Financial Well-Being Definition and Drivers Final Report--Working-Age Americans

Consumer Financial Protection Bureau
Financial Education Metrics Development
and Research Support Services—CFP-12-Q-00016
Final Report Synthesizing Research Findings
and Providing Recommended Hypotheses for Working-Age Americans
Anita Drever
Emory Nelms
William Pate
Corporation for Enterprise
Development

Dee Warmath
Nilton Porto

University of Wisconsin-Madison
Center for Financial Security

Caroline Ratcliffe
Rachel Brash
Dina Emam
Emma Kalish
Signe-Mary McKernan
Brent Theodos
The Urban Institute

Submitted On:
January 17, 2014
Submitted To:
Cassandra McConnell, Deputy Assistant Director
Genevieve Melford, Senior Research Analyst
James Miner, Policy Analyst
Hector Ortiz, Policy Analyst
Consumer Financial Protection Bureau
Submitted By:

Anita Drever, Deputy Project Director
Corporation for Enterprise Development (CFED)
1200 G Street, NW, Suite 400
Washington, D.C. 20005
202-207-0142

This report is for the Consumer Financial Protection Bureau. This report is not a public document and not
for distribution.
Acknowledgements: The authors would like to acknowledge and thank our partners for their
contributions to this report: J. Michael Collins—University of Wisconsin-Madison Center for Financial
Studies; Michael Edwards—The Ohio State University; Michael Long—ICF International; John Lynch—
University of Colorado-Boulder Center for Research on Consumer Financial Decision Making; Kenneth
Orvis—University of Tennessee; Richard Netemeyer—University of Virginia McIntire School of
Commerce; Michelle Revels—ICF International; R. J. Wirth—Vector Psychometric Group.

EXECUTIVE SUMMARY
This report lays out a definition of financial well-being for Americans between the ages of 18 and 61. It
draws on the scientific literature and in-depth, qualitative interviews to conceptualize financial wellbeing in a manner that resonates with working-age consumers’ everyday financial experiences. This
report also examines the knowledge, behavior and personal characteristics that influence working-age
Americans’ financial well-being. It looks at how these forces act in concert to generate a sense of
financial security—or lack thereof.
Several key insights emerged over the course of this work:
•

When assessing their financial well-being, working-age Americans think about both their present
and future financial circumstances. Future-oriented behaviors and personal characteristics
therefore seem to play a significant role in working-age Americans’ financial well-being.

•

Knowledge of financial facts appears to have less influence on working-age Americans’ financial
well-being than their ability to do financial research (and we define financial research broadly to
include consulting friends and family and comparison shopping as well as looking up financial
information on the internet, reading financial blogs, etc.).

•

Financial knowledge generally only affects financial well-being if it is translated into behavior.
Understanding the mechanisms by which this translation occurs is therefore critical to
understanding how financial knowledge influences financial well-being.

•

One’s personal networks, socio-economic circumstances and upbringing profoundly influence
one’s financial knowledge, behavior and personal characteristics.

•

Finally, the knowledge, behaviors and personal characteristics that affect financial well-being
are part of a compensatory system in that weakness in one area (knowledge of budgeting, for
example) can be counter-balanced by strength in another (being a generally frugal person).

These insights comprise the core findings of the Consumer Financial Protection Bureau-funded Financial
Well-being Project to date. This report synthesizes these insights and others to produce a definition of
financial well-being and a set of hypotheses regarding the financial knowledge, behavior and personal
characteristics that influence financial well-being for working-age Americans grounded in both the
literature and in-depth qualitative research with consumers and practitioners.

BACKGROUND AND PROCESS
The research team, consisting of the Corporation for Enterprise Development (CFED) and its partners,
the Center for Financial Security at the University of Wisconsin-Madison, the Urban Institute, ICF
International and Vector Psychometric Group, are carrying out the Financial Well-being Project in two
stages: 1) developing a definition of financial well-being and identifying the knowledge, behaviors and
personal characteristics that may most strongly influence financial-well-being and 2) developing a scale
to measure financial well-being and a research plan for testing the hypotheses regarding its key drivers.
This report presents findings from the first stage of the Project and its conclusions pertain to Americans
between 18 and 61 years of age (“working-age Americans”). Findings for Americans 62 years of age and
older are presented in a separate, companion report.
The Consumer Financial Protection Bureau (CFPB) intentionally limited the scope of the Financial Wellbeing Project to the detailed analysis of financial well-being and its immediate drivers in the areas of
knowledge and behavior, as these domains are most likely to be affected by financial-education-related
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interventions. The CFPB also requested that the research team explore the personal characteristics that
drive financial well-being because these interact strongly with knowledge and behavior.
The Financial Well-being Project’s focus on knowledge and behavior does not discount the critical role
played by socio-economic status and factors tied to working-age Americans’ social and economic
environment on financial well-being. These forces likely have a tremendous influence on people’s
financial health; and the Financial Well-being Project does examine their impact by researching their
influence on key drivers within the domains of knowledge and behavior. Socio-economic and
environmental drivers are not the primary focus of this paper, however.

FINANCIAL WELL-BEING DEFINED
The first step in our research into financial well-being was an extensive review of the existing academic
literature. This review included an examination of research within the fields of economics, psychology,
consumer science and sociology. It revealed that research on financial well-being has been limited—few
attempts have been made to define the concept or understand the forces that influence it.
Next, the research team conducted qualitative research in order to develop a definition of financial wellbeing based on the insights of American consumers and input from financial practitioners. The research
team conducted one-on-one interviews with 59 American consumers—41 of whom were between the
ages of 18 and 61— with diverse backgrounds in terms of their gender, race/ethnicity, marital status,
employment status, income level and geography (US region of residence and urban/suburban/rural
locale within US region of residence). In addition, the team also interviewed 30 financial practitioners
from a range of professions (financial planner, credit counselor, etc.) and clientele characteristics
(income, age, race/ethnicity, etc.). These recorded one-hour interviews focused on how each person
defined financial well-being for themselves (or their clients, in the case of practitioners) and what
factors they felt were related to different levels of financial well-being based on their own personal
experiences and the experiences of those around them. The research team coded the interviews once
they were transcribed so that comments regarding particular subjects or “themes” could be catalogued
and queried. The research team then shared a summary of these catalogued comments, along with an
outline version of the project literature review, with a panel of academic and practitioner experts.
The results of the qualitative analysis tended to converge naturally toward a common set of themes, and
the expert panel furthered the process. Although individuals’ financial experiences and backgrounds are
varied and unique, a single, broadly applicable definition of financial well-being emerged that reflected
the views of both the working-age and older American consumers. In this sense, financial well-being can
be defined as being free from worry about one’s finances; this entails having control over one’s
finances, having the capacity to absorb a financial shock, being on-track to meet financial goals and
being able to make choices that allow one to enjoy life. These facets of financial well-being have strong
time-frame dimensions: the first and fourth pertain mainly to the present and the second and third to
the future.
Each facet of our proposed definition of financial well-being was reflected in the qualitative interview
themes. Consumers talked about having control over one’s finances in terms of being able to pay bills
on time, not having unmanageable debt and being able to make ends meet. The importance of having a
financial ‘cushion’ came up often: consumers reported gaining peace of mind from having savings,
health insurance and good credit, and being able to rely on friends and family for financial assistance:
factors that increase working-age Americans’ capacity to absorb a financial shock. Having financial
goals—such as paying off one’s student loans within five years or saving a particular amount towards
one’s retirement—and being on track to meet those financial goals—also made working-age Americans
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feel financially empowered. Finally, being able to make choices that allow one to enjoy life such as
taking a vacation, enjoying a meal out now and then or going back to school to pursue an advanced
degree were also deemed by a large proportion of interviewees to be an essential ingredient in financial
well-being.

DRIVERS OF FINANCIAL WELL-BEING
Beyond the primary goal of defining financial well-being for working-age Americans, the secondary
purpose of the current study was to identify the drivers of financial well-being within the domains of
financial behavior, financial knowledge, and personal characteristics. The research team, in
collaboration with the academic and practitioner experts, examined the literature review, existing
research on the relationship between knowledge and behavior, and the qualitative research findings
and developed hypotheses regarding key drivers of financial well-being. The team also constructed a
framework that describes how the key drivers relate to one another and to financial well-being. We
describe the drivers in terms of their corresponding hypotheses below.
Financial knowledge
1) Individuals who know how to do financial research will have higher levels of financial well-being.
Being able to do financial research well involves knowing the following:
a. when it is helpful to seek financial knowledge;
b. how to acquire reliable financial knowledge;
c. how to figure out which behaviors/choices are likely to improve one’s financial wellbeing and why; and
d. how and when to engage in financial behaviors.
Good financial researchers possess a suite of skills. For example, they know when to comparison shop
rather than simply accept the first offer that comes along, they know how to find someone they can
reach out to in order to get reliable financial information and they have the skills to make the
calculations to figure out if they can afford to take on a particular loan.
2) Individuals who know how to translate reliable financial knowledge into financial behavior will
have higher levels of financial well-being. As a result, individuals who have the following skills
are more likely to experience financial well-being:
a. an understanding of how to motivate oneself to act on one’s financial knowledge; and
b. trust in one’s financial knowledge (this assumes that one’s financial knowledge is reliable).
Knowing that one ought to engage in a behavior is different from knowing how to get oneself to engage
in a behavior. Individuals who excel at translating knowledge into action are more likely to achieve
financial well-being. For example, one interviewee talked about how she often visualizes her future self
when making financial decisions so that she is motivated to use her financial knowledge. Similar logic
applies to one’s confidence in one’s financial knowledge: trusting one’s knowledge increases the
likelihood that one will actually invest one’s money rather than simply think about investing one’s
money.
Financial behavior
1) Individuals who do the following will have higher levels of financial well-being:
a. effectively manage their resources on a day-to-day, month-to-month basis;
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b. plan ahead and have financial goals;
c. actively seek out financial knowledge; and
d. act on their financial knowledge, making informed decisions about purchases, financial
products, money management strategies, etc.
Consumers who stay on top of their bills each month, track their expenses and have financial goals and
plans for how to reach them will have higher levels of financial well-being. Individuals who engage in
financial research are also more likely to have financial well-being. Finally, individuals who act on their
financial knowledge (only subtly different from knowing how to get oneself to act on one’s financial
knowledge—but measured, for example, in terms of actual 401K contributions rather than knowledge of
strategies one can employ to get oneself to deposit money in a 401K) are more likely to experience
financial well-being.
Personal characteristics
Individuals who have higher levels of the following characteristics are more likely to experience financial
well-being:
a. a propensity to plan;
b. future-orientation;
c. drive;
d. a propensity to work hard;
e. conscientiousness;
f. self-control;
g. ability to delay gratification;
h. a propensity to ‘measure themselves by their own yardsticks’ (i.e. to use an inward
frame of reference when assessing themselves rather than comparisons to others);
i. self-confidence; and
j. self-efficacy.
The larger system of financial well-being drivers

Knowledge

Social and
contextual
factors

Personal
characteristics

Behavior

Financial
well-being

Decision
context
Opportunities

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Financial knowledge, behavior and personal characteristics fit within a larger, compensatory system of
forces that influence financial well-being. In this system, weaknesses in one domain may be
counterbalanced by strengths in another. Further, although the focus of the Financial Well-being Project
is on the personal characteristics, financial knowledge and financial behavior that affect financial wellbeing, as the diagram above illustrates, social and contextual factors determine one’s access to financial
knowledge. Social and environmental forces also help to mold one’s personal characteristics.
While both the strategies individuals employ and the contexts they operate in differ, our research
indicates that people generally pursue the same kinds of financial goals: to be in control of their
finances, to be prepared for financial shocks, to achieve financial objectives, and to be able to make the
financial choices that allow for enjoyment of life.

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CONTENTS
Executive summary ....................................................................................................................................... 3
Introduction .................................................................................................................................................. 9
Literature review......................................................................................................................................... 12
Qualitative research .................................................................................................................................... 16
Financial well-being ................................................................................................................................ 17
Financial behavior ................................................................................................................................... 20
Financial knowledge................................................................................................................................ 27
Personal characteristics and attitudes .................................................................................................... 34
Social and environmental context .......................................................................................................... 38
Financial well-being definition and hypotheses regarding its drivers ........................................................ 43
Financial well-being ................................................................................................................................ 44
Personal characteristics and attitudes .................................................................................................... 45
Financial knowledge................................................................................................................................ 47
Ability to translate knowledge into behavior ......................................................................................... 48
Financial behavior ................................................................................................................................... 48
Contribution to the field and to the work of the project going forward ................................................ 50
References .............................................................................................................................................. 52
Appendix A: Literature review .................................................................................................................... 58
Appendix B: Knowledge classification memo ............................................................................................. 75
Appendix C: Qualitative research methodology ........................................................................................ 91
Appendix D: Qualitative research theme descriptions ............................................................................... 99
Appendix E: Quotes from working-age Americans and practitioners ...................................................... 110

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INTRODUCTION
Researchers have relied on measures ranging from FICO scores to the use of predatory financial services
to measure personal finance-related outcomes. Although many of these metrics assess the degree to
which individuals were able to leverage financial knowledge for financial gain or financial behaviors that
increase net worth, it’s not clear that these metrics align with working-age Americans’ personal financial
goals. This report suggests an alternative. It distills research from the Consumer Financial Protection
Bureau-funded Financial Well-being Project into a definition of financial well-being based on consumers’
own perceptions of what financial well-being means to them. Subsequent research can use this
definition to inform the development of metrics to measure personal-finance outcomes.
This report also provides insight into the forces that affect the financial well-being of working-age
Americans. By triangulating the body of knowledge represented by the literature with in-depth
qualitative research into consumer and practitioners’ financial experience, the research team and the
project’s academic and practitioner experts developed a set of hypotheses predicting the contributing
influence of various personal characteristics, knowledge and behaviors on financial well-being.

