National Norming Data for Financial Well-Being and Financial

National Norming Data for National Norming Data for Financial Well-Being and Financial Financial Well-Being and Financial

DistressDistress

Benoit Sorhaindo, InCharge Institute of America Benoit Sorhaindo, InCharge Institute of America Jinhee Kim, University of MarylandJinhee Kim, University of MarylandBarbara O’Neill, Rutgers UniversityBarbara O’Neill, Rutgers University

Aimee D. Prawitz, Northern Illinois UniversityAimee D. Prawitz, Northern Illinois UniversityE. Thomas Garman, Virginia Tech UniversityE. Thomas Garman, Virginia Tech University

Presented on November 17, 2005 in Scottsdale, Arizona thePresented on November 17, 2005 in Scottsdale, Arizona the22nd Annual Conference of the22nd Annual Conference of the

Association for Financial Counseling and Planning EducationAssociation for Financial Counseling and Planning Education

The leaders at the InCharge Education Foundation believe that anyone’s efforts to improve personal financial well-being and/or reduce financial distress have to be validly and reliability measured before attempting to pronounce that the information, education, counseling, advice, or other intervention "worked." The IFDFW has been developed to be one such measure.

Organization of Organization of PresentationPresentation

► Introduction/ExplanationIntroduction/Explanation► Need for a financial distress/Need for a financial distress/

ffinancial well-being scaleinancial well-being scale► Purposes of the studyPurposes of the study► Literature reviewLiterature review► MethodologyMethodology► ResultsResults► ConclusionsConclusions► National normsNational norms► Closing observationsClosing observations► Two IFDFW SubscalesTwo IFDFW Subscales► Suggested uses of the IFDFW scaleSuggested uses of the IFDFW scale

PrefacePreface

Ex anteEx ante Need exists for FDFW scale Need exists for FDFW scale • Nearly 20 years in the making Nearly 20 years in the making • Built on several conceptual modelsBuilt on several conceptual models• Derived from 58 descriptive conceptsDerived from 58 descriptive concepts• Three-phase national Delphi study of personal Three-phase national Delphi study of personal

finance experts’ rankingsfinance experts’ rankings• 20+ published academic studies20+ published academic studies• Six national InCharge research studies Six national InCharge research studies

including three national norming data including three national norming data collectionscollections

Preface (cont’d)Preface (cont’d)

Ex postEx post► Each question met 12 validity and Each question met 12 validity and

reliability criteriareliability criteria► Scale selection and each anchor term Scale selection and each anchor term

met 5 criteriamet 5 criteria► Strong statistical findings (0.956 Strong statistical findings (0.956

Cronbach Alpha) Cronbach Alpha) ► IFDFW scale has predictive validity for IFDFW scale has predictive validity for

six variables including health, job six variables including health, job outcomes, and family relationshipsoutcomes, and family relationships

Need for a Financial Distress/Need for a Financial Distress/Financial Well-Being ScaleFinancial Well-Being Scale

► Key deterrentKey deterrent to psychological well-being to psychological well-being is economic distressis economic distress

► Growing interest in financial educationGrowing interest in financial education in USA to improve knowledge and behaviorsin USA to improve knowledge and behaviors

► Limited evidence,Limited evidence, often anecdotal, shows often anecdotal, shows that some that some interventionsinterventions decrease financial decrease financial distress and improve financial well-beingdistress and improve financial well-being

► Accurate and reliable subjective Accurate and reliable subjective measuresmeasures of financial distress and financial of financial distress and financial well-being do not existwell-being do not exist

► If measure existed, levels can be assessed If measure existed, levels can be assessed before and afterbefore and after purposeful interventions purposeful interventions

Purposes of the StudyPurposes of the Study

1.1. To create an InCharge Financial To create an InCharge Financial Distress/Financial Well-Being Distress/Financial Well-Being scalescale

2.2. To report national norms of To report national norms of financial distress/financial well-financial distress/financial well-being using the IFDFWbeing using the IFDFW

