You need to understand – really understand – what your members and employees are actually facing financially. In order to do this, you should measure their financial well-being as an initial benchmark. How do you measure?
The CFPB Financial Well-Being Scale provides a common metric that allows a comparison of financial well-being across people and over time. The short questionnaire (5 or 10 questions) focuses on the extent to which people feel that they:
• Have control over day-to-day and month-to-month finances.
• Have the capacity to absorb a financial shock.
• Have the financial freedom to make choices that lead to an enjoyable life.
• Are on track to meet financial goals.
Financial Health Network
The Network also has a short survey tool credit unions can use to evaluate the financial health of both employees and members. It examines four dimensions—spending, saving, borrowing, and planning—and two metrics within each. Questions measure the degree to which consumers:
• Spend less than their income.
• Pay bills on time.
• Have sufficient liquid savings.
• Have sufficient long-term savings.
• Have a manageable debt load.
• Have a prime credit score.
• Have appropriate insurance.
• Plan ahead financially.
of credit union members are struggling financially.
of credit union members are unsatisfied with their current financial situation.
of credit union members ran out of money before the end of the month at least once last year.
ALICE®, an acronym for Asset Limited, Income Constrained, Employed, is a new way of defining and understanding the struggles of households that earn above the Federal Poverty Level, but not enough to afford a bare-bones household budget. Reports are available in many (not all) states to help you understand what your members are facing financially.
U.S Financial Health Pulse
The Foundation is a proud member of the Financial Health Network® who issues the U.S. Financial Health Pulse, a groundbreaking research initiative about financial health in America. Take a look at the Pulse results to gain an understanding of the percentage of people in the “vulnerable”, “coping” and “healthy” categories used by the Network.
CFPB Financial Well-being by State
In November 2019, the CFPB issued a state-by-state report on financial well-being using data from the Financial Industry Regulatory Authority (FINRA) Foundation 2018 National Financial Capability Study. This report highlights where adults are struggling financially in your state to help inform your strategy.