REPORT OVERVIEW AND SUMMARY OF FINDINGS
The literature provided a useful starting point in our investigation of financial well-being and its drivers
for working-age Americans. Building on this, additional insights were gained through an analysis of
qualitative interviews with practitioners and consumers examining their understanding of financial wellbeing and its drivers. By synthesizing what we learned from the literature and our qualitative research,
this report is able to offer well-informed hypotheses about what ordinary working-age Americans want
for their lives financially and what may be the best paths for getting there. In addition, it provides insight
into a larger, compensatory system wherein individuals may have vastly different levels of financial
knowledge, contrasting financial behaviors and distinct personal characteristics, yet their different
patterns each combine to yield similar levels of financial well-being.

FINANCIAL WELL-BEING DEFINED
On the surface, Americans’ personal financial landscapes differ vastly. The income stream, social
networks, financial challenges and options of a Central American immigrant cook living in the Pico Union
district of Los Angeles contrast markedly with those of the owner of a large cattle ranch in rural
southeast Wyoming. However, at a deeper level, financial well-being has the same fundamental
elements for most people regardless of income level, geographic location, age or other socioeconomic
characteristics. Financial well-being involves being in control of one’s finances, having the capacity to
absorb a financial shock, being on track to meet financial goals and being able to make the choices
that allow one to enjoy life. These facets of financial well-being have strong time-frame dimensions: the
first and fourth pertain mainly to the present and the second and third to the future.

DRIVERS OF FINANCIAL WELL-BEING
In our research, we examined financial well-being drivers within the domains of financial knowledge,
financial behavior and personal characteristics. The Consumer Financial Protection Bureau limited the
scope of work to these domains because the drivers within them are the ones most likely to be affected
by financial education initiatives. Socioeconomic status, social networks and other ‘environmental’
factors likely have a profound influence on financial well-being; however, rather than examining social
and environmental factors as key drivers of financial well-being, this report mainly describes them as
influences on drivers in the knowledge and behavior domains. Further, the qualitative analysis includes

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social and contextual themes, or topics, that emerged from our interviews with both working-age
Americans and financial practitioners.
In the section below we summarize, in condensed form, the testable hypotheses about drivers that we
developed from our analyses of the literature, our qualitative interview results, and academics’ and
practitioners’ insights. Later sections of the report explain in detail how we developed and selected this
particular set of hypotheses, and present and discuss the hypotheses more formally. In brief:
Personal characteristic-related drivers
Insights from consumer interviews, combined with findings from the literature, indicate that some kinds
of people are more likely to experience high levels of financial well-being than others. Interviewees
stated that persons who are conscientious and/or hardworking are more likely to experience high levels
of financial well-being mainly because interviewees felt that these characteristics lead to success in the
workplace. Interviewees felt that Individuals who are more future-oriented and less impulsive are likely
to be better at sticking to a budget and saving regularly and are therefore more likely to have the
capacity to absorb a financial shock and be on track to meet their financial goals. Individuals who are
financially self-confident or have higher levels of financial self-efficacy may be more likely to act on their
financial knowledge and start a business or invest in the stock market. Finally, individuals who feel less
compelled to “keep up with the Joneses” and measure themselves by their own yardsticks are more
likely to be able to make the choices that allow one to enjoy life.
Financial knowledge-related drivers
The literature and the qualitative interviews suggest that fact-based knowledge has little effect on
financial well-being. Rather, individuals need to know how to do financial research—when to undertake
financial research, where to go to get information and how to evaluate that information. Individuals also
need to know how to get themselves to act on their financial knowledge in service of their long-term
best interests and they need confidence in their financial knowledge in order for them to be willing to
act on that knowledge. Individuals also need to know how and when to engage in financial behaviors.
Although financial blogs, the internet and public libraries are all sources of financial knowledge that
were referenced in the qualitative interviews, personal experience and trusted mentors in one’s family
and social network were individuals’ primary sources of financial information—and the qualitative
interviews indicate that the financial knowledge base one is able to access via one’s networks varies
vastly with socio-economic status.
Financial behavior-related drivers
Behavioral drivers of financial well-being are deeply intertwined with the financial knowledge and
personal characteristics that influence financial well-being. From the literature and the qualitative
interviews, we learned that people who plan ahead are more likely to have the capacity to absorb
financial shock and be on track to meet financial goals—and, of course, they are more likely to assess
themselves as having a “high propensity to plan” on a personality assessment. People who do financial
research are more likely to experience higher levels of financial well-being and they are more likely to
know how to do financial research. Similarly, individuals who act on their financial knowledge are more
likely to experience higher levels of financial well-being and they are also more likely to know how to get
themselves to act on their financial knowledge. Differentiating behavioral drivers from other drivers is
likely to be challenging because they are to a large extent driven by knowledge and personality.

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REPORT STRUCTURE
The current report summarizes how we arrived at a definition of financial well-being and our hypotheses
regarding its drivers, and it discusses how these will inform our research going forward. In the section
following the introduction, we hit upon the highlights of our review of the literature. This provided a
useful starting point for understanding how these concepts were currently defined and measured and
what was known about their relationships to each other within the areas of financial knowledge,
financial behavior, and personal characteristics at the level of the individual. Our full financial well-being
literature review can be found in Appendix A, and our review of the literature on the connection
between knowledge and behavior across a number of different fields can be found in Appendix B . The
subsequent section describes findings from our qualitative interviews with working-age Americans and
financial practitioners across the country. These interviews both confirmed much of what we learned
from the literature review and provided rich information giving guidance to our definition and key
drivers of financial well-being. A more in-depth treatment of our methodology and findings can be found
in Appendices C through E. The next section presents a formal definition of financial well-being and the
hypothesized relationships that key drivers (based on themes from consumer and practitioner
interviews) have with this definition. The report concludes with a discussion of how the findings will
inform the development of scales to measure financial well-being and an analysis plan to test its
hypothesized drivers.

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LITERATURE REVIEW
OVERVIEW
The literature on financial well-being and its drivers is in its infancy. That is, no agreed upon definitions
or measures exist for financial well-being. Further, widely agreed upon definitions and measures of
financial knowledge and financial behaviors similarly lack clarity; personal characteristics stand out in
that the definitions and measures within this domain are better developed. As a consequence, the
literature offers only vague insights into how these various measures are related to financial well-being
for working-age Americans. Presented here is a brief synopsis of the main findings of our literature
review with a focus on those elements that are closely related to our research hypotheses. The
complete literature review can be found in Appendix A.
We begin with definitions and measures that exist in the literature, move on to relationships between
these concepts as described by current research, and conclude with a review of gaps in the field and a
discussion of how the literature review informs subsequent phases of the financial well-being Project.

DEFINITIONS AND MEASUREMENTS
The first major finding of our literature review is that the field lacks generally accepted definitions and
measurements of financial well-being, financial knowledge, and financial behavior. Definitions and
measures of personal characteristics are better developed, but their relationship with the former
concepts is still limited.
A formal definition of financial well-being has yet to be articulated in the consumer science literature.
Rather, levels of financial well-being (or more accurately, just “well-being”) have been inferred from the
presence or absence of other characteristics or behaviors. For example, financial well-being has been
described as a consequence of responsible financial behavior (Bucks and Pence 2008; Gerardi et al.
2010; Bayer et al. 2009; Duflo and Saez 2003; Cole et al. 2009). That is, if a person engages in one or
more behaviors that increase his or her net worth (e.g., contributing to a retirement account), it is
inferred that his or her financial well-being has measurably improved, independent of the individual’s
subjective personal assessment.
Financial knowledge differs from financial well-being in that many measures have been developed and
studied in the literature even though 70 percent of studies in this area give no definition of this concept
(Huston, 2010). The financial knowledge definitions offered tend to focus on financial literacy. When
financial knowledge is measured, it has been assessed both objectively (e.g., ability to calculate
compound interest, knowing the distinction between a stock and a bond) and subjectively (e.g., ‘on a
scale of 1 to 10, how would you rate your level of financial knowledge?’). Objective and subjective
measures of financial knowledge have been shown to correlate well with each other in some studies
(Allgood and Walstad 2011; Perry and Morris 2005), but have been shown to diverge when assessing
confidence in older Americans (Lusardi 2012).
In the literature, financial behavior encompasses a wide range of actions and decisions that affect a
household’s financial circumstances. Research into financial behavior tends to examine behavior either
in a single area (e.g., retirement planning) or across a number of areas at the household level (e.g., cash
flow management, investments). Studies of financial behavior use both objective measures (e.g.,

administrative data on 401k participation) and self-reported measures (e.g., ‘how often do you exceed
your limit on credit cards?’). The full literature review in Appendix A examines in more detail the
financial behavior research in the categories of retirement planning and wealth accumulation; credit
usage, debt management, and financial management; mortgage and mortgage default; and
investments.
Personal characteristics include demographic characteristics, personality traits, and attitudes. As
described earlier, these concepts are fairly well defined in the literature and many of these have been
studied in the consumer science field in terms of their impact on knowledge and behavior.

RELATIONSHIPS BETWEEN CONCEPTS
Below is a rough sketch that summarizes the relationships among the major domains related to financial
well-being as put forth in the literature. The full literature review in Appendix A examines the
relationships between each domain depicted below (with the exception of decision context and
opportunities, presented in gray). Here, we focus on those relationships pertaining to personal
characteristics, financial knowledge, financial behavior and financial well-being.

The primary relationship explored in the literature is that between financial knowledge and financial
behavior. Generally, research has found that more financial knowledge is associated with positive
financial behavior, but not in all cases. It should also be noted that the relationship is one of association
and not causation. That is, it has not been established that increased financial knowledge causes one to
engage in more positive financial behaviors. Part of the issue is that researchers typically overlook the
intervening steps between knowledge and behavior including attitude toward the behavior, subjective
norms with respect to the behavior (e.g., expectations), and intention (see the Financial Well-being
Project’s Knowledge Classification Memo (Appendix B)for more information). Further, a recent study
(Fernandes et al. in press) has shown that acting on financial knowledge is more likely to occur if the
information is learned immediately before (i.e., “just in time”) the particular behavior (e.g., securing a
car loan). Moreover, the type of measure used to assess financial knowledge appears to make a
difference. That is, some research has shown that subjective measures of financial literacy are better
predictors of financial behavior than objective measures (Hung et al. 2009).

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A specific subset of financial behaviors, planning behavior, has also been demonstrated to have a
positive relationship with financial knowledge. For example, greater financial knowledge is associated
with greater planning for retirement, even after accounting for demographic characteristics (Hung et al.
2009; Lusardi and Mitchell 2009). However, some of this same research (Hung et al. 2009) shows no
relationship between financial knowledge and dollars saved in 401k accounts. Again, these seemingly
contradictory findings stress the importance of more research into the complex connection between
financial knowledge and financial behavior.
Another aspect of understanding financial knowledge involves distinguishing between explicit (i.e., factbased) and implicit knowledge (i.e., information that can only be learned by coaching or apprenticeship;
considered more complex than explicit knowledge). Research in this area is limited, especially with
respect to financial knowledge. However, the underlying theory of increased complexity of knowledge
(Bloom 1956; Anderson and Krathwohl 2001) would suggest that implicit knowledge is a better predictor
of behavior than explicit knowledge. More information about the relationship between knowledge and
behavior, including the distinction between explicit and implicit knowledge, can be found in Appendix B.
The relationship between personal characteristics and financial well-being has not been formally
studied. At least in part, this has to do with the lack of a formal definition for financial well-being. What
is better understood is the relationship between personal characteristics and financial behavior.
Personal characteristics can include demographic information, personality traits, and attitudes. Specific
personal characteristics covered in our literature review include age, time preference, and a propensity
to plan.
Lusardi and Mitchell (2009) found that individuals over 50 have higher scores on the basic financial
literacy index. However, other research has shown that debt literacy is highest for middle-aged people
and lower for younger and older groups (Lusardi and Tufano 2009). A more extensive discussion on the
impact of age on financial behavior can be found in the companion report on older Americans. Time
preference and a propensity to plan are closely related concepts that serve as examples of other
personal characteristics related to financial behavior. Time preference refers to whether an individual
invests in the present or sometime in the future (e.g., time in a financial literacy class; Meier and
Sprenger 2013). That is, those who are patient are more likely to make a sacrifice in the present for a
larger future return. Related to time preference is a higher propensity to plan. Here, research shows that
these individuals are more likely to exhibit self-control, use coupons, and tend to have higher FICO
scores (Lynch et al. 2010). Higher levels of confidence and self-efficacy appear to be related to
investment knowledge and behavior (Chen et al. 2001).

