0.48 -0.54 -1.15£15,000butlessthan£35,000 -0.10 -0.47 -0.38 -0.44 -0.36 -0.76£35,000butlessthan£50,000 -0.05 0.10 -0.42 -0.24 -0.26 -0.45Housingtenure(refisownoutright) Ownwithamortgage -0.37 -0.24 -0.15 -0.52 -0.18 -0.25Rentfromprivatelandlord -0.53 -0.26 -0.14 -0.80 -0.26 -0.37RentfromLocalauthorityorhousingassociation -0.26 -0.77 -0.25 -0.32 -0.04 -0.51Livewithparents/otherfamily -0.06 0.25 0.20 -0.34 -0.24 0.26Someotherarrangements -0.12 0.70 0.12 -0.51 -0.30 -0.17

Othersocio-demographic/economiccharacteristicsofthehouseholdMortgage/rentlastmonth(refis£100orless) GBP101-GBP1,000 0.27 0.31 0.56 0.02 -0.21 0.04GBP1,001-GBP9,999 -0.04 -0.16 0.41 0.00 -0.35 -0.34GBP10,000-GBP19,999 -1.06 -2.13 -0.41 0.36 -1.58 -1.11GBP20,000ormore -0.47 -2.01 -0.80 -1.42 -0.63 -0.14SocialclassofCIE(refisA) B -0.04 0.00 0.40 0.14 0.27 0.16C1 0.04 0.05 0.33 0.10 0.08 0.13C2 0.00 -0.45 -0.23 0.07 0.22 -0.09D -0.06 -0.53 -0.35 -0.20 0.24 -0.16E -0.17 -0.43 -0.51 -0.22 0.11 -0.07Geography(refisurban) Metropolitanarea 0.05 -0.73 -0.09 -0.04 -0.28 -0.17Mixed 0.20 -0.17 -0.06 -0.34 0.15 -0.02Rural 0.02 -0.11 -0.04 -0.03 0.32 0.06

Tablecontinues…

52

…continued

1.Saving

mindset

2.Finan

cial

numeracy

3.In

ternet

engagemen

t

4.Finan

cial

confiden

ce

5.Self-

controlled

spen

ding

6.Finan

cial

engagemen

t

Negativelifeevents(refisnoneinlast3years)

Inlastthreeyears -0.02 -0.42 -0.10 -0.31 0.00 -0.25

Inlasttwelvemonths -0.11 -0.54 0.22 -0.24 -0.32 -0.17

Incomeeachweekormonth(refisvaries)

Exactlythesame 0.23 0.41 0.07 0.05 0.19 0.12

Roughlythesame -0.05 0.61 -0.01 -0.03 -0.02 0.15

Othersocio-demographic/economiccharacteristicsoftheindividualGender(refisMale)

Female 0.23 -0.61 -0.10 -0.11 -0.18 0.01

Agegroup(refis75+)

18-24 -0.20 -1.08 2.47 -0.11 -2.26 0.16

25-34 -0.03 -1.02 2.26 -0.09 -2.14 0.24

35-54 0.35 -0.14 1.95 -0.11 -1.07 0.42

55-74 0.31 0.27 1.38 0.21 -0.82 0.36

Ethnicity(refisWhite)

Blackorminorityethnicgroup 0.15 -1.10 -0.50 -0.38 0.14 -0.08

Highestlevelofeducationachieved(refishigherdegree)

Firstdegreelevel 0.23 0.32 -0.03 0.00 0.43 0.23Diplomasinhighereducationorequivalent 0.03 -0.26 -0.21 0.33 0.23 0.07

A-Levelorequivalent -0.01 -0.17 -0.26 0.14 0.12 -0.06

Vocationalqualifications -0.07 0.12 -0.73 0.29 0.44 -0.03

GCSE/O-Level/CSE -0.13 -0.26 -0.46 0.15 0.27 -0.49

Other,includingstillstudying -0.33 -1.09 -0.71 0.42 0.29 -0.20

None -0.16 -1.18 0.02 0.27 0.50 -0.50

Long-standingillnessordisability(refisno)

