A new CFPB report entitled “Financial well-being: The goal of financial education” describes the CFPB’s initial research into how people acquire financial capability. The CFPB states in the report that it undertook the research specifically to inform financial education and improve consumer outcomes. According to the CFPB, its “overarching objective” was to determine how to define and measure the success of different financial literacy strategies so that it would have a basis for measuring the effectiveness of different strategies. To achieve that objective, the CFPB found it necessary to define the end goal of financial education.
Having found an emerging and growing consensus that improvement in individual financial well-being is the “ultimate measure of success” for financial literacy efforts, the CFPB developed a definition of financial well-being based on interviews conducted by its research team with adult consumers and financial practitioners. As discussed more fully in the report, it found that financial well-being can be defined as a state of being wherein people:
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Feel in control of their day-to-day and month-to-month finances
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Have capacity to absorb financial shock
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Are on track in meeting financial goals
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Have the financial freedom to make choices that allow them to enjoy life
A substantial portion of the report is devoted to a discussion of the CFPB’s efforts to identify specific types of financial behaviors, financial knowledge, and personal traits that are helpful to people in achieving greater financial well-being. The report also includes a discussion of the implications of the CFPB’s research for financial capability practitioners and further research.