GAPS IN THE FIELD
This brief summary of the literature has shown that our understanding of financial well-being is very
limited. Currently, there is no consensus on definitions and measures of financial well-being and its
drivers in the areas of financial behavior and financial knowledge. Definitions and measures for personal
characteristics are more advanced, yet even so, our understanding of the key drivers within this domain
that pertain to financial well-being is still very limited.
Seemingly contradictory findings in the consumer science literature underscore the need for widely
agreed upon definitions and measures of financial well-being and its key drivers. Since no formal
definition of financial well-being exists, one task of the qualitative research described next in this report
was to develop a definition based on the experiences of ordinary working-age Americans and financial
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practitioners that work directly with clients through the use of one-on-one interviews. A second task of
the qualitative research was to learn from working-age Americans and financial practitioners what they
view as drivers of financial well-being—that is, determining what those drivers are and in what way they
relate to financial well-being. This research, in combination with lessons learned from the literature and
input from experts in the field, set the stage for developing and refining formal hypotheses about these
relationships.

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QUALITATIVE RESEARCH
The research team conducted a qualitative study with a large, geographically diverse sample of
consumers and practitioners in order to understand how consumers and practitioners define financial
well-being and understand its drivers. The study included working-age Americans (between 18 and 61
years old), older Americans (62 years of age and older), and the financial practitioners who serve them.
This report focuses on our research and findings for working-age Americans; the research and findings
for older Americans can be found in a separate, companion report. Given the exploratory and sensitive
nature of the research topic, the research team decided in-depth one-on-one interviews 1 were the most
appropriate investigative approach. One-on-one interviews yield “information-rich” data, and the openended question interview format employed by the research team gave respondents the opportunity to
discuss financial well-being and its drivers from a variety of perspectives. The research team analyzed
the qualitative data and found that in spite of the diversity of the study sample, there were clear themes
in the respondents’ definitions of financial well-being and their understanding of its drivers. The sections
that follow briefly describe the methodology we used to collect and analyze the data; the consumers
and practitioners who participated in the research; and the results of the qualitative analysis. A more
complete description of the methodology used for the study can be found in Appendix C.

METHODOLOGY
This section focuses on the one-on-one interviews the research team conducted with 41 working-age
American consumers between the ages of 18 and 61, although it also references the interviews the
research team conducted with 18 older Americans. This sample was regionally and sociodemographically diverse. The research team conducted interviews in Atlanta, Chicago, Washington, D.C.,
Los Angeles, Tennessee, and Wyoming. Each region included between 12 and 22 percent of our workingage sample with the lowest numbers in Washington, D.C. and Tennessee while Chicago and Los Angeles
were the regions best represented in our sample. There were more women (68%) than men and persons
from all age groups were interviewed with the heaviest concentration among those 36 to 45 years of
age (39%). Study participants were ethnically and racially diverse and had varied educational
backgrounds, although persons with at least a college degree were over-represented (51%). The sample
included persons with different marital and employment statuses and a wide range of incomes.
In addition, the research team also interviewed 30 financial practitioners representing a range of
profession types (financial planners, credit counselors, consumer loan officers, etc.) and clientele
characteristics (undocumented immigrants, large asset holders, military, agricultural, entrepreneurs,
etc.).
The recorded one-hour interviews focused on how each person defined financial well-being for
themselves and what factors they felt were related to different levels of financial well-being based on
their own personal experiences and the experiences of those around them. The interviews, once
transcribed and coded, provided the basis for analyzing prevalent themes that could be incorporated
into a definition of financial well-being, and for identifying the key components of financial behavior,
financial knowledge, and personal characteristics that drive it.

1

On two occasions we interviewed pairs—a husband and wife and two co-workers.

FINDINGS
The following sections describe our main findings from our interviews with working-age Americans and
financial practitioners.
The first section includes the major themes, or topics, discussed in relation to financial well-being. First,
these are listed in order of how often they came up in the interviews. Then, direct quotes from both
working-age Americans and financial practitioners are presented in order to give a better sense of how
some of these themes were talked about.
Later sections follow the same format as above, but focus on themes, or topics, focused on financial
knowledge, financial behavior, personal characteristics, and social and contextual factors as they relate
to financial well-being. Further, these sections include summaries of prominent themes discussed in the
interviews.

FINANCIAL WELL-BEING
We began the qualitative interviews with both consumers and practitioners with the question, “What
does the phrase “financial well-being” mean to you?” We followed with a series of probes and an image
exercise to encourage respondents to think deeply about their response. When analyzing the interview
transcripts, the research team sorted the respondents’ answers into categories or “themes” 2 (see Table
1). For example, the team would have categorized as “savings” a section of interview where a workingage American discusses savings as something they have done that has had an impact on their current
financial well-being.
The financial well-being related themes that arose most often in the interviews included being able to
afford “wants” or things that give one pleasure in life such as meals out, vacations, etc. but also in terms
of learning to be happy with less and thereby making one’s wants financially feasible; family—most
frequently as both a financial resource and knowledge source, but occasionally as a financial liability;
good employment—most often described in terms of steady employment and making it possible to pay
bills; savings in the context of providing a buffer and as a behavioral objective; lack of financial stress or
worry; and one’s spouse or partner—as a financial resource, source of financial knowledge and enforcer
of good financial behavior (see quotations below).
Financial practitioners were more likely to mention capacity to deal with life events in the context of
financial well-being, but otherwise the themes they discussed in their interviews were similar to the
themes discussed by consumers.

2

Counting the number of times a theme appeared in a set of interviews is one way of assessing its
salience. These counts should be interpreted with caution, however. A single person bringing up a
theme five times will raise a theme’s count total by five points. We double-checked to see if this was a
problem in our data, and because we usually included a paragraph of text with each theme this did not
appear to be the case.
Page 17 of 132

RANKED THEMES
Table 1. Ranked themes associated with financial well-being for working-age Americans
rank

Theme

rank

theme

1

Able to afford “wants”

11

Being employed

2

Family(knowledge + resource)

12

Agency

3

Good employment

13

Managing financial emergencies/crises

4

Savings

13

Not living paycheck-to-paycheck

5

Able to pay bills

15

Debt

6

Lack of financial stress/worry

16

Ability to enjoy simple things

7

Spouse/partner (knowledge + resource)

16

Happiness

8

Home ownership (or lack thereof)

18

Having a financial cushion

9

Afford or have access to healthcare/health
insurance

19

Buying 'wants' versus 'needs'

10

Lifestyle

Source: Consumer interviews

The following are illustrative quotes drawn directly from the qualitative interviews. These quotes were
selected in order to capture consumers’ experiences and to highlight many of the interview themes.
Often, quotes touch on multiple themes, demonstrating their interconnectedness in consumers’
everyday lives.

Page 18 of 132

QUOTES RELATED TO FINANCIAL WELL-BEING
“Whatever money you take in, you need to make sure that you have savings above that. You’re not
spending it as it comes in. So you can make $20,000 a year, and as long as you live below your means
and you’re happy I would consider that financial wellbeing. But it just depends on your life, what you
want to do with your life. And just not being stressed out, being able to do it.” – Working-age American,
Tennessee
“Some people, as soon as they get the money they spend it. You have got to be frugal, you have got to
save your money, put some money away, save it until you’re set and secure. Then you can be more… you
can buy more stuff.” – Working-age American, Chicago
“I was unemployed and right when I became unemployed, my mother had some really bad health issues.
Everything just kind of went down at once, and it was like, had I saved or had I thought about the future,
I would've, you know…. It just kind of all hit at once, like I wasn't expecting it.” – Working-age American,
Los Angeles
“There’s a lot more stress in your life if all you’re able to do is meet your monthly obligations, and the
stress comes with the knowledge that any emergency – any unforeseen problem— could create a
negative situation for you. So if someone gets sick and they need to go in the hospital and you have a
hospital bill, suddenly now people are living month to month.” – Practitioner, Los Angeles
(“And when you say you have to know where you want to be, what are you thinking when you have to
say one of the differences is that people with higher levels of financial wellbeing is knowing where they
want to be?” ) “Well, you have to have goals. You have to understand where you would like to be in
terms of the things you want to obtain, whether it be more wealth, acquisitions, or just the happiness
factor. Am I happy with where I’m at and how could I improve it, basically.” – Working-age American,
Washington, D.C.
“I think the challenges also are again, expectations or what you know. I keep thinking like, yeah, why
don’t I have more financial stability? I think some of it was that I wasn’t striving for it. Not so much
expectations kind of combined with goals. I do think in general that people with goals are more well off.”
– Working-age American, Los Angeles
“Enjoyment is the reason why you want to. Well, you don’t want to worry about it. You want to be able
to fulfill your dreams and goals. You need to be able to… you’re not doing this, you’re not just making
the plans and watching how you spend money and investing it and watching your investments just for
the sake of the doing that. That would be boring.” –Working-age American
“My step sister and I, we're mostly the same age. I said, ‘Look, I'm not trying to keep up with you, but you
have been working in the government since you were seventeen years old. You have a house you’ve
been in it for about ten years. You have a nice car, nice job. You get a paycheck every two weeks. S, you
got what you wanted. That might not be the house that you want to live in for the rest of your life, but
at least you accomplished your dreams and managed to get to where you wanted to be. You can go on
trips, when your leave time comes— vacation time. You can go on trips. Me? I can't go anywhere
because of the little check I get once a month and by the time I pay bills and all that, I'm broke." –
Working Age American, Washington, D.C.
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FINANCIAL BEHAVIOR
DEFINITION OF FINANCIAL BEHAVIOR
In the qualitative research, we asked working-age Americans to identify decisions made (or not made)
and actions taken (or not taken) that they felt had influenced their financial well-being. We also asked
practitioners to describe what their more successful clients tended to do and the kinds of decisions they
tended to make. What we heard was that working-age Americans developed and adopted many
different strategies in order to navigate their financial lives. We also heard that what are normally
thought of as singular actions, such as saving, actually encompassed a wide variety of behaviors.
Consumers adopted different behaviors or strategies depending on the kinds of problems they
encountered or the kinds of goals they are trying to achieve.
The themes that arose most often in the interviews included saving, being frugal or cheap; budgeting;
buying “needs” and not “wants”; managing credit card debt; making sound financial decisions with
respect to one’s home, having a financial plan, and investing (see Table 2).
Unsurprisingly, budgeting and tracking where your money has gone came up more frequently in
interviews with financial practitioners than in interviews with consumers (although budgeting came up
frequently in the consumer interviews as well).

RANKED THEMES
Table 2. Ranked themes associated with financial behavior for working-age Americans
rank

theme

1
Saving
2
Being frugal/cheap
3
Budgeting (future expenses)
4
Buying 'wants' versus 'needs'
4
Credit cards
6
Buying/selling/owning home+mortgage
7
Bad decisions, especially early in life
8
Having a financial plan
8
Investing, researching investments
Source: Consumer interviews

rank
10
11
12
13
14
14
16
17

Theme
Lifestyle choices and preferences
Hustling/doing what it takes to find work
Getting a good education
Rules of thumb
Financial goals
Managing debt
Doing financial research
Watching others/seeking advice from others

PROMINENT THEMES
Saving
Throughout the qualitative research, working-age consumers and practitioners spoke about the
importance of saving as a means of securing their future and protecting against unforeseen expenses.
For many, saving was thought of as a conscious decision and most interviewees thought of saving as a
daily activity that is tied to being frugal. However, the qualitative interviews showed that saving is not a
singular act, but rather it encompasses sets of behaviors and strategies. For some interviewees, saving
was putting money in a bank account. To other consumers spending less or shopping around was a way
of saving money. For others, investing was a different kind of saving strategy. In particular, using a
retirement account as a savings investment was common among working-age Americans. Many of those
interviewed suggested that people employed different saving strategies based on their circumstances
and their time horizon. Most consumers and practitioners both agreed that budgeting was an important
saving strategy.
Page 20 of 132

Being frugal or cheap
Being frugal or cheap was a themes that arose often in the interviews. Interviewees described frugality
as a learned skill, usually acquired during one’s upbringing or through personal experience. Many
described being frugal as being disciplined or consciously choosing to spend less money. Similarly,
others relied on tools such as budgets to drive frugal spending habits. For many respondents, being
frugal was a lifestyle and it encompassed other habits/behaviors such as saving and buying “needs” and
not “wants.”
Budgeting
Many interviewees said that they utilized some form of budget. While having a plan to guide spending
was a common theme in the project interviewees, the ways that people went about creating and
adhering to budgets varied. Some consumers developed short-term, week-to-week budgets in order to
manage their money, while others created longer-term budgets. Having a budget made interviewees
feel more secure because it allowed them to track where their money was going.
Buying “wants” vs. “needs”
Many described the importance of differentiating between needs and wants as a way of prioritizing
spending. The manner in which consumers defined needs and wants was often contingent upon their
social and environmental context. For most consumers, needs included being able to pay bills and
provide for one’s family. Buying needs and not wants was commonly talked about in the context of
budgeting.
Credit cards
Many of those interviewed had strong opinions regarding credit cards. Some consumers and
practitioners felt credit cards were part of one’s safety net. They said that having access to credit was
reassuring because it meant they had financial resources on which to fall back. However, most believed
credit cards affected financial well-being negatively. Many interviewees, when discussing the
importance of managing resources effectively on a day-to-day, month-to-month basis, did so using
behaviors with credit cards as examples. Interviewees also described acquiring credit card debt as a
behavior indicative of one’s inability to plan ahead.
Buying, selling and/or owning a home
Many people connected their home directly to their financial well-being, as much of their net worth was
tied up in their home. For some consumers, their home was a source of financial stability because it
represented their largest asset and gave them access to credit. Many felt their home had intrinsic
value—apart from its value as an asset. Some consumers, however, described their home as a
detriment, especially in the terms of unaffordable mortgages or unforeseen expenses. Several
consumers said that they wished they had not purchased a home just before the 2008 recession.
Bad decisions
Many consumers indicated that they learned much of their financial knowledge through personal
experiences or the experiences of persons close to them, particularly from mistakes they or others have
made. This was especially true of people’s early experiences with credit cards. Consumers and
practitioners both suggested that there are behaviors that can irrevocably damage someone’s ability to
achieve financial well-being. Commonly these behaviors included substance abuse problems such as
alcoholism or drug use. Similarly, consumers and practitioners both said that smoking and tobacco use
was expensive and a financial drain, particularly among low-income populations.