Literature ReviewLiterature Review1.1. Conceptual models of overall well-beingConceptual models of overall well-being

2.2. Overall well-being and personal financesOverall well-being and personal finances

3.3. Financial strainFinancial strain

4.4. Conceptual models of financial well-beingConceptual models of financial well-being

5.5. Financial well-being and financial behaviorsFinancial well-being and financial behaviors

6.6. Objective measures of financial well-beingObjective measures of financial well-being

7.7. Subjective measures of financial well-beingSubjective measures of financial well-being

8.8. Financial distressFinancial distress

Literature ReviewLiterature Review8.8. Financial distress and healthFinancial distress and health9.9. Financial distress and job outcomesFinancial distress and job outcomes10.10. Levels of financial satisfaction, Levels of financial satisfaction,

dissatisfaction and happinessdissatisfaction and happiness11.11. Levels of financial distress and Levels of financial distress and

over-indebtednessover-indebtedness12.12. Financial distress and personal Financial distress and personal

bankruptcybankruptcy13.13. Financial distress and credit Financial distress and credit

counselingcounseling

MethodologyMethodology► History of scale development (Cantril – NIFPEE –History of scale development (Cantril – NIFPEE –

InCharge)InCharge)► Six data collectionsSix data collections

2000 Panel Study of Financially Distressed2000 Panel Study of Financially Distressed 2001 Follow-up Study of Financially Distressed 18 2001 Follow-up Study of Financially Distressed 18

Months LaterMonths Later 2003 Large Panel Study of Financially Distressed2003 Large Panel Study of Financially Distressed 2004 Omnibus Telephone Survey of the General 2004 Omnibus Telephone Survey of the General

PopulationPopulation 2004 Mail Survey of the General Population2004 Mail Survey of the General Population 2004 Mail Survey of Initially Financially Distressed 2004 Mail Survey of Initially Financially Distressed

AdultsAdults► Beta Version of IFDFW ScaleBeta Version of IFDFW Scale► More than a dozen steps to develop the IFDFWMore than a dozen steps to develop the IFDFW

MethodologyMethodology Review of Over 10 Conceptual Models ofReview of Over 10 Conceptual Models of

Overall Well-being/Quality of LifeOverall Well-being/Quality of Life

► Andrews & WitheyAndrews & Withey► Andrews & WitheyAndrews & Withey► CampbellCampbell► Campbell, Campbell,

Converse & Converse & RodgersRodgers

► CantrilCantril► DavisDavis► DienerDiener

► Festiger► Frisch, Cornell,

Villanueva, & Retzlaff

► Frisch► Olson, McCubbin,

Barnes, Larsen, Muxen, & Wilson

Methodology Methodology Review of Over 30 Conceptual Review of Over 30 Conceptual

Frameworks and Related Academic Frameworks and Related Academic Research StudiesResearch Studies

► Beutler & MasonBeutler & Mason► Davis & HelmickDavis & Helmick► Davis & SchummDavis & Schumm► Deacon & FirebaughDeacon & Firebaugh► FestingerFestinger► FitzsimmonsFitzsimmons► Hira, Bauer & HafstromHira, Bauer & Hafstrom► Foster & MetsenFoster & Metsen► GarmanGarman► Godwin & CarrollGodwin & Carroll► GodwinGodwin

► HafstromHafstrom► Hafstrom & Hafstrom &

DunsingDunsing► HiraHira► Jeries & AllenJeries & Allen► JooJoo► KimKim► Lawrence, Carter & Lawrence, Carter &

VermaVerma► Lown & CookLown & Cook► PorterPorter► Porter & GarmanPorter & Garman► Prochaska-CueProchaska-Cue

► Shinn► Strumpel► Wilhelm, Iams &

Rudd► Varcoe & Fridrich,► Walson &

Fitzsimmons► Williams► Williams► Williams► Winter & Morris

Methodology Methodology Review of Over 10 General Population Review of Over 10 General Population Surveys on Financial Stress/Financial Surveys on Financial Stress/Financial