Yes -0.13 -0.41 0.34 -0.45 -0.24 -0.47

NumberofhoursspentonInternetlastweek(refisnone)

Lessthan1hour -0.19 0.04 n/a -0.24 -0.07 -0.02

1-2hours 0.00 -0.09 -0.22 -0.53 -0.10

3-5hours -0.12 0.23 -0.17 -0.46 0.10

6-7hours -0.05 0.56 -0.35 -1.00 0.00

8-10hours -0.17 0.87 -0.31 -0.54 0.06

11-19hours -0.07 1.02 -0.20 -0.52 0.08

20-29hours -0.26 1.15 -0.24 -0.76 -0.01

30hoursormore -0.06 1.24 -0.22 -0.76 0.20

TypesofInternet-enableddevicesaccessedbyhousehold(refisthreeormore)None -0.48 -0.90 -2.99 -0.14 0.08 -0.06

One 0.02 -0.29 -1.00 0.05 0.56 -0.02

Two -0.03 0.02 -0.28 0.11 0.34 -0.06

Tablecontinues…

53

…continued

1.Saving

mindset

2.Finan

cial

numeracy

3.In

ternet

engagemen

t

4.Finan

cial

confiden

ce

5.Self-

controlled

spen

ding

6.Finan

cial

engagemen

t

FinancialmanagementcharacteristicsoftheindividualChiefIncomeEarnerinhousehold(refismyself)

Mejointly -0.27 -0.01 0.01 -0.05 -0.20 -0.10

Someoneelse 0.05 0.20 -0.04 -0.01 0.01 0.18


Memostly(includingn/a,nopartner) 0.19 0.81 0.82 1.10 0.21 0.43

Mejointly 0.06 0.59 0.61 0.89 0.02 0.31

Nocurrentaccountinownnameorjointly(refisbanked) -0.42 -0.95 -0.64 -0.50 -0.07 -0.16

Thinkofmoneyinpots(high=strongagreement) 0.07 -0.08 0.00 0.08 -0.04 0.04


One 0.28 0.26 -0.06 0.09 -0.04 0.41

Two 0.38 0.62 -0.05 0.08 0.08 0.42


Adviser/adviceagency 0.10 0.92 0.52 -0.14 -0.07 0.40

Activeuseofwebsites,comparisons 0.09 0.93 0.71 -0.31 -0.26 0.11

Passiveuseoffinancialpages,TV,radioandsocialmedia 0.08 0.77 -0.72 -0.14 -1.08 0.24

Friends/family -0.13 0.34 0.20 -0.35 -0.77 0.14Regularlyreadsthefinancialpages(high=stronglydisagree)

-0.11 0.07 -0.14 -0.24 0.05 -0.03

Constant 7.64 7.10 1.54 8.00 8.26 6.00


3,461respondents(fullsample),weightedtoberepresentativeoftheUKpopulation.Theshadingindicatesstatisticalsignificance,wherelightshadingindicatesp<0.05,mediumshadingindicatesp<0.01,anddarkshadingindicatesp<0.001.Theresultsfordon’tknowandothermissingcategoriesarenotshown.Acontrolvariable,whichreflectspost-hocre-categorisationofhouseholdcompositionisalsonotshown.

54

AppendixTableA4:Regressiontopredictscoresonbehaviourcomponents,byenablersandinhibitorsandallpersonalandhouseholdcharacteristics

1.M

anages

cred

ituse

2.Activesaver

3.Kee

pstrack

1.Building

resilience

2.W

orks

towardsgoa

ls


1.Savingmindset 0.06 0.13 0.10 0.09 0.12

2.Financialnumeracy -0.01 -0.01 0.08 0.03 0.01

3.Internetengagement -0.04 0.01 0.09 0.03 -0.01

4.Financialconfidence 0.10 0.10 0.02 0.06 0.04

5.Self-controlledspending 0.12 -0.01 -0.01 -0.04 -0.11

6.Financialengagement 0.08 0.16 0.09 0.08 0.16

Keysocio-economiccharacteristics

Workstatus(refisemployedfull-time)