Page 21 of 132

Financial plan
Many people talked about the importance of having a financial plan as a way to guide spending and
incentivize good behavior. Financial plans differed from budgets in the interviews because financial
plans were often longer term and more generalized than budgets. Most consumers and practitioners
said that at the heart of a plan is a goal, or something to work towards. As the situations of working-age
Americans changed, so did their goals. For example, some consumers said that after they had children
their financial goals changed. As their goals changed, consumers changed their plans to better fit their
goals. A consumer’s financial plan encompasses all of the strategies and behaviors that they use to
achieve their goals. For many consumers, budgets were a way of making sure spending habits match up
with their plans for the life they want to live.
Investing
Many interviewees felt that investing was critical to both long- and short-term wealth creation and a
critical ingredient in securing one’s financial future. Interviewees with and without investments both
expressed this view. The interviewees described a range of behaviors as “investments” including
participation in the stock exchange, purchasing real estate, purchasing a business, etc. One practitioner
suggested that all purchases should be viewed as investments as a way of encouraging people to think
more strategically about how they spend their money.
Lifestyle
In the qualitative research, many interviewees suggested financial well-being encompassed being able
to maintain their current lifestyle into the future. Many working-age Americans used lifestyle to refer to
their current spending habits, such as going out to eat or spending money on “wants.” Some suggested
that an indulgent lifestyle was a detriment to their financial well-being because it represented not
thinking about the future. Consumers and practitioners both said that being content with what you have
or maintaining a more frugal lifestyle is one way to achieve financial well-being.
Hustling or doing what it takes to find work
One of the most commonly mentioned drivers of financial well-being was having stable employment. In
the event of a job loss many interviewees said that it was important to do whatever you had to do to
provide for yourself and for your family. For some, this meant taking jobs that they would not normally
take in order to secure a paycheck. Some talked about hustling to find work as being entrepreneurial
and taking risks. Often consumers talked about hustling to find work in the same way they talked about
being hardworking or being driven. Consumers often spoke of hustling as a skill they acquired watching
their parents struggle and survive hard times.
Getting a good education
Interviewees suggested that one of the best things one can do for oneself financially is to make sure to
get a good education. Many noted that income and education are positively correlated and talked about
education opening doors to higher paying, more stable employment. Interviewees also talked about
how being future oriented when young enabled one to make better decisions with respect to one’s
education. Others indicated that education in and of itself provides financial knowledge that allows one
to make better informed decisions. Younger working Americans in particular said that getting an
education was very important but that taking out the necessary student loans has negatively impacted
their financial well-being.

Page 22 of 132

Rules of thumb
Many of the financial behaviors that consumers described as beneficial for financial well-being are
strategies they synthesize from financial information they gather from different sources and from
personal experience. “Correct” or “beneficial” financial behaviors are often communicated in the form
of rules of thumb, such as “pay yourself first.” Some consumers talked about learning rules of thumb
from their parents.
Financial goals
The importance of having a financial goal was a theme in a majority of the qualitative interviews. For
many, a financial goal provided meaning to particular financial behaviors such as saving or creating a
budget. However, working-age Americans and practitioners said that financial goals only affected
behavior if they felt realistic and attainable to the individual. Some of the consumers and practitioners
also suggested that the kinds of strategies that an individual adopts are guided by the kinds of financial
goals that they set for themselves. Many working-age consumers set long-term goals, like having a
secure retirement or paying off their mortgage. Others set shorter-term goals, like paying off credit card
debt. Some working-age Americans talked about goals such as travel or a new car that guided their
financial behavior. Financial practitioners commonly said that the hardest thing is to set realistic
financial goals.
Debt
Many working-age Americans thought that debt was a major threat to their financial well-being. Some
described how being in debt made them feel that their finances were out of control. Both consumers
and practitioners said that many people were unsure of the best way to effectively manage their debt.
Like many other financial behaviors, consumers gather information from their social networks and from
their own personal experience to develop strategies to fit their own situation.
Doing However, many of those interviewed said they felt intimidated the sheer volume of financial
information available and often “did not know where to start”. With this in mind, many said that doing
research is the act of seeking out information and evaluating its fit for an individual’s particular
situation. How and where people actually did financial research varied. Some read financial books by
practitioners like Suze Orman. Others said they read the business section of the newspaper regularly.
Some said that when they need information they can go to the library. Many of those interviewed said
that almost anything you needed to know was available on the internet. Some consumers reached out
to a financial professional either as a source of knowledge or to use as a sounding board.
Watching others or seeking advice from others
Working-age Americans often described the importance of using the people around them as resources.
Consumers discussed gaining knowledge from observing the mistakes of people close to them.
Interviewees also talked about soliciting advice from family and friends in their social networks. Friends
and family often play the role of sounding-board, helping people to be more confident that they are
doing the right things or making the right choice was important. Working-age Americans commonly
sought out information on investing, saving strategies, buying a car or buying a home. Many consumers
brought up how challenging they felt it was to find someone they could trust to give them financial
advice.

Page 23 of 132

SUMMARY
The research team grouped the themes mentioned by working-age Americans and practitioners into a
set of key behavioral drivers. First, budgeting, saving, prudent credit card use and other behaviors can
be described as effective managements of resources on a day-to-day, month-to-month basis. Second,
a range of future-oriented behaviors such as having a financial plan and investing all involve planning
ahead and having financial goals. Third, doing financial research can be conceptualized broadly to
include consulting friends and family before making a purchase, relying on one’s social network to find a
trustworthy financial planner as well as reading financial blogs, books, etc. Finally, buying a home,
starting a 401(k), etc. refer to acting on financial knowledge to make informed decisions about
purchases and financial products.

Page 24 of 132

QUOTES RELATED TO FINANCIAL BEHAVIOR
“Well, the reason I said retirement and not short-term because I have watched too many people that
have retired that I have talked to and they've said, "Look, we've retired now and we don't have any
money to fall back on." They didn't think ahead like me. Well, okay, you don't wait for the government to
give you what they going to give you. You take some money and you set it to the side for yourself and
don't spend it, just leave it there and let it build up so when you retire. Now you have something to fall
back on to go along with whatever the government going to give you because everybody knows now that
you don't get what you think you going get. I have seen too many people.”- Working-age American,
Washington, D.C.
“I didn’t get it from my mom or my dad. I don’t know, I just picked it up myself along the way and just I
really study, acknowledging what’s going around. And we always question how did that person get from
point A to point B. Then you kind of figure out what they did, and you kind of see the pattern that’s
going on.” - Working-age American, Chicago
“The reason why I am in a position now…what put me in not in a good position is because I have credit
cards that I ran up. I shouldn’t have done that. I’m paying those credit cards now. My goal is to pay
them off and just get rid of them. Like now if I had none of that, I would be more financially stable
because the money I do get wouldn’t go to making payments.”- Working-age American, Chicago
“Then, for probably 10 additional years, I worked two jobs. I never had summers off. I worked all
summer to pay for my house, and now, I mean, I paid it off 15 years ago. It’s completely paid off. I own
it free and clear. This is the best thing I ever did was buy this land, this house. I paid $42,000 for my
house and land back in 1977. It’s probably worth $400,000 right now. So when I think of the future,
that’s kind of part of my financial security.”- Working-age American, Wyoming
“Okay, cautious means you don’t just jump into something, you do your research. Prepared, you’ve done
the research; you’ve done the planning and have thought about the pros and cons of a particular
financial move. So now I’m ready to make that move, to make a decision, either pro or con.”- Workingage American, Atlanta
(“What are the key ingredients to achieving financial well-being?”) “Yeah, you have to do your research.
You have to be willing to read about it. It’s not through osmosis. I still like to read an actual newspaper
every day, I always read the business section. I picked up Suze Orman, but I don’t read those on a regular
basis.”- Working-age American, Los Angeles

Page 25 of 132

QUOTES FROM FINANCIAL PRACTITIONERS RELATED TO FINANCIAL BEHAVIOR
“Never live beyond what you make, always spend less than what you make. There are people who never
spend more than what they make, and then it’s just saving if you can save. What I’m saying is saving is
the most central theme to have, you know, financial well-being at the later age of your life.” (“What
about for younger clients?”) “I would tell them to start saving now, whatever you could afford. It
doesn’t matter. Even if you can save 5% or 8% of what some financial advisors advise you – whatever
you can save. You know, it’s a starting point.”-Practitioner, Texas
“Create a plan. Well, first be realistic. Being realistic in where you are in your life at that given time, and
then creating a plan short term, midterm and long term to get to the point where you want to be. And
then, you know, take steps a little bit at a time to get there.”-Practitioner, Los Angeles
“Every bit of financial news or advice that’s offered on any news program is being offered by somebody
who is getting paid and not by you. I mean there is a lot of knowledge out there, but letting it go
through that filter is critically important.”-Practitioner, Washington, D.C.

Page 26 of 132

FINANCIAL KNOWLEDGE
DEFINITION OF FINANCIAL KNOWLEDGE
We asked working-age Americans to share with us the most valuable financial lessons they learned over
the years, where they learned those lessons, and the information that was most helpful in their financial
decision making. We also asked financial practitioners to identify the knowledge they considered most
important for their clients to have. What we heard was that consumers gathered financial information
from a wide range of sources, but that working-age Americans relied most heavily on those closest to
them for financial information. We also heard that knowing specific financial facts, like the difference
between stocks and bonds, was not as relevant to consumers’ lives as knowing where to go to get
financial information.
One’s family, one’s upbringing, one’s personal experience and financial advisors were the most
frequently cited sources of financial knowledge (See Table 3). Knowledge about investing, credit cards
and home purchases were the topic-specific items that came up most frequently. Both consumers and
practitioners were more likely to mention knowledge regarding optimal behaviors than knowledge of
particular facts. Knowing how to do financial research and being engaged in financial research came up
often in both the practitioner and consumer conversations.
Financial practitioners often brought up how knowing the resources available in one’s community had
the potential to improve financial well-being. Practitioners were, however, less likely to cite social
networks as a source of financial knowledge.