Well-BeingWell-Being

► Principal Financial (2004)Principal Financial (2004)► American Express (2004)American Express (2004)► MetLife (2004)MetLife (2004)► CIGNA (2004)CIGNA (2004)► Roper (2003)Roper (2003)

► Caravan Saray (2004)► Gallup (2004)► ComPsych (2004)► Putnam Investments

(2004)► Thrivent (2004)► AARP (2004)

Methodology Methodology List Relevant Personal Finance List Relevant Personal Finance

Concepts, Attributes and ObjectsConcepts, Attributes and Objects

►Over 50 concepts were judged Over 50 concepts were judged relevantrelevant to aspects, conditions, or to aspects, conditions, or dimensions of personal financial dimensions of personal financial distress and financial well-beingdistress and financial well-being

►Solicited suggestionsSolicited suggestions from more from more than 50 personal finance than 50 personal finance college college professorsprofessors and more than 40 and more than 40 personal finance personal finance experts in experts in businessbusiness

MethodologyMethodology List Evolved to 58 Personal Finance List Evolved to 58 Personal Finance Concepts that Describe Aspects of Concepts that Describe Aspects of

FDFWFDFWConcepts are illustrations ofConcepts are illustrations of certain salient life experiences, certain salient life experiences, behaviors, concerns, perceptions, behaviors, concerns, perceptions, and personal judgments regarding and personal judgments regarding the common personal finance the common personal finance topics of topics of money, credit,money, credit, and and economic resourceseconomic resources

MethodologyMethodology Judge Each Concept Against Judge Each Concept Against

Three CriteriaThree Criteria1.1. Concept and its anchor terms Concept and its anchor terms

describe describe distinct aspectsdistinct aspects of FDFW of FDFW2.2. Likelihood that concept would Likelihood that concept would occur occur

in a substantive proportionin a substantive proportion of of the populationthe population

3.3. Concept would Concept would occur with adults occur with adults whether or notwhether or not they utilized credit they utilized credit cards and installment loans/leasescards and installment loans/leases

Methodology Methodology 20 Concepts20 Concepts

(1-10 of 20 Alphabetized Below)(1-10 of 20 Alphabetized Below)

► Ability to handle $1,000 financial emergencyAbility to handle $1,000 financial emergency► Ability to manage moneyAbility to manage money► Assessment of quality of personal financial Assessment of quality of personal financial

behaviorsbehaviors► Availability of savings to pay for 3 months’ living Availability of savings to pay for 3 months’ living

expensesexpenses► Availability of money to go out for entertainmentAvailability of money to go out for entertainment► Availability of money to pay for minor emergencyAvailability of money to pay for minor emergency► Confidence about a plan to reach financial goalsConfidence about a plan to reach financial goals► Confidence about long-term financial futureConfidence about long-term financial future► Confidence about being on-track for a financially Confidence about being on-track for a financially

successful retirementsuccessful retirement► Feelings about level of financial stress todayFeelings about level of financial stress today

Methodology Methodology 20 Concepts20 Concepts

(11-20 of 20 Alphabetized Below)(11-20 of 20 Alphabetized Below)

► Feelings about one’s current financial conditionFeelings about one’s current financial condition► How good or bad finances are likely to be a year How good or bad finances are likely to be a year

from nowfrom now► How well off financiallyHow well off financially► Knowledge of personal financesKnowledge of personal finances► Living today on a paycheck-to-paycheck basisLiving today on a paycheck-to-paycheck basis► Satisfaction with present financial conditionSatisfaction with present financial condition► Secure about one’s personal finances for Secure about one’s personal finances for

retirementretirement► Spend some time at work on personal financial Spend some time at work on personal financial

concernsconcerns► Stressed about one’s personal finances in generalStressed about one’s personal finances in general► Worry about being able to meet normal monthly Worry about being able to meet normal monthly

living expensesliving expenses

MethodologyMethodology Identify National Panel of Personal Identify National Panel of Personal

Finance ExpertsFinance Experts► Of the 800+ members in the Association for Of the 800+ members in the Association for