Fullorpart-timeeducationortraining -0.09 -0.48 0.05 -0.20 -0.02

Employedparttime 0.32 -0.14 0.21 0.16 -0.35

Self-employedfulltime 0.14 -0.19 -0.07 0.00 -0.54

Self-employedparttime 0.56 -0.56 -0.01 0.03 -0.16

Retiredfrompaidwork 0.29 -0.32 -0.01 0.20 -1.40

Unemployed 0.40 -1.06 0.30 -0.31 -1.07

Notworkingforanyotherreason 0.34 -0.56 0.11 0.01 -0.72

Householdcomposition(refiscouple,nochildren)

Singleadulthousehold 0.19 0.10 0.09 0.31 -0.03

Loneparentwithchild(ren)under18 -0.43 -0.30 0.14 -0.19 -0.03

Couplewithchild(ren)under18 -0.36 -0.15 0.04 0.02 0.62

Multi-adultwithchild(ren)under18 0.02 0.03 -0.13 0.24 0.08

Multi-adult,nochildrenunder18 -0.24 -0.38 0.07 -0.16 0.41


Lessthan£13,500 -0.21 -0.88 0.09 -0.84 -0.14

£15,000butlessthan£35,000 -0.18 -0.64 0.09 -0.76 -0.05

£35,000butlessthan£50,000 -0.27 -0.36 -0.04 -0.43 0.04


Ownwithamortgage -0.38 0.45 0.16 0.35 0.42

Rentfromprivatelandlord -0.22 -0.03 0.30 0.01 0.43

RentfromLocalauthorityorhousingassociation 0.00 -0.12 0.18 -0.03 0.05

Livewithparents/otherfamily 0.09 0.41 0.34 0.26 0.44

Someotherarrangements -0.12 0.49 0.00 0.73 0.21

Othersocio-demographic/economiccharacteristicsofthehouseholdMortgage/rentlastmonth(refis£100orless)

GBP101-GBP1,000 -0.27 -0.24 -0.01 -0.17 -0.02

GBP1,001-GBP9,999 -0.50 -0.06 -0.10 -0.08 0.12

GBP10,000-GBP19,999 -0.62 -0.47 -0.19 0.42 0.26

GBP20,000ormore -0.96 -1.20 -0.43 -0.39 -0.21

Tablecontinues…

55

…Continued

1.M

anages

cred

ituse

2.Activesaver

3.Kee

pstrack

1.Building

resilience

2.W

orks

towardsgoa

ls

SocialclassofCIE(refisA)

B -0.09 0.01 -0.09 -0.23 0.15

C1 -0.10 -0.02 -0.03 -0.15 0.06

C2 -0.03 0.03 0.04 -0.25 -0.08

D 0.01 -0.06 -0.06 -0.25 0.10

E -0.10 -0.08 -0.02 -0.55 0.12

Don'tknow 0.05 -0.63 -0.75 -1.03 0.02

Geography(refisurban)

Metropolitanarea -0.05 -0.41 -0.31 -0.30 -0.17

Mixed -0.05 -0.08 -0.42 -0.12 -0.01

Rural -0.22 -0.16 -0.06 -0.17 -0.56


Inlastthreeyears 0.04 0.24 0.24 0.32 0.18

Inlasttwelvemonths -0.25 -0.02 0.18 -0.01 0.41


Exactlythesame 0.19 0.23 -0.20 0.09 -0.04

Roughlythesame -0.04 0.23 -0.25 0.18 0.01


Female -0.04 -0.01 0.08 -0.21 0.16

Agegroup(refis75+)