RANKED THEMES
Table 3. Ranked themes associated with financial knowledge for working-age Americans
Rank
1
2
3

4
5
6
7

theme
Family and spouse as a source of advice +
experiences one can observe
Personal experience
Upbringing as a source of habits, values
and a time during which one could observe
others
Financial advisor
Watching others/seeking advice from
others
Investing
Trustworthiness of financial knowledge

8
Doing financial research
9
Credit cards
Source: Consumer interviews

rank

theme

9

Saving

9
9

Financial plan
Teaching children about money

13
14

Buying/selling/owning home+mortgage
Bad decisions

14
14

Budgeting (future expenses)
Afford or have access to healthcare/health
insurance

17
17

Financial institution
Government policies

Page 27 of 132

PROMINENT THEMES
Family and spouse
Consumers said they primarily relied on those closest to them for financial information. For many
working-age consumers, parents were seen as particularly useful because they were trusted and
understood the consumers’ context. For other working-age consumers, their spouse or partner was a
source of knowledge because they could offer a different perspective and serve as a trusted sounding
board. Advice from one’s family or spouse is often exchanged by way of informal conversations. Some
consumers solicited advice by asking what seemed like the best option or by asking how they should go
about engaging in a particular financial behavior. Others used their family members simply as sounding
boards in order to feel more confident that they are doing the right sorts of things and making the right
choices.
Personal experience
Most of the consumers indicated that they primarily acquired financial information through personal
experience. People said that they learn by doing and, frequently, learn from mistakes they have made.
This is was especially common with learning how to use credit cards responsibly. Many consumers said
they made mistakes with getting into debt when they were young, especially if they got a credit card in
college. Consumers noted that those bad decisions, as long as they were not too great, were critical to
improving their financial well-being because they learned from them. Many interviewees also indicated
that they evaluated information they received from others against their own personal experience.
Upbringing
Upbringing was one of the themes brought up most often in the qualitative interviews. For many
consumers, upbringing was their most important source of financial knowledge. Watching one’s
parents navigate their financial lives greatly impacts how one navigates one’s own financial life. Over
the course of one’s upbringing, one absorbs not only financial facts, but also cultural norms regarding
money. Interviewees did not always follow in their parents’ financial footsteps—for some watching
their parents struggle motivated them to lead their own financial lives differently.
Financial advisor
Financial advisors played an interesting role in the qualitative research. Many consumers cited them as
important sources of knowledge, but people said they actually used advisors infrequently. Working-age
Americans indicated that they used financial advisors primarily as a source of knowledge about
managing finances or making investments. Others used financial professionals as sounding boards to
legitimize knowledge that they themselves already had but lacked the confidence to implement.
Perhaps unsurprisingly, financial practitioners were more likely to suggest that financial advisors were
important source of financial knowledge. Some consumers, particularly those who had employed a
financial advisor in the past, also felt they were critical and that they could be particularly useful in
planning for retirement.
Watching others/seeking advice from others/social networks/friends
For some consumers, friends and social networks played a similar role to family in enabling access to
financial knowledge. Many working-age Americans used friends and social networks as sources of
investment, financial products and comparison-shopping information. In this way, common cultural and
social norms are reinforced. Working-age Americans specifically said that social networks were
important sources of knowledge about job opportunities. Financial practitioners also noted that the

Page 28 of 132

information consumers get from friends is not always right and said that social networks can just as
easily reinforce bad behaviors as they can good behaviors.
Investing
Throughout the qualitative research, consumers commonly said that they would feel more confident in
their financial knowledge if they had more information about investing. Many consumers felt that
knowing how to invest was the “next step” in financial knowledge above knowing how to manage one’s
finances day-to-day. Some working-age Americans said that they wanted to invest in the stock market,
but were unsure of how to start. Some working-age Americans were already investing but wanted to
know more about differences between investment options, or to know more about when to invest.
Many consumers indicated that their primary investment strategy was through employer-provided
retirement accounts, such as a 401(k).
Trustworthiness of financial knowledge
Being able to trust financial knowledge was another theme that came up often in the consumer
interviews. Consumers indicated that being able to deem information “trustworthy” was a critical part
of translating financial information into behavior. Some practitioners indicated that this may be why
consumers tended to gather most of their financial knowledge from family, friends and their own
personal experiences. The importance of trust also explains why most consumers said they were
referred to their financial advisor through friends or family. Other consumers also said that they trusted
their financial advisor because they were introduced in the workplace, which legitimized their advisor’s
interests.
Doing financial research
Both working-age Americans and practitioners agreed that doing financial research was important for
acquiring financial knowledge. Many consumers indicated that this was particularly important regarding
complex issues like taking out a loan or purchasing a house. However, many of those interviewed
decried the challenge presented by the sheer volume of financial information available and felt that
knowing where to go for reliable, trustworthy information is critical. How and where people actually did
financial research varied: Some read financial books by practitioners like Suze Orman. Others said they
read the business section of the newspaper every day. Some said that when they need information they
can go to the library. Many of those interviewed said that almost anything you needed to know was
available on the internet and blogs. Some consumers reached out to a financial professional either as a
source of knowledge or to use as a sounding board.
Credit cards
Many consumers had reservations about using credit cards and suggested that responsibly using credit
and credit cards was important for achieving financial well-being. Most consumers said that they
learned how to use credit through personal experiences and mistakes. Some consumers also talked
about how once they were in debt, it was important to know how to manage debt effectively.
Savings
Throughout the qualitative research, consumers commonly said that saving and knowing how to save
was an important step for most people in reaching a higher level of financial well-being. Many
consumers had different approaches to saving money. Some consumers suggested that the different
saving strategies reflected differences in knowledge. Some learned saving behaviors from friends and
family. These were often described as rules of thumb such as “pay yourself first.” Other consumers
developed tools such as budgets to identify ways they can save more. Others learned from personal
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experiences such as trying to save money for a purchase. Consumers and practitioners both said that the
best way to save is to have a goal. Regardless of the approach, consumers indicated that they constantly
tested and evaluated the efficacy of their saving strategies.
Financial plan
Many of those interviewed described having a financial plan as a critical part of achieving financial wellbeing because it incentivizes other behaviors. Both consumers and practitioners indicated that
developing financial plans is not easy. Consumers and practitioners said that the most successful
financial plans were ones that were anchored by realistic goals. People tend to develop financial plans
on their own or with input from close friends and family. Some track their spending and they use this
information to inform their financial planning. For some consumers, plans were long-term, like saving
for retirement or to buy a house. Others’ plans had a short-term focus, like paying off debt or saving for
the holidays. Regardless, the kinds of plans and goals individuals create for themselves greatly affect the
kinds of financial information they seek out and deem important.
Teaching children about money
Both consumers and practitioners recognized that upbringing was very important as it often serves as
the first place people acquire financial knowledge and behavior. However, many interviewees noted
that our upbringing can teach and reinforce bad behavior just as easily as it can reinforce good
behaviors. Some consumers and practitioners said that as a country we should emphasize financial
education and literacy to a greater extent in school. Many consumers indicated through their own
experiences or through observations that young adults often lack necessary financial knowledge.
Buying, selling and/or owning a home
Many consumers said they knew very little about purchasing a home when they first went through the
process. Some stated that they wished they had known more before buying a house and that the terms
and conditions of their mortgage were something they wished they had understood better. Others said
they wished they had inspected their home prior to purchasing it. Still others said that they had
difficultly knowing when it was safe to purchase a home. Some respondents expressed that they had
underestimated the costs and expenses that come with owning a home.
Budgeting
Many consumers talked about the importance of developing a budget either as a guide for future
spending or as a way of identifying spending habits. Some consumers said they learned to budget from
their parents, who actively encouraged them to participate in creating the household budget.
Government policies
Some consumers said that they did not know as much about the tax code as they thought they should.
Some practitioners suggested this was particularly true with respect to applications for refunds or
claiming exemptions. In addition to taxes, some consumers and practitioners suggested that
government-funded welfare programs improved the financial well-being of vulnerable populations.
However, the application process for these programs was often described as difficult and complex.
Practitioners in particular mentioned that supports such as unemployment benefits are underutilized
and that this harms low-income populations. Some practitioners also noted that they have clients who
they believe over-utilize welfare programs. Some consumers, particularly in suburban and rural areas,
said unemployment and welfare programs promoted complacency and diminished financial well-being
as a result.

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SUMMARY
When asked about the financial knowledge consumers felt was most valuable and the source of that
knowledge, they often referred to information shared with them by friends and family. Over the course
of the interviews it became clear that consumers, when confronted with a financial decision, consult the
financial information sources around them they trust—and often the source of this knowledge is their
personal networks as well as newspapers and books from the local public library. The research team
synthesized these insights into an understanding of financial knowledge, of which the key insights
include knowing when it’s helpful to seek financial knowledge, how to acquire reliable financial
knowledge and how to figure out which behaviors/choices are likely to improve one’s financial wellbeing and why and how and when to engage in behaviors likely to improve financial well-being. The
centrality of personal networks as a source of financial knowledge provides insight into one of the
critical roles that social context plays in financial well-being.

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QUOTES RELATED TO FINANCIAL KNOWLEDGE
“I was very close to an elderly aunt and she left me a good inheritance, but we'd talk. She would tell me
what she was buying or selling and I would tell her what I thought of it. She would ask me things about
what she had read in the paper and, things like that.”
- Working-age American, Los Angeles
“I wasn’t a saver in the beginning. My career getting out of college, I was living for today, for the day
and thinking that I’ve got forever to save. But that time goes by. I wish I had been more responsible in
putting that nest egg away for a rainy day because when I got my hands on some money as a young
person, I bought a car.”- Working-age American, Atlanta
“If only I had known back 15 years ago or 20 years ago what I know now, I probably would have made
different choices that would set me up to be better off financially than I am even now. I think it’s around
choices, but again, maybe it’s exposure that influences those choices too. Like what you were taught,
your values, what your parents knew. Sometimes I think people know, but they just choose to do
whatever they’re going to do anyway and sometimes it’s that people don’t know.”- Working-age
American, Atlanta
“It’s taken a long time to get to know him, just because he’s an accountant. There are a lot of Wall
Street fellows that do other stuff. I don’t really know them. He’s smart. I think he knows what he’s
talking about. I mean, he keeps an eye on the market. He’s got money wrapped up somewhere. He
pays for things in cash I’m pretty sure. You know, but I do trust him and I don’t think he was judging me.
You know, to have someone who got their ducks in a row financially to say like you’re not doing anything
different, it feels pretty good.”- Working-age American, Wyoming
“Yeah, I think education is key to financial anything. I think one reason we’re kind of in the mess that
we’re in is that we borrow, borrow, borrow, and I don’t think people are taught that they have to wait to
have what they want. I don’t think they’re educated, not only at school but at home. I have noticed that
parents are just as bad as kids. They want what they want right then. They can charge it. They can get
it. They can have it.”- Working-age American, Tennessee
“I know how to do it now and how to set it to the side and say, "Look you can't touch this, this is for a
rainy day." For a rainy day does not mean when it rains outside, it means hard times. Hard times are
going to come again one day and I want to be ready when it comes because I'm forty-six now, so when I
get like sixty or sixty-five or seventy, I can save up.” - Working-age American, Washington, D.C.

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QUOTES FROM FINANCIAL PRACTITIONERS RELATED TO FINANCIAL KNOWLEDGE
(“Do you find if there are people – young people, older people— that ones that are perhaps more
successful from your point of view that they know something that the less successful ones don’t?”)
“Always. Always. That’s probably because they had a mentor or they’ve had somebody in their life
explain it to them before they get into trouble. Or maybe they’ve gone to a bank and asked advice before
wanting to do something. Or the bank says you know what? You’re not ready for this but let me give you
some tips. I mean maybe they got some kind of advice like that that helps them out.”-Practitioner,
Wyoming
(“…if they weren’t coming to a financial planner, where would they get that knowledge?”) “Well, I think
people make decisions by neighboring solutions. Hopefully they would have a parent or a mentor that’s
already done what they are thinking of doing, and they would take to them personally. It could be a
friend or maybe a neighbor.”-Practitioner, Washington, DC
“Not many people are saving their money for investments. And even if they did, how financially literate
are people with respect to investments? I mean people can tell you the price difference between Ross
and H&M and Marshalls – but they can’t tell you what they would do with that money if I told them to
put into something that would earn a return other than a savings account. Smart people invest their
income in income generating assets that add net worth , that grow their net worth over time.”Practitioner, Los Angeles
“I remember coming out of school getting my first credit card and you know, realizing as I spent it that I
only had to pay back a certain amount. That seemed pretty easy. Then after about a year I realized I was
paying a higher amount, and the number kept on growing. Then I started thinking about well, what
would it really pay to get this paid off? And I realized that the credit card companies weren’t helping me
pay off. In fact, what I was doing was digging a bigger hole. Then I realized the minimum amount of pay
off on my credit card was not getting me ahead. That was something I learned on my own at least back
then. I was paying enough but my balance wasn’t going down.
-Practitioner, Maryland
“He said, you want to sit down with a budget and list out all your expenses and what you think it’s going
to be every month. And it’ll change – for example, this and that. Maybe your house might be the same.
Then how much money you’re bringing in, and then you compare your revenues to your expenses.
Hopefully at the end, you’ll have some money left over.”
– Practitioner, Washington, DC
“Someone has got to start a conversation. Usually it’s the person who’s older and seeing this for
themselves, but sometimes it’s kids who are coming into the family— in-laws. Or it’s kids themselves who
are starting ask questions about you know, what would happen to whatever personal property or what
would happen to….What would you want us to do if something were to happen?”
-Practitioner, Wyoming

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PERSONAL CHARACTERISTICS AND ATTITUDES
DEFINITION OF PERSONAL CHARACTERISTICS AND ATTITUDES
During both the practitioner and the working-age American interviews, we asked respondents whether
they felt personal characteristics affected financial well-being. We also provided working-age Americans
with a list of over 30 personality types and asked them to indicate the ones they associated either
positively or negatively with financial well-being. During the interviews, respondents described not only
the personal characteristics they felt were most strongly associated with financial well-being, but they
mentioned attitudes as well (see Table 4).
Hardworking, driven, and self-control, discipline and patience, as well as being future-oriented, came up
most often as characteristics strongly associated with financial well-being in the working-age American
interviews. Being frugal and not feeling the need to keep up with the neighbors were also mentioned
frequently. Consumers tended to discuss the influence of self-esteem on financial well-being while
practitioners were more likely to mention financial self-efficacy (belief in one’s ability to reach financial
goals and one’s perceived level of financial expertise).
Personal characteristics include personality, attitudes, and other individual traits.