Financial Counseling and Planning Education, Financial Counseling and Planning Education, 110 AFCPE members110 AFCPE members were initially identified were initially identified who were long-term members, served on who were long-term members, served on boards of directors or committees, made boards of directors or committees, made research or best practices presentations at research or best practices presentations at conferences, written educational materials in conferences, written educational materials in personal finance, and/or otherwise known as personal finance, and/or otherwise known as leaders in personal financeleaders in personal finance

► Criteria reappliedCriteria reapplied and list was pared to and list was pared to 5252 personal finance experts, and personal finance experts, and 45 45 participatedparticipated

MethodologyMethodology Describe National Panel of Personal Describe National Panel of Personal

Finance ExpertsFinance Experts(Overlapping Characteristics of 45 Respondents)(Overlapping Characteristics of 45 Respondents)

31 women and 14 men31 women and 14 men 30 with doctoral degrees30 with doctoral degrees 10 extension specialists10 extension specialists

and agentsand agents 16 academic teaching16 academic teaching

professorsprofessors 2 with foundations 2 with foundations 5 retirement5 retirement

specialistsspecialists

7 military financialcounselors andfinancial aidspecialists

6 from creditcounseling

8 for-profitbusinesspersons

3 retired persons

MethodologyMethodology Presentation of Concepts to Presentation of Concepts to

Experts inExperts in3-Phase Delphi Study3-Phase Delphi Study

(95+% continuous participation in all phases)(95+% continuous participation in all phases)►Concepts presented solely as Concepts presented solely as

concepts, not in a question formatconcepts, not in a question format►No scales or anchor terms were No scales or anchor terms were

presentedpresented►Experts ranked concepts as those Experts ranked concepts as those

deemed important for use in a scaledeemed important for use in a scale

MethodologyMethodology Top-10 Rankings of the Third Phase of Top-10 Rankings of the Third Phase of

Delphi StudyDelphi Study(In Descending Order; “1” is Highest Rank)(In Descending Order; “1” is Highest Rank)

1.1. Ability to handle $1,000 financial emergencyAbility to handle $1,000 financial emergency

2.2. Ability to manage moneyAbility to manage money

3.3. Availability of money to pay for minor emergencyAvailability of money to pay for minor emergency

4.4. Feelings about level of financial stress todayFeelings about level of financial stress today

5.5. Feelings about one’s current financial conditionFeelings about one’s current financial condition

6.6. Knowledge of personal financesKnowledge of personal finances

7.7. Living today on a paycheck-to-paycheck basisLiving today on a paycheck-to-paycheck basis

8.8. Satisfaction with present financial conditionSatisfaction with present financial condition

9.9. Stressed about one’s personal finances in generalStressed about one’s personal finances in general

10.10. Worry about being able to meet normal monthly Worry about being able to meet normal monthly living expensesliving expenses

Methodology Methodology Review and Apply Criteria for Scaling Review and Apply Criteria for Scaling

and Anchor Termsand Anchor TermsScale selection criteria:Scale selection criteria: Internally consistent, Internally consistent,

obtain intensity or strong feelings toward item, obtain intensity or strong feelings toward item, provide clear opposing contrasts, increase range of provide clear opposing contrasts, increase range of scores to more faithfully reflect individual differences scores to more faithfully reflect individual differences in the attributein the attribute

Anchor terms on 10-point scales:Anchor terms on 10-point scales: Four Four terms or descriptors placed below the numbers “1,” terms or descriptors placed below the numbers “1,” “10,” “4,” and “7” below a 10-point line; no words “10,” “4,” and “7” below a 10-point line; no words under center numbers “5” and “6”under center numbers “5” and “6”

Content and construct validity:Content and construct validity: Enhanced by Enhanced by administration to multiple nationally representative administration to multiple nationally representative samples of adults as well as multiple samples of samples of adults as well as multiple samples of financially distressed consumers; review of research; financially distressed consumers; review of research; surveys of experts; attention to clarity, readability, surveys of experts; attention to clarity, readability, appearance, and question sequencingappearance, and question sequencing