18-24 0.15 0.37 0.11 0.19 0.67

25-34 -0.01 0.22 0.08 0.02 0.30

35-54 -0.01 0.02 0.04 0.03 -0.25

55-74 -0.10 -0.11 0.14 0.06 0.08


Blackorminorityethnicgroup 0.02 0.10 -0.50 -0.07 0.10


Firstdegreelevel 0.06 0.22 0.00 0.30 -0.04

Diplomasinhighereducationorequivalent 0.03 -0.09 -0.05 -0.18 0.03

A-Levelorequivalent 0.09 -0.11 0.00 0.03 -0.05

Vocationalqualifications 0.03 -0.05 0.02 -0.14 -0.24

GCSE/O-Level/CSE -0.03 0.00 0.06 -0.10 -0.15

Other,includingstillstudying 0.07 -0.15 0.04 -0.16 0.02

None 0.13 0.09 0.09 0.09 0.28


Yes -0.06 -0.14 0.07 -0.04 -0.07

Tablecontinues…

56

…Continued

1.M

anages

cred

ituse

2.Activesaver

3.Kee

pstrack

1.Building

resilience

2.W

orks

towardsgoa

ls

NumberofhoursspentonInternetlastweek(refisnone)

Lessthan1hour 0.00 -0.42 -0.27 -0.16 0.17

1-2hours 0.10 -0.28 -0.12 -0.11 0.04

3-5hours 0.12 -0.15 0.01 -0.12 0.28

6-7hours 0.14 0.20 -0.10 0.28 0.18

8-10hours -0.05 0.42 -0.14 0.68 0.88

11-19hours -0.07 0.37 -0.11 0.67 0.81

20-29hours -0.03 0.35 -0.16 0.62 0.74

30hoursormore 0.01 0.38 -0.23 0.54 0.74

TypesofInternet-enableddevicesaccessedbyhousehold(refisthreeormore)

None -0.01 -0.28 -0.20 -0.03 -0.55

One 0.03 -0.04 -0.03 -0.02 -0.15

Two 0.01 -0.17 -0.03 -0.13 0.09

Financialmanagementcharacteristicsoftheindividual

ChiefIncomeEarnerinhousehold(refismyself)

Mejointly -0.05 -0.05 0.07 0.00 0.19

Someoneelse 0.05 0.01 0.00 0.03 0.10


Memostly(includingn/a,nopartner) -0.09 0.46 0.54 0.40 -0.18

Mejointly -0.06 0.33 0.33 0.34 -0.17

Nocurrentaccountinownnameorjointly(refisbanked) 0.03 -0.22 -0.17 -0.07 0.02

Thinkofmoneyinpots(high=strongagreement) 0.00 0.09 0.11 0.05 0.10


One 0.08 0.05 0.17 0.04 0.09

Two 0.02 0.29 0.29 0.28 0.67


Adviser/adviceagency -0.18 0.68 0.35 0.84 0.95

Activeuseofwebsites,comparisons -0.34 0.45 0.21 0.56 0.58

Passiveuseoffinancialpages,TV,radioandsocialmedia -0.29 0.42 0.03 0.07 0.79

Friends/family 0.06 0.22 0.03 0.27 0.36

Regularlyreadsthefinancialpages(papers/online)(high=stronglydisagree)

-0.02 -0.12 -0.04 -0.10 -0.13

Constant 6.05 0.66 3.36 0.50 1.22

AdjustedR-Squared 0.26 0.31 0.33 0.32 0.39


57

AppendixTableA5:Regressiontopredictscoresonoutcomecomponents,bybehaviours,enablersandinhibitorsandallpersonalandhouseholdcharacteristics 1.Currentfinancial

wellbeing2.Longer-termfinancialsecurity

Behaviours 1.Managescredituse 0.26 0.10

2.Activesaver 0.14 -0.08

3.Keepstrack -0.09 -0.01

1.Buildingresilience -0.03 0.56

2.Workstowardsgoals -0.03 -0.01

Enablersandinhibitors 1.Savingmindset -0.05 0.02

2.Financialnumeracy 0.00 0.05

3.Internetengagement 0.00 0.02

4.Financialconfidence 0.29 0.09

5.Self-controlledspending 0.03 0.01

6.Financialengagement 0.11 0.05

Keysocio-economiccharacteristics Workstatus(refisemployedfull-time)