RANKED THEMES
Table 4. Ranked themes associated with personal traits and attitudes for working-age Americans
rank

theme

1
Hardworking
2
Driven
3
Self-control/discipline/patience
4
Outgoing
5
Self-esteem
5
Stressed/worried
5
Far-sighted/planner/future-oriented
8
Being frugal/cheap
9
Responsible
10
Not needing to keep with the Joneses
10
Being materialistic
10
Risk
Source: Consumer interviews

rank
13
14
14
14
17
18
18
18
21
21
23
23

theme
Self-efficacy
Nice/friendly
Positive attitude/optimism
Planning
Self-confidence
Ability to enjoy simple things
Knowing yourself
Open to new ideas
Type A
Not being a burden/self-sufficient
Pragmatism
Lazy

PROMINENT THEMES
Hardworking
Many of those interviewed felt that hardworking individuals were more likely to achieve financial wellbeing. Some working Americans felt that being hardworking led to more opportunities in the work place,
providing those individuals with more stable employment and allowing them to climb the income
ladder. Others recognized that having a spending plan and using a budget was not a one-time decision.
Maintaining the self-control necessary to stick to the plan requires work.
Driven
Interviewees used the word “driven” to describe individuals who are highly motivated to achieve a goal.
Interviewees felt that being driven correlated positively with “good” financial behaviors like saving and
budgeting. Driven individuals were also perceived as more likely to overcome adversity.
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Self-control/discipline/patience
Spending money is easier than not spending money. People are constantly tempted to spend rather
than to save and the respondents felt that achieving financial well-being required possessing the selfdiscipline to make choices in support of one’s financial goals.
Self-esteem
Having good self-esteem was commonly thought of as important for achieving financial well-being.
Many of the interviewees suggested that emotion-driven spending tended to negatively affect financial
well-being. Some thought that being insecure or not feeling good about oneself led to impulse spending
or spending that was primarily meant to make themselves feel better in that moment.
Stressed/worried
Stress and worry were often described as products of low levels of financial well-being. Respondents
also talked about financial stress driving poor financial behaviors. For some, being stressed led to
impulse spending or spending that was primarily meant to make oneself feel better in the moment.
Others thought that being stressed made people focus on only the obstacles at hand and made planning
for the future more difficult. Some respondents felt the opposite to be the case: financial worry can
sometimes force people to focus on details and make better-informed financial decisions as a result.
Far-sighted/planner/future-oriented
Interviewees often expressed the idea that having a plan to cope with unforeseen events or shocks is
critical to achieving financial well-being. The ability to plan for the future was often discussed in close
connection with being frugal and having self-discipline.
Being frugal/cheap
Respondents felt frugality positively influenced an individual’s financial well-being. Interviewees
indicated that some people are better able to make do with less and that frugality is a skill that one
learns during one’s upbringing or from one’s spouse.
Responsible
Some interviewees suggested that more responsible individuals would be more likely to achieve
financial well-being. Responsible individuals were characterized as having better abilities to distinguish
between needs and wants, pay their bills on time and not fall into debt. Similarly, interviewees felt
responsible individuals were better able to avoid risky behaviors such as over-reliance on credit cards.
Not needing to keep up with the Joneses
Many of the interviewees indicated that social pressure was one reason that people overspend.
Individuals feel the need to “keep up” or “fit in” with family members, friends or others in their social
network. Some described the ability to not give into these social pressures as critical to an individual’s
financial well-being. Others talked about the importance understanding what truly makes one happy
and not needing to spend money on things one does not need.
Being materialistic
Some interviewees described materialism as a major cause of overspending. Usually this topic was
brought up in reference to others, not themselves. In the qualitative research, materialism was
described similarly to not giving into social pressures and not needing to keep up with the Joneses.
Some described it as being able to enjoy the simple things in life and knowing what makes you happy.

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Others described not being materialistic more as making do with less and not spending money on
“wants.”
Risk
In the qualitative research, figuring out how to balance risk was a common theme. Many recognized that
financial behaviors such as investing were inherently risky, but many considered them important or
even necessary for their financial well-being. Some thought that being willing to engage in some risky
behavior or being able to tolerate risk positively impacted financial well-being.

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QUOTES RELATED TO PERSONAL CHARACTERISTICS AND ATTITUDES
“Working hard, yeah. You would gain financial comfort through working hard and saving your money,
working two or three jobs and putting that money aside, put it into a 401K, buy some of your company’s
stock options and just saving. Put it in the savings account.” – Working-Age American, Atlanta
“I've never been broke so...I've seen other people go broke and need money. They live out of their cars
and that's to me scary. And I don't want that to happen to me so, that's why I live frugally, according to
some people, but to me it's comfortable because I'm not overspending.”
– Working-Age American, Los Angeles
“They live day-to-day. My perception of these people is that they’re just scraping to get by. It’s like
paycheck to paycheck, and they may complain oh, God, this just happened, we had this bill. So you had
some bad things, but bad things happen to everybody and you need to plan ahead.”
– Working-Age American, Los Angeles
“Certain people in life will never be able to get over that hurdle. They’re going to get the first hurdle or
the second or the 12th or whatever it is, and they’re going to be stuck at that hurdle. They have become
complacent. Certain people need a little guidance. They need somebody to pick them up and throw
them over the hurdle and say you know, do this. You know, if you’re working at I don’t want to say a
menial job flipping burgers, but if you’re working flipping burgers and you want to drive a nice car, you
probably should go and look for a better job instead of staying here and complaining that you don’t have
money to do what you want to do. Keep doing this, but also look for something else. Get over that
hurdle, get to the next level. Certain people can’t do that. Other people – oh, that’s all you’re going to
do that’s fine. And then they go and they jump to the next one and they get to the next one.”- Workingage American, Los Angeles
“…and the confidence, and I think maybe just more of a drive to say look man, I am getting out of this
crap hole, and I’m going to do something.”- Working-age American, Los Angeles
“Those who have higher levels of financial wellbeing would be those who are more focused, that are
more sort of… they have more control of their spending, of themselves. They’re organized, people that
are very organized. I think people who are calm and who are happy; relaxed people aren’t going to feel
that anxiety or that stress or do things that they know they shouldn’t do, I think. I think that those with
lower levels of financial wellbeing are those who don’t have control. They don’t know how to control,
they’re not focused. People who are maybe very anxious, stressed out, sometimes people do it, they
spend money because of the anxiety.”
- Working-age American, Atlanta

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SOCIAL AND ENVIRONMENTAL CONTEXT
DEFINITION OF SOCIAL AND ENVIRONMENTAL CONTEXT
We explored the role of external influences on financial well-being—including friends, family,
neighborhood, region, programs/policy and the economy (see Table 5). The qualitative research
indicated that an individual’s social and environmental context greatly influenced their access to
financial knowledge, in turn affecting financial behavior. Individuals are also strongly influenced by social
norms, which play a powerful role in shaping the expectations an individual has for themselves. These
expectations in turn guide the behavior and choices that an individual makes, both consciously and
unconsciously. Social context also limits the options that an individual has available. While many
consumers and practitioners commonly spoke of the importance of personal agency, they also
recognized that communities are defined by structural inequalities that shape individuals’ lives. The
qualitative research suggests that individuals’ perceptions of their own financial well-being are greatly
influenced by their own personal circumstances.

RANKED THEMES
Table 5. Ranked themes associated with social and environmental context for working-age Americans
rank

theme

1
Family
2
Upbringing
3
Economy
4
Spouse/partner
4
Culture
6
Good employment
6
Government policies
8
Friends
9
Social networks
10
Community
Source: Consumer interviews

rank
11
11
13
13
13
13
17
17
17
17

theme
Not needing to keep with the Joneses
University
Children
Being employed
Multiple income sources
Inequality/discrimination
Knowing the resources in the community
Workplace
Life event
Getting a good education

PROMINENT THEMES
Family
Family was brought up often during the qualitative interviews. The impact of “family” on financial wellbeing is multifaceted. Family members, especially parents, are a source of financial knowledge. Family
members also provide loans to cover both expected and unexpected expenses. Family may also provide
free or low-cost housing, especially for younger working Americans. Family can also be a financial
detriment, especially to the “sandwich generation.” The costs of both children’s education and care for
one’s aging parents—especially if they are experiencing cognitive decline—can be highly detrimental to
one’s financial well-being.
Upbringing
Respondents felt that one’s upbringing strongly influences one’s financial knowledge. Some said they
learned how to engage in particular financial behaviors because they were taught these behaviors by

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their parents. Others said they learned just by watching their parents handle money. Most of those
interviewed felt that people tended to adopt values and cultural norms about money during their youth.
Economy
Many interviewees had friends or family that had lost jobs or were forced to take pay cuts to stay
employed during the Great Recession. Investment losses during this time also occurred frequently. For
most, it was the local economy and local job market that had the most immediate impact on their lives
although some respondents felt their financial well-being was strongly linked to both the national and
international economy.
Spouse/partner
Many interviewees suggested that an individual’s spouse or partner played an important role in his or
her financial well-being. For some, a spouse or partner was a major source of financial knowledge, able
to provide insights based on his or her own life experiences and the life experiences of his or her own
friends and family. Spouses also came up in the context of discussions regarding the financial security
associated with having two breadwinners in a household. Others talked about how their spouse had a
positive influence on their individual’s financial behavior. Many interviewees said this was particularly
true when partners shared common goals or were working within a common financial plan. When
partners did not share the same financial values, many said the opposite was true and that a spouse
could actually be detrimental to financial well-being.
Culture
Interviewees also indicated that cultural values and social pressure cause some people to overspend.
Some referred to it generally as a “culture of consumption” where status is closely tied to material
goods. Others talked about it more specifically as feeling as though they had to keep up with friends and
family. The role of culture varied by geography—consumers in big cities were more likely to talk about
experiencing pressure to buy consumer goods than residents of more rural areas.
Good employment
Good employment was viewed by many consumers and practitioners as one of the key drivers of
financial well-being. In addition to providing a stable income, employment often provided benefits such
as health insurance, which consumers described as crucial for their financial well-being. For some, the
workplace provided them with important financial knowledge, particularly about retirement.
Government policies
Taxes came up often in government policy-related conversations. Most respondents felt that taxes
negatively impacted their financial well-being, though some acceded that they were necessary. Some
working-age Americans and practitioners felt that welfare programs such as unemployment benefits
and rent-controlled housing could greatly improve an individual’s financial well-being.
Friends
Friends share financial knowledge and information about job opportunities. Friends may also provide
financial assistance during difficult times. Respondents also that spending time with friends led them to
spend more money than they would have otherwise.
Social networks
Social networks encompass friends, family, co-workers, and their connections. Most consumers thought
that having an extended social network positively influenced their financial well-being, as they believed
that these networks facilitated access to broader resources including employment information, financial
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support and financial knowledge. Consumers also felt that social networks act as a source of pressure to
buy consumer goods.
Community
For some consumers, community was talked about synonymously with social networks. Others,
however, saw the community as also including community resources which provided resources and
financial knowledge. These resources included the library, banks, and other institutions. For others,
community resources included places like churches or food banks which offered support during hard
times.