MethodologyMethodology Decide on Items for IFDFW ScaleDecide on Items for IFDFW Scale

1.1. Review six questions from Review six questions from Beta Beta versionversion using data from 2004 Mail using data from 2004 Mail Survey of the General Population Survey of the General Population (N=1,300; 65% return rate on (N=1,300; 65% return rate on sample nationally representative sample nationally representative population of 2,000)population of 2,000)

2.2. Factor analysis, Cronbach Alpha, Factor analysis, Cronbach Alpha, scree plot, and principal scree plot, and principal component component statistical analyses statistical analyses were promisingwere promising


3.3. Review results again on clarity, Review results again on clarity, comprehension, and content validity from comprehension, and content validity from three focus groupsthree focus groups

4.4. Review the questions associated with the Review the questions associated with the top-top-10 Delphi rankings10 Delphi rankings of personal finance of personal finance experts using data from 1,300 respondents in experts using data from 1,300 respondents in the 2004 Mail Survey of the General Populationthe 2004 Mail Survey of the General Population

5.5. Factor analysis, Cronbach Alpha, scree plot, Factor analysis, Cronbach Alpha, scree plot, and principal component and principal component statistical analyses statistical analyses were quite promising,were quite promising, yielding a yielding a single single factorfactor and a and a very high Cronbach Alphavery high Cronbach Alpha


6.6. Each of the remaining 17 concepts were Each of the remaining 17 concepts were considered as considered as potential contributorspotential contributors

7.7. ReappliedReapplied the 12-item validity and reliability the 12-item validity and reliability criteriacriteria established for IFDFW scale questions established for IFDFW scale questions

8.8. ThreeThree Delphi ranked concepts Delphi ranked concepts deleteddeleted because because they were they were lowestlowest three ranked in that study and three ranked in that study and each was each was redundantredundant with other with other concept/questionsconcept/questions

9.9. The deletions slightly reduced the final 8-The deletions slightly reduced the final 8-question IFDFW Cronbach Alpha to a still question IFDFW Cronbach Alpha to a still quite quite robust 0.956 and a single factorrobust 0.956 and a single factor

Methodology Methodology Decide on ItemsDecide on Items

3 Deletions From Delphi Rankings 3 Deletions From Delphi Rankings(“1” is Highest Rank)(“1” is Highest Rank)

1.1. Worry about being able……………. 1.47Worry about being able……………. 1.472.2. Paycheck-to-paycheck basis……… 2.24Paycheck-to-paycheck basis……… 2.243.3. Feelings financial condition..……… 3.06Feelings financial condition..……… 3.064.4. Financial stressed general…………. 3.23Financial stressed general…………. 3.235.5. Financial stress today……………….. 3.27Financial stress today……………….. 3.276.6. Satisfaction financial condition…… 3.38Satisfaction financial condition…… 3.387.7. $1,000 financial emergency………. 4.00$1,000 financial emergency………. 4.008.8. Money for minor emergency……… 4.18Money for minor emergency……… 4.189.9. Personal finance knowledge………. 4.27Personal finance knowledge………. 4.2710.10. Manage money………………………… 4.62Manage money………………………… 4.62

MethodologyMethodology Decide on ItemsDecide on Items1 Addition to IFDFW1 Addition to IFDFW

8. How often does this happen 8. How often does this happen to you? You want to go out to to you? You want to go out to eat, go to a movie or do eat, go to a movie or do something else and don’t something else and don’t because you can’t afford to?because you can’t afford to?