Fullorpart-timeeducationortraining 0.01 0.10

Employedparttime -0.13 0.29

Self-employedfulltime -0.44 0.04

Self-employedparttime -0.32 0.58

Retiredfrompaidwork 0.22 0.57

Unemployed -0.86 -0.05

Notworkingforanyotherreason -0.20 0.13

Householdcomposition(refiscouple,nochildren)

Singleadulthousehold 0.27 0.01

Loneparentwithchild(ren)under18 -0.35 -0.13

Couplewithchild(ren)under18 -0.26 -0.19

Multi-adultwithchild(ren)under18 0.08 -0.10

Multi-adult,nochildren -0.07 0.15


Lessthan£13,500 -0.74 -0.50

£15,000butlessthan£35,000 -0.41 -0.34

£35,000butlessthan£50,000 -0.29 -0.21


Ownwithamortgage -0.30 -0.38

Rentfromprivatelandlord -0.62 -1.23

RentfromLocalauthorityorhousingassociation -0.72 -1.14

Livewithparents/otherfamily -0.01 -0.92

Someotherarrangements -0.02 -0.77

Tablecontinues…

58

…Continued



Othersocio-demographic/economiccharacteristicsofthehouseholdMortgage/rentlastmonth(refis£100orless)

GBP101-GBP1,000 0.11 -0.08

GBP1,001-GBP9,999 -0.20 0.11

GBP10,000-GBP19,999 -0.70 0.52

GBP20,000ormore -0.14 0.74

SocialclassofCIE(refisA)

B -0.19 -0.08

C1 -0.36 -0.10

C2 -0.30 -0.28

D -0.39 -0.27

E -0.39 -0.50

Geography(refisurban)

Metropolitanarea 0.02 -0.17

Mixed 0.31 0.12

Rural 0.05 0.12


Inlastthreeyears -0.32 0.06

Inlasttwelvemonths -0.65 -0.15


Exactlythesame 0.07 -0.06

Roughlythesame 0.07 0.01


Female -0.11 0.07

Agegroup(refis75+)

18-24 -0.39 -1.04

25-34 -0.48 -0.81

35-54 -0.58 -0.53

55-74 -0.26 -0.17


Blackorminorityethnicgroup -0.31 -0.42


Firstdegreelevel -0.18 0.04

Diplomasinhighereducationorequivalent -0.07 0.01

A-Levelorequivalent -0.20 0.09

Vocationalqualifications -0.22 -0.08

GCSE/O-Level/CSE -0.06 0.00

Other,includingstillstudying -0.15 0.05

None 0.12 0.19

Tablecontinues…

59

…Continued




Yes -0.31 -0.05

HoursspentontheInternetlastweek(refisnone)

Lessthanonehour -0.02 -0.15

1-2hours -0.05 -0.10

3-5hours 0.06 -0.01

6-7hours -0.05 -0.02

8-10hours -0.30 -0.08

11-19hours -0.23 0.03

20-29hours -0.26 0.04

30hoursormore -0.41 0.03

TypesofInternet-enableddevicesaccessedbyhousehold(refisthreeormore)

None -0.12 -0.20

One -0.19 -0.15

Two -0.16 0.14

FinancialmanagementcharacteristicsoftheindividualChiefIncomeEarnerinhousehold(refismyself)

Mejointly 0.12 -0.21

Someoneelse 0.09 -0.22


Memostly(includingn/a,nopartner) -0.18 0.09Mejointly -0.13 0.03Nocurrentaccountinownnameorjointly(refisbanked) -0.16 -0.19

Thinkofmoneyinpots(high=strongagreement) -0.01 -0.01


One 0.09 0.05

Two 0.06 -0.02


Adviser/adviceagency -0.26 0.21

Activeuseofwebsites,comparisons -0.29 0.10

Passiveuseoffinancialpages,TV,radioandsocialmedia -0.09 0.42

Friends/family -0.22 -0.03

Regularlyreadsthefinancialpages(high=stronglydisagree) 0.02 -0.10

Constant 5.86 2.81



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