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QUOTES RELATED TO SOCIAL AND ENVIRONMENTAL CONTEXT
(“So what would it take to move you up from a 4 to like a 7 or an 8 or a 9? What would it take to, what
would have to change?”) “To start working again. Get a job, be employed, and get a better job than
what I was at. To shoot for an 8,9,10.” - Working-age American, Los Angeles
“Lower financial wellbeing may be caused by job loss, or well, the economy in the main sense. So the
company you’re working for may lay you off or the company may reduce your hours, or the business you
started may suffer as well due to the economy. So the economy has a lot to do with financial wellbeing.”
- Working-age American, Atlanta
“I figure when I’m 80 I’ll have to work at McDonald’s or something, but I don’t care.” (“Why do you
figure at 80 you’ll have to work at McDonald’s?”) Well, let’s see when the market crashed the last time,
we lost oh, $80,000, $100,000 worth of savings. I just don’t have any faith in the security of our country
in many ways, not just financially.” - Working-age American, Wyoming
“A job change, a catastrophic health issue can change things around. I mean an injury. I mean you can
have a car wreck and be sent to Vanderbilt and have a $150,000 to $200,000 insurance bill or hospital
bill. I mean I don’t know how you would ever get out of that financially. You know, you probably have to
declare bankruptcy would probably be what they would have to do.” - Working-age American,
Tennessee
“My friend that I went to high school with, she’s a financial person. Thompson Reuters, she’s the one
who helped me with the marketing and people connections that kind of bring you together to help each
other out. That really helped too. Another guy that I met through my marketing too helped me with a
job and got me a car and got me this for this job and you know, a company car. So yeah, your socialism
and having friends that can be there for you, that helps too.” - Working-age American, Chicago
“I think I know a lot about the choices that need to be made to secure yourself financially, but to have
the discipline to do that. We, as Americans, I don’t know if it’s a worldwide epidemic or not, but it’s
instant gratification. I try to teach that to my kids, but Mommy is guilty too.” - Working-age American,
Atlanta
“Not give in to society. To not have to have the nicest things. You can’t afford it. That’s what I feel like a
lot of people are doing now is they have to have the new Mercedes even though they can’t afford it. So
people just give into society and into the trend.” - Working-age American, Los Angeles

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MOST IMPORTANT INFLUENCE ON FINANCIAL WELL-BEING
At the end of each consumer and practitioner interview, we asked respondents “Out of
everything we have discussed today, what do you feel is the most important ingredient in
achieving and maintaining financial well-being?” We noted the responses in the topline
summaries we created for each interview and then tallied the responses.
Approximately a third of respondents cited money management—including saving and
investing—as the most important ingredient in achieving financial well-being. One in five
respondents felt that the closely related behavior of having concrete goals and making plans to
achieve those goals was what was most important.
Attitude and personal characteristics came up slightly less often. Hard work, responsibility, selfreliance and self-discipline were each mentioned by approximately a dozen respondents as
being the most important ingredient in achieving financial well-being.
The next most frequently cited factors were one’s education and one’s upbringing. Both
consumers and practitioners felt that youth tended to pick up the financial habits of their
parents. A slightly smaller number mentioned either resiliency, having a positive attitude or selfconfidence. Finally either having a job—particularly for persons at the lower end of the income
spectrum—or having the right job was brought up by a handful of respondents.
The most commonly cited obstacles to financial well-being were unexpected crises—usually
health emergencies—and high levels of debt.

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FINANCIAL WELL-BEING DEFINITION AND HYPOTHESES REGARDING ITS
DRIVERS
This final section of the report triangulates what is known about financial well-being and its
drivers in the literature with the key themes from the qualitative research conducted by the
research team. It synthesizes these inputs into a definition of financial well-being deeply
grounded in consumers’ insights as well as a set of hypotheses regarding its drivers informed by
both the literature and qualitative research with consumers and practitioners.
Before providing details regarding the hypotheses and their drivers, we would first like to
outline some of the deeper, crosscutting forces at play. First, financial well-being and its drivers
have both present and future dimensions. Financial well-being involves feeling in control of
one’s finances today and being prepared for tomorrow. Individuals who have more future
oriented personal traits such as high levels of “propensity to plan” (Lynch et al. 2010) and selfcontrol are more likely to report high levels of financial well-being. Similarly, individuals who
engage in more future oriented behaviors such as goal setting and retirement planning are also
more likely to have high levels of financial well-being.
Second, both the literature and the qualitative research findings suggest that static, fact-based
knowledge about financial products and concepts does not drive financial well-being. Instead
knowing when and how to find financial information, assess its merit and predict the
consequences of acting on that information are what matter.
Third, financial knowledge largely affects financial well-being by way of its influence on
behavior. We have therefore included hypotheses that focus explicitly on the translation of
financial knowledge into behavior.
Fourth, the drivers of financial well-being fit together into a compensatory system: despite
contrasting levels of financial knowledge, disparate financial behaviors and variations in other
personal characteristics, two individuals may achieve the same level of financial well-being by
using strengths in one area to compensate for weaknesses in another.
Below we describe how these higher-level insights, together with results from the literature
review and qualitative research, inform both a definition of financial well-being and a series of
hypotheses regarding the personal characteristics, financial knowledge and financial behavior
that drive financial well-being.

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DEFINITION OF FINANCIAL WELL-BEING
Persons who report high levels of financial well-being are in control of their finances, they have
the capacity to absorb a financial shock, they are on-track to meet financial goals and they are
able to make the choices that allow one to enjoy life. These facets of financial well-being have
strong time-frame dimensions: the first and fourth pertain mainly to the present and the second
and third to the future.
Individuals of a relatively high level of financial well-being feel in control of their day-to-day
financial lives: they manage their finances; their finances do not manage them. Such individuals
are able to cover expenses, pay bills on time and do not worry about not having enough to get
by. This aspect of financial well-being was mentioned the most often in the qualitative
interviews.
Individuals who have a relatively high level of financial well-being also have the capacity to
absorb a financial shock. Because their family and friends provide a support system and/or they
have savings and/or insurance of various types, their lives would not be up-ended if their car or
home needed an emergency repair or if they were laid off temporarily from their job. They are
able to cope with unforeseen life events.
Individuals experiencing financial well-being also believe that they are on-track to meet their
financial goals. They have a financial plan and they are actively working towards goals such as
saving to buy a car or home, or pay off student loans.
Finally, individuals experiencing financial well-being perceive that they are able to make choices
that allow them to enjoy life. They can splurge once in a while. They can afford a few “wants”,
such as being able to go out to dinner or take a vacation, in addition to meeting their “needs,”
and they are able to be generous toward their friends, family and community.
Support from the literature
Overall, the literature on financial well-being is limited, therefore there was little in the way of
previous research for the research team to draw on in developing its definition of financial wellbeing. Strumpel (1976) suggests that financial well-being encompasses satisfaction with income
and savings, perceptions of opportunity, ability to make ends meet, a sense of material security,
and a sense of fairness in the rewards distribution system. Our definition references contextual
factors less mainly because consumers mentioned them infrequently in their personal
definitions of financial well-being.
Porter and Garmen (1993) propose that financial well-being “depends not only upon objective
and subjective measures of the financial situation, but also on how a person perceives objective
attributes of the financial situation after comparing those attributes against certain standards of
comparison” (1993, p. 136). The financial well-being scale we develop will largely be based on
self-assessment; it will therefore be heavily influence by personal perception. Our qualitative
research indicated, however, that individuals are not similarly influenced by ‘standards of
comparison’—interviewees often talked about the importance of learning to resist the
temptation to keep up with the Joneses. Adding ‘the propensity to measure oneself by one’s
own yardstick’ to our list of drivers of financial well-being provides more nuanced insight into
this comparative aspect of financial well-being.
Researchers have tended to infer financial well-being from engagement in particular financial
behaviors such as managing credit cards well (Allgood and Walstad 2011), acquiring financial
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knowledge (Atkinson and Messy 2012), knowing mortgage terms (Bucks and Pence 2008),
avoiding mortgage delinquency or foreclosure (Gerardi et al. 2010), participating in employeroffered retirement plans (Bayer et al. 2009, Duflo and Saez 2003, 2002, Hung et al. 2009), and
financial market participation (Cole et al. 2009). Some authors have suggested a relationship
between happiness and financial well-being (Oswald 1997) and between self-confidence and
financial well-being (Bearden et al. 2001). Our research adds to this work by defining and
measuring financial well-being directly rather than by inferring it from financial behaviors.
Two of the dimensions of the consumer-based definition of financial well-being proposed in this
paper are discussed in the existing literature, although not as a unified concept and not in direct
reference to financial well-being. Being in control of one’s finances is closely related to the
concept of financial self-efficacy. Lown (2011) describes financial self-efficacy as a person’s
confidence in his/her ability to manage finances without being overwhelmed, including
consumer assessments of confidence in ability to manage finances, perceptions of ability to
achieve financial goals and ability to stick to a spending plan. The capacity to absorb economic
shocks also has parallels in current research on financial resilience and financial fragility (Lusardi
et al. 2011).

PERSONAL CHARACTERISTICS AND ATTITUDES
We developed several hypotheses regarding the personal characteristics most likely to affect
financial well-being.
Individuals who have a higher propensity to plan and are more future-oriented are more likely
to experience financial well-being than are individuals who are ‘living day-to-day.’
The literature generally assumes that patience (i.e. higher discount factors) and greater
propensity to plan will encourage behaviors such as retirement planning, savings and more
judicious use of credit cards, from which higher levels of financial well-being can be inferred
(Meier and Sprenger 2009, Lynch et al. 2010).
In the qualitative interviews, consumers and practitioners averred that “planners” and future
oriented individuals are more likely to achieve financial well-being. Several individuals also
talked about how their own transition from living day-to-day in their youth to becoming more
future oriented adults was a critical part of their achieving a higher level of financial well-being.
Driven, hardworking, conscientious individuals are more likely to experience financial wellbeing than are less motivated individuals.
A large proportion of consumers felt that individuals that were driven, or hardworking, were
likely to have high levels of financial well-being, primarily because these characteristics, perhaps
separately or in combination, are likely to translate into professional success and a higher level
of income. Conscientiousness is a “Big Five” personality factor for which there are very welldeveloped metrics. It can be described as direction, or “the purposefulness and adherence to
plans, schedules, and requirements” (McCrae and Costa 1987, p.88). Others have labeled it as
self-control or self-regulation (Heckman 2007). Past research has demonstrated that personality
factors, to include conscientiousness, moderately predict subjective well-being (Ozer and BenetMartínez, 2006). Also, conscientiousness has been shown to correlate with a propensity to plan
(Lynch et al, 2010).

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Although conscientiousness may be associated with specific traits or characteristics such as
“driven” and “hardworking”, from our analysis of consumer and financial practitioner
interviews, it remains to be seen exactly how these characteristics are related to each other for
any one individual. We therefore anticipate measuring these characteristics separately to assess
how they are related to each other and to financial well-being.
Individuals who possess self-control and are able to delay gratification are more likely to
experience financial well-being than individuals with weaker self-control.
Researchers have found that the ability to delay gratification is associated with a range of
positive life outcomes (Shoda et al. 1990). During the qualitative interviews, consumers and
practitioners talked a lot about the importance of patience and the ability to resist temptation
particularly in conjunction with saving. Further, an inability to delay gratification has been
shown to override the positive effects of being future oriented (Anong and Fisher 2013). This
latter finding underscores the complex interplay of various personal characteristics.
Individuals who ‘measure themselves by their own yardsticks’ using an inward frame of
reference rather than by comparing themselves to others are more likely to experience
financial well-being.
Persons with an inward/internal frame of reference may have higher levels of financial wellbeing than individuals with an outward/external frame of reference. Persons who are not trying
to ‘keep up with the Joneses’ are more likely to be content with what they are able to afford
than are persons who seek validation from others by attaining coveted material goods (Moschis
1981, Ward 1974, Wong 1997).
The theme of being able to resist the pressure to keep up with the Joneses came up often in the
qualitative interviews and many felt their own ability to resist this pressure was critical to their
financial well-being both because it made it easier for them to save and because they felt they
could be happy with less. The academic literature provides a number of explanations for
“keeping up with the Joneses” to include caring about how one’s income compares to others
(reference-income or rank-income hypotheses; Boyce et al. 2010), materialism being influenced
by image management (Wong 1997), or social motivation rather than economic motivation for
consumption (Moschis 1981).
Individuals who are more self-confident and have higher levels of self-efficacy are more likely
to experience financial well-being.
Practitioners and consumers pointed out that those who felt as if they could affect their
circumstances and create a better life for themselves were more likely to engage in financial
behaviors that had a high probability of producing that life. Research has shown that investment
knowledge confidence has been found to be a reliable individual predictor of investing selfefficacy (Chen et al. 2001), and that some households avoid certain assets (e.g., stocks) because
they are aware they lack the skills to invest efficiently (Campbell 2006). Further, working adults’
investment knowledge and knowledge confidence are reliably related, but investment
knowledge itself was not a reliable individual predictor of investing self-efficacy. However,
overconfidence can be a problem, leading consumers not to seek information and encouraging
riskier decisions (Hadar et al. 2011, Barber and Odean 2011). Because of the various ways that
confidence has been researched, it may be particularly useful to distinguish between general
confidence and financial self-confidence in the next stage of scale development to better inform
this hypothesis.