MethodologyCorrelations of the

8 Questions on IFDFW© (General Population)

MethodologyFactor Analysis(General Population)

MethodologyComponent Matrix on the 8 Questions

of the IFDFW (General Population)

Preliminary ConclusionsPreliminary Conclusions1.1. The InCharge Financial The InCharge Financial

Distress/Financial Well-Being scale is a Distress/Financial Well-Being scale is a valid and reliable measurevalid and reliable measure

2.2. The 8-question self-report IFDFW scale The 8-question self-report IFDFW scale subjectively measures a multi-subjectively measures a multi-dimensional constructdimensional construct of financial of financial distress/financial well-being by distress/financial well-being by assessing some combination of the assessing some combination of the variables of variables of financial well-being, financial well-being, financial distress, financial strain,financial distress, financial strain, and and financial satisfactionfinancial satisfaction

National NormsNational Norms►The following several slides present The following several slides present

selected demographic informationselected demographic information about the general population and about the general population and basic norms for the IFDFWbasic norms for the IFDFW

►The data was collected in summer The data was collected in summer 2004 from two national samples2004 from two national samples

National Norms: General Population

5.46.9

8.29.2

14.5 14.2 13.812.2

11.4

4.2

0.02.04.06.08.0

10.012.014.016.0

1 2 3 4 5 6 7 8 9 10

Perc

en

tag

e(Mean=5.7; SD=2.4)

Source: InCharge Education Foundation, National Norms on InCharge Financial Distress/Well-Being Scale for General Adult Population. 1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”; 10 Means “No Financial Distress/Excellent Financial Well-Being”

(1-4: 30%) (7-10: 42%)

National Norms: National Norms: General PopulationGeneral Population

(1 Means “Overwhelming Financial Distress/Worst Financial Well-(1 Means “Overwhelming Financial Distress/Worst Financial Well-Being”;Being”;

10 Means “No Financial Distress/Excellent Financial Well-Being”)10 Means “No Financial Distress/Excellent Financial Well-Being”)

General populationGeneral population

Mean=Mean=5.75.7; SD=2.4; SD=2.4Employed populationEmployed population

Mean=Mean=5.75.7; SD=2.4; SD=2.4Financially distressed populationFinancially distressed population

Mean=Mean=3.43.4; SD=1.6; SD=1.6

GenPopGenPop Debt DistDebt Dist

Q1: How satisfied are you with your present financial sit...Q1: How satisfied are you with your present financial sit... 5.35.3 3.93.9

Q3: How do you feel about your current financial Q3: How do you feel about your current financial situation?situation? 5.25.2 3.43.4

Q4: How often do you worry about being able to meet Q4: How often do you worry about being able to meet norma...norma... 5.75.7 3.33.3

Q5: What do you feel is the level of your financial stres...Q5: What do you feel is the level of your financial stres... 5.95.9 4.24.2

Q6: How stressed do you feel about your personal Q6: How stressed do you feel about your personal finances...finances... 5.95.9 4.24.2

Q8: How confident are you that you could find the money Q8: How confident are you that you could find the money t...t... 5.95.9 2.62.6

Q18: How often do want to go out to eat, go to a movie Q18: How often do want to go out to eat, go to a movie or...or... 6.36.3 3.43.4

Q19: How frequently do you find yourself just getting Q19: How frequently do you find yourself just getting by ...by ... 5.65.6 2.32.3

Scale averageScale average 5.75.7 3.43.4

National Norms: National Norms: Scores for Individual IFDFW Scores for Individual IFDFW

Scale Questions Scale Questions General Population Versus Financially Distressed PopulationGeneral Population Versus Financially Distressed Population

Two IFDFWTwo IFDFW Subscales:Subscales:“InCharge Financial Distress Scale”“InCharge Financial Distress Scale”

andand

“InCharge Financial Well-Being Scale”“InCharge Financial Well-Being Scale”

Financial DistressFinancial Distress (4 questions) (4 questions) Mean: 5.65Mean: 5.65 Standard Deviation: 2.23Standard Deviation: 2.23 Cronbach Alpha:Cronbach Alpha:

Financial Well-BeingFinancial Well-Being (4 questions)(4 questions) Mean: 5.80Mean: 5.80 Standard Deviation: 2.76Standard Deviation: 2.76 Cronbach Alpha:Cronbach Alpha:

0.95

0.91

National Norms: EmploymentGeneral Population

IFDFW by Employment Status

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Sca

le o

f 1-

10

Mean 5.7 3.4 6.4 4.9 5.7

EmployedUnemployed, but

seeking workRetired

Unemployed, NOT seeking work

All

National Norms:Household Income

General Population

IFDFW by Household Income$000

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Sc

ale

of

1-1

0

Mean 3.9 4.8 5.6 5.5 6.4 6.6 6.8 6.8 7.1 7.5 5.7

<20 >20-30 >30-40 >40-50 >50-60 >60-70 >70-80 >80-90 >90-100 >100 All

National Norms: Education

General Population

IFDFW by Education

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Sca

le o

f 1-

10

Mean 5.1 4.8 5.3 5.1 5.7 6.6 6.6 7.1 5.7

Grade schoolSome high

schoolHigh school

graduate

Trade/ Vocational

training

Associates degree or

some college

Graduated a 4-year college

Some post graduate

study

Graduate or professional

degreeTotal

National Norms: Gender

General Population

IFDFW by Gender

4.80

5.00

5.20

5.40

5.60

5.80

6.00

6.20

6.40

Sca

le o

f 1-

10

Mean 6.23 5.36 5.72

Male Female Total

National Norms: Marital Status

General Population

IFDFW by Marital Status

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Sca

le o

f 1-

10

Mean 6.2 5.1 6.1 4.8 5.7

Married/Living with a partner

Single/Never married Widowed Divorced All

Monitoring US Personal Financial Monitoring US Personal Financial Wellness Wellness

►The next several slides present the The next several slides present the results of the ICEF quarterly survey of results of the ICEF quarterly survey of the national population to measure the national population to measure financial distress/financial wellness. financial distress/financial wellness.

► In addition to the 2004 results In addition to the 2004 results measurements for the first three measurements for the first three quarters of 2005 are shown.quarters of 2005 are shown.

Monitoring US Personal Financial WellnessPersonal Financial Wellness in the US

0

5

10

15

20

'1: low 10: high

Pe

rce

nt

Signature Study Data 5.4 6.9 8.2 9.2 14.5 14.2 13.8 12.2 11.4 4.2

1st Quarter 2005 5.2 3.7 6.3 8.7 11.9 12.3 12 13.4 13.1 13.3

2nd Quarter 2005 4 4 5 8 10 12 14 13 14 16

3rd Quarter 2005 5.2 3.7 6.3 8.7 11.9 12.3 12 13.4 13.1 13.3

1 2 3 4 5 6 7 8 9 10

Monitoring US Personal Financial Wellness

Financial Wellness (FDS8 Ratings Over Time)

5.7

6.8

6.4

6.7

5.0

6.0

7.0

Financial Wellness Average

Sc

ale

1-

10

FinancialWellness

5.7 6.4 6.7 6.8

Aug-04 Mar-05 Jun-05 Sep-05

US Personal Financial Wellness and Average IncomeBy Region

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

6.9

7.0

7.1

Wel

lnes

s o

n 1

-10

Sca

le

40000

42000

44000

46000

48000

50000

52000

54000

56000

Ave

In

com

e

Financial Wellness (true FDS8 Average) 6.4 7.0 6.7 6.9

Income of $100K or less 49628 45921 55000 47862

Northeast Midwest South West

Monitoring US Personal Financial Wellness

Closing ObservationsClosing Observations

► The 8-question IFDFW ostensibly The 8-question IFDFW ostensibly measures measures the single constructthe single construct of financial of financial distress/financial well-beingdistress/financial well-being

► The IFDFW, in effect, The IFDFW, in effect, assesses financial assesses financial healthhealth

► FourFour questions aim to obtain a sense of questions aim to obtain a sense of one’s present state of financial well-beingone’s present state of financial well-being

► FourFour questions aim to obtain a sense of questions aim to obtain a sense of one’s reaction to his or her present state of one’s reaction to his or her present state of financial well-beingfinancial well-being

► Average financial wellness of US consumers Average financial wellness of US consumers increased for the period considered: 2004/05increased for the period considered: 2004/05

