Measuring Impact: Financial Coaching as a Pathway to Understanding Financial Well-Being

In September, the Consumer Financial Protection Bureau (CFPB) released findings from its National Financial Well-Being Survey, which provides never-before-seen data on the financial well-being of U.S. households, including which populations feel positively about their financial situations, and which are struggling. Prosperity Now partnered with the CFPB to define financial well-being and to develop a reliable and valid scale to measure it, and we’re excited that the next stage of the Bureau’s research has resulted in this rich data that explore how different financial circumstances, experiences and opportunities relate to financial well-being. Today, we’re happy to announce the publication of two new resources that can help practitioners better understand the Financial Well-Being Scale, as well as how it can be incorporated into financial coaching and other financial capability programs. 

The results of the CFPB’s survey showed that financial well-being varies widely in the US, in both expected and unexpected ways. Income, employment and educational attainment are all positively related to financial well-being, as one would expect, but gender is not. Meanwhile, differences by race and ethnicity were smaller than differences based on financial experiences, behaviors and attitudes. In fact, the greatest differences in financial well-being were related to savings and the ability to absorb unexpected expenses.  

To supplement the results of the survey, the CFPB also released the full survey dataset so that other researchers could analyze the data, as well as a tool for consumers to assess their own financial well-being and compare their score to the national results. Together, this new research and the related tools contribute immensely to our understanding of the financial lives of Americans and can help us better identify what works to help improve financial well-being.  

Since its release in 2015, we’ve been talking to practitioners about using the Financial Well-Being Scale in their evaluations to measure clients’ financial situations. These conversations suggested that the tool was useful, but more information was needed to begin using it to collect data. So, to explore further, we worked with practitioners through the Coaching & Evaluation Fellowship—generously supported by the Bank of America Charitable Foundation—to discern best practices for financial capability programs using this scale. And, to deepen our understanding, we also tested the Center for Financial Security’s Financial Capability Scale to see how it might improve the data-collection efforts of five financial coaching programs. 

Working with the Fellowship participants over the course of 10 months, we found that: 

  • Financial capability and well-being improved during financial coaching. Among approximately 100 clients, Fellows observed that financial coaching increased clients’ financial capability by an average of 1.2 points (on an eight-point scale). Similarly, well-being increased by an average of 2.5 points (on a 100-point scale) over a period of roughly six months.  

  • Scoring the scales can create an additional burden for staff. Both scales tested require a scoring process on the part of staff, which sometimes resulted in errors in calculation. Additionally, some Fellows noted that they had trouble interpreting the scores without a comparison point.  

  • Scales can be an effective coaching tool. While answering the questions did elicit some anxiety in a few clients, discussing the scales with clients allowed staff to gain an understanding of where clients were in their financial lives and allowed for deeper discussions about specific financial topics. Additionally, coaches could turn any discomfort into productive discussions and actions toward goals.  

To learn more about the experience and our recommendations for practitioners, please read our new brief, Measuring Financial Capability and Well-Being in Financial Coaching Programs

Related Content