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FINANCIAL KNOWLEDGE
Financial knowledge is what one needs to know in order to navigate one’s financial life in
support of one’s life objectives. Financial knowledge may be both conscious and non-conscious.
Non-conscious knowledge would include automatic routines that are activated by a particular
decision or circumstance with little conscious thought. For example, someone raised in a family
where home ownership was the norm will have a lot of non-conscious knowledge regarding
what’s involved with purchasing a home that they would not think to mention if asked what one
needs to know in order to buy a home. Both the literature and the qualitative interviews suggest
that explicit factual financial knowledge, such as knowing the difference between a stock and a
bond, has little effect on financial well-being. Instead it’s the ability to do just-in-time financial
research well in parallel with these stored automatic routines and tacit knowledge that drives
financial well-being.
Our qualitative analysis of consumer and practitioner interviews and review of the literature
identified two potential knowledge-related drivers of financial well-being:
Individuals who know how to do financial research will have higher levels of financial wellbeing. Being able to do financial research involves knowing the following:
a. when it is helpful to seek financial knowledge;
b. how to acquire reliable financial knowledge;
c. how to figure out which behaviors/choices are likely to improve one’s financial
well-being and why; and
d. how and when to engage in financial behaviors.
When: One must first know when to seek financial knowledge—persons who are over-confident
in their financial knowledge and/or who are unable to perceive when additional knowledge
would be helpful may not seek financial knowledge when it would improve their financial wellbeing. In today’s world, financial knowledge is often acquired “just-in-time” before making
specific financial decisions. Therefore knowing when to look for more information is critical.
How: Once persons are able to recognize that they would benefit from additional financial
knowledge, knowing how and where to do financial research is critical. Financial research
includes an array of activities including comparison shopping, finding out about the programs
and resources available in one’s community or workplace, understanding the steps one needs to
undertake in order to invest, etc. Individuals who have people they trust in their personal
networks (family members, friends, financial advisors, etc.) who have financial expertise and can
be consulted on a variety of personal finance-related topics will likely have a higher level of
financial well-being.
Why: Persons who know that having an emergency savings fund, setting financial goals,
budgeting, etc. are important, who are able to envision or have experienced the consequences
of engaging in these behaviors (and are therefore likely to be more motivated to engage/persist)
and understand that not engaging in these behaviors exposes themselves to risk are more likely
to have financial well-being. Skills such as numeracy assist in better understanding the
consequence of financial behaviors. For example, the ability to calculate compound interest
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helps one to understand the value in saving large sums of money early in life and may
incentivize this behavior.
How and when to engage in financial behaviors: Understanding WHAT to do is one thing,
understanding HOW and WHEN to do it is another. “How” encompasses knowing the
appropriate steps to take to achieve a financial goal—for example, knowing how to open a
savings account. “When” implies understanding how to optimally time one’s actions—for
example, in most cases the earlier in life one starts to save for retirement, the better. This
knowledge may be conscious or non-conscious.

ABILITY TO TRANSLATE KNOWLEDGE INTO BEHAVIOR
Individuals who are high in financial knowledge and trust their financial knowledge (but are
not over-confident in their financial knowledge) are more likely to experience financial wellbeing.
Having financial knowledge isn’t enough, one most also trust that knowledge in order to have a
sense of self-efficacy.
Individuals who act upon their financial knowledge are more likely to experience financial
well-being
This is closely related to the final financial knowledge hypothesis in that it involves the actual
implementation of the knowledge necessary to achieve high levels of financial well-being.

FINANCIAL BEHAVIOR
Financial behavior includes the actions and decisions that influence one’s current and future
financial well-being. The literature review and qualitative analysis of consumer and practitioner
interviews identified four potential behavior-related drivers of financial well-being:
Individuals who effectively manage their resources on a day-to-day, month-to-month basis
will have a higher level of financial well-being.
Persons who stay on top of their bills each month, are able to manage their debt or have no
debt, live within their means, etc., are more likely to have a higher level of financial well-being.
The literature shows that financial capability, defined as the ability to control and manage one’s
own finances, is positively related to the propensity to save and save regularly, household
income in later years, and to life satisfaction (Taylor 2011). Other research indicates that greater
financial knowledge was associated with better cash-flow management, credit management,
savings, investment, and other money management behaviors (Hilgert, Hogarth, and Beverly
2003).
The qualitative research yielded many behaviors that may positively impact financial well-being.
However, most consumers indicated that simply being able to manage the day-to-day things like
budgeting or using credit was most important to their financial well-being. Most consumers
when first asked to define financial well-being said that it was not having to worry about paying
your bills or being able to afford the basics. Consumers and practitioners both agreed that
making sure that you had enough to meet your monthly obligations started with managing one’s
resources on a day-to-day basis.

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Individuals who plan ahead and have financial goals will have a higher level of financial wellbeing.
Persons who have plans in place to weather illness, layoffs, etc., will have a higher level of
financial well-being, as will individuals who save and have financial goals. This hypothesis is
closely tied to some of the personal characteristics and attitudes hypotheses.
Consumers and practitioners both emphasized the importance of having clear and realistic
financial goals. The importance of having a goal is critical in the process of identifying and
evaluating financial behavior was a common theme in the qualitative research. Regardless of
what the goal is, people tended to seek out knowledge and choose behaviors that best allow
them to reach their goals. The qualitative research indicates that deliberately planning for the
future and developing longer-term goals encourages consumers to engage in behaviors that
positively impact their financial well-being. Further, the literature has shown that planning can
help override competing self-control tendencies (Lynch et al, 2010, Laibson 1997, Wertenbroch
1998). Financial planning also affects wealth accumulation (Ameriks, Caplan and Leahy 2003)
and promotes greater satisfaction in retirement (Elder and Rudolph 1999).
Behavioral intention has been put forth as the most important factor in preventing risky credit
behaviors and credit card debt accumulation to college students (Xiao et al, 2011). Further,
attitudes toward planning for the future are related to financial capability (Atkinson et al, 2007).
Individuals who actively seek out financial knowledge will engage in financial behaviors that
improve their financial well-being.
Persons who shop around for the best deal, read financial blogs, seek out a financial advisor and
use their spouse (if their spouse is a good financial partner) for a sounding board before making
financial decisions will have a higher level of financial well-being. This hypothesis is closely tied
to knowing when and how to acquire reliable financial knowledge.
The qualitative research suggests that financial knowledge and financial behavior are tightly
interconnected. Behavior is guided by both conscious and nonconscious financial knowledge.
Consumers and practitioners both agreed that the process of actually doing research leads
people to make better financial decisions and, thus, engage in better financial behaviors.
Individuals who act upon their financial knowledge, and make informed decisions about
purchases and financial products, will have higher levels of financial well-being.
Persons who have a savings account, a retirement account in which they invest, who have
secured a mortgage with reasonable terms if they own their home, etc., will have higher levels
of financial well-being. Testing this hypothesis will likely involve many objective financial
capability metrics such as ownership of a savings account, 401K plan, etc., and will require
taking into account the fact that some individuals have better financial product options to
choose from than others as a result of where they work or live.
The qualitative research demonstrated that there is often a gap between people’s intentions
and their actions. Simply knowing what one should do was not enough to achieve financial wellbeing. Consumers and practitioners both indicated that while seeking out financial information
is important, people have to act on that knowledge. The qualitative research suggests that a
major part of this process is persisting in financial behavior. For example, opening a 401(k) is not
enough to save for retirement—an individual must invest and put money into that account over
the span of many years before that account significantly impacts their financial well-being.
Financial behaviors are not singular actions, but comprise many decisions that consumers make
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every day. Engaging in a particular behavior and evaluating whether that behavior fits one’s
particular needs greatly influences how a behavior impacts an individual’s overall financial wellbeing.
An example from the literature demonstrating a nuanced interaction of knowledge and behavior
comes from Hader, Sood, and Fox (2011). They showed that individuals with higher subjective
knowledge are more likely to say they would join a 401K plan, understand 401K plans, and
choose riskier investments (with higher long-term returns) than those with lower subjective
knowledge (Hader, Sood, and Fox 2011). Another example showcases the impact of time
between financial learning and financial behavior (Fernandes et al. in press). Here, the authors
demonstrate that with longer delays between learning and behavior, relevance of the
information goes down and the likelihood of forgetting the information increases. Learning
financial information “just in time” for a particular behavior (i.e., securing a car loan) increases
the likelihood of success.

CONTRIBUTION TO THE FIELD AND TO THE WORK OF THE PROJECT GOING FORWARD
This report offers a definition of financial well-being informed by what consumers feel the
concept means to them personally. We arrived at that definition first by reviewing the financial
well-being literature (to find that very little headway has been made in defining it), then by
interviewing consumers around the country to discover how they define financial well-being.
Despite marked differences in the ethnicity, socio-economic status and geography of those
interviewed, high levels of financial well-being equated to a remarkably similar list of conditions
for most individuals: being in control of one’s finances, having the capacity to absorb a financial
shock, being on track to meet financial goals and being able to make the choices that allow one
to enjoy life. Further, the proposed definition of financial well-being describes both older
Americans’ and working-age Americans’ perceptions of the concept.
Our process necessarily began with defining financial well-being. To date, our project has
delivered a proposed definition grounded in expert opinion, the existing literature and, most
importantly, the voice of the consumer. With a well-grounded working definition in hand, we
developed testable hypotheses regarding a set of personality-, knowledge- and behavior-linked
forces that we identified as potential drivers of financial well-being. Those hypotheses build on
key insights that emerged from both the published literature and our qualitative research:
•

The personal-characteristic and behavioral drivers of financial well-being, like the
components of financial well-being itself, include short-term (present) and longer-term
(future) considerations. The importance of an individual’s capacity to manage day-today affairs of the present as well as plan for the future is evident in both the behavior
and personality-characteristic-related hypotheses. Setting and making progress towards
financial goals is a particularly important future-oriented behavior. Financial goals
motivate people to delay gratification, to save and to seek financial knowledge.

•

The literature and the qualitative interview results suggest that factual knowledge has
little effect on financial well-being. Instead, individuals need to know how to pursue
financial research as needed—including when to undertake such research, where to go
to get information and how to evaluate and act on the information acquired. This
finding frames aspects of both the knowledge and behavior related hypotheses.

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•

Financial knowledge does not necessarily translate into financial behavior—or to
subsequent financial well-being. Our hypotheses examine the dynamics of this
translation explicitly.

•

One’s personal networks, socio-economic circumstances and upbringing profoundly
influence one’s access to financial knowledge, acquisition of financial skills, habits and
norms and development of attitudes and personal characteristics.

•

Finally, the knowledge, behaviors and personal characteristics that influence financial
well-being are part of a compensatory system in that weakness in one area (knowledge
of budgeting, for example) can be counter-balanced by strength in another (being a
generally frugal person).

This report provides an evidence-based, clearly articulated definition of financial well-being that
has the potential to provide the field with greater directionality both in future research and in
policy. There is still much to learn, however. The hypotheses proposed in this report need to be
tested and further refined. Scales need to be developed or identified in the literature so that the
concepts we have articulated can be measured accurately and reliably. Further, additional
research needs to be done to understand how social and environmental factors, the decision
context and the availability of opportunities affect financial well-being. It is our hope that this
research will help to lay the groundwork for a range of future efforts to better understand
financial well-being and its drivers.

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APPENDIX A: LITERATURE REVIEW

Financial Education Metrics Development
Summary of Findings from Literature
Working-Age Americans

OBJECTIVES
This review of the literature shows that the financial well-being literature is in its infancy,
primarily due to a lack of clear definitions, but also because it does not yet identify causal
effects. The literature lacks clear, consensus definitions of the concepts of financial knowledge
and financial behavior, both primary drivers of financial well-being. Also, the field has yet to put
forward a definition of financial well-being. The absence of widely accepted definitions for these
three constructs hampers the development of valid and reliable measures for all three areas.
Measures of financial behavior are the furthest along, but they are still not well-established. In
general, the literature finds that less financial knowledge is associated with suboptimal financial
behavior. By and large, the literature does not directly measure financial well-being, but rather,
infers lower financial well-being from suboptimal financial behaviors.
This literature review draws from fields such as economics, psychology, consumer science, and
sociology to summarize (a) definitions of financial knowledge, behavior, and well-being used in
the literature, (b) what is known about how financial knowledge relates to financial well-being
and/or financial behavior, (c) the importance of personal traits and social context, and (d) gaps
in knowledge.

DEFINITIONS OF FINANCIAL KNOWLEDGE, BEHAVIOR, AND WELL-BEING IN THE
LITERATURE
One step toward better understanding how financial knowledge and financial behavior affect
financial well-being is to look at how researchers have defined each of these concepts.
Researchers use varied definitions for “financial knowledge” and sometimes use the term
interchangeably with the term “financial literacy.” Some studies reviewed, however, provide a
conceptual discussion of financial literacy, and there appears to be a growing consensus that in
addition to a knowledge or information component, financial literacy has an action
component—that is, the ability to put financial knowledge to use. Financial behavior is often
described not as a concept but as a list of actions related to money management, the most
common being retirement planning, credit card usage, mortgage decisions and mortgage
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delinquency, cash flow management and savings, and investments. The literature offers little in
the way of defining financial well-being. For the most part, financial well-being is inferred from
positive financial behaviors or knowledge.
Below we summarize how financial knowledge, financial behavior, and financial well-being have
been defined in the literature. Under each of these three concepts, we describe how the
literature has conceptually defined and operationalized the measures.

DEFINITIONS OF FINANCIAL KNOWLEDGE AND FINANCIAL LITERACY
CONCEPTUALIZATION
The terms financial knowledge, financial literacy, financial capability, and numeracy are often
used interchangeably. Definitions of these concepts are typically not provided. Huston (2010)
finds that roughly 70 percent of studies of financial knowledge or financial literacy gave no
definition. Studies that do propose a definition tend to focus on financial literacy. As the
definitions listed below indicate, financial literacy is often seen as having both a knowledge and
action component. While various definitions have been proposed, empirical studies tend to
select a portion of the concept definition for their purposes, working backwards from the data
they have available to indicate the level of literacy or knowledge. Examples of definitions of
financial literacy are as follows:
•
•

•
•
•

The President's Advisory Council on Financial Literacy defines financial literacy as “the