Suggested Uses of theSuggested Uses of theIFDFW Scale and NormsIFDFW Scale and Norms

1.1. ExplainExplain perceived financial distress and perceived financial distress and financial well-beingfinancial well-being

2.2. Track changes,Track changes, advances, and progress that advances, and progress that individuals, families, and the general population individuals, families, and the general population make in their financial condition over timemake in their financial condition over time

3.3. Compare IFDFW scoresCompare IFDFW scores against the InCharge against the InCharge norms for the general population, employed norms for the general population, employed population, and financially distressed populationpopulation, and financially distressed population

4.4. Create IFDFW normsCreate IFDFW norms for population segments for population segments5.5. Measure levelsMeasure levels of severity of FDFW of severity of FDFW6.6. Increase understandingIncrease understanding of consumers who of consumers who

are seriously financially distressed and have are seriously financially distressed and have very low financial well-beingvery low financial well-being

Suggested Uses of theSuggested Uses of theIFDFW ScaleIFDFW Scale and Normsand Norms

7.7. Screen large groupsScreen large groups of people to determine if of people to determine if they are seriously financially distressed and they are seriously financially distressed and have very low financial well-beinghave very low financial well-being

8.8. Determine the educational needsDetermine the educational needs of of individuals and groupsindividuals and groups

9.9. Identify and/or predictIdentify and/or predict which consumers which consumers may need various types of may need various types of appropriately appropriately targeted assistance,targeted assistance, interventions and interventions and referrals (e.g., mental health counseling, referrals (e.g., mental health counseling, employee assistance program counseling, employee assistance program counseling, marriage counseling, pastoral counseling, credit marriage counseling, pastoral counseling, credit counseling, debt consolidation, bankruptcy, counseling, debt consolidation, bankruptcy, financial planning)financial planning)


10.10. Compare treatmentsCompare treatments designed to reduce designed to reduce financial distress and improve financial well-financial distress and improve financial well-beingbeing

11.11. Compare measuresCompare measures of subjective and of subjective and objective FDFWobjective FDFW

12.12. Provide insightsProvide insights into objective measures of into objective measures of FDFWFDFW

13.13. PredictPredict which consumers are likely to report which consumers are likely to report poor health, poor family relationships, and poor health, poor family relationships, and poor job outcomespoor job outcomes

14.14. Assess productivity benefitsAssess productivity benefits to employers to employers for employees who improve their FDFWfor employees who improve their FDFW


15.15. CompareCompare means and standard deviations of means and standard deviations of findings with results of findings with results of other studiesother studies

16.16. Allow more generalizationsAllow more generalizations about about probabilistic relationships and other probabilistic relationships and other variablesvariables

17.17. Formulate and testFormulate and test hypotheses hypotheses

18.18. Test causalityTest causality in longitudinal research in longitudinal research

Contact InformationContact Information► Benoit Sorhaindo,Benoit Sorhaindo, Director of Research, Director of Research,

InCharge Education Foundation, Inc., 2101 Park InCharge Education Foundation, Inc., 2101 Park Center Drive, Suite 310, Orlando, FL 32835; Center Drive, Suite 310, Orlando, FL 32835; Tele: 407-532-5704. Fax: 407-532-5750 Tele: 407-532-5704. Fax: 407-532-5750

Email: [email protected]: [email protected]

Web: www.InCharge.orgWeb: www.InCharge.org► E. Thomas Garman,E. Thomas Garman, Author, Researcher and Author, Researcher and

Advisor; Fellow and Professor Emeritus, Virginia Advisor; Fellow and Professor Emeritus, Virginia Tech University, 8044 Rural Retreat Court, Tech University, 8044 Rural Retreat Court, Orlando, FL 32819; Tele/Fax: 407-363-9048 Orlando, FL 32819; Tele/Fax: 407-363-9048 Email:[email protected]:[email protected]

Web: www.EThomasGarman.netWeb: www.EThomasGarman.net

Documents

National Norming Data for Financial Well-Being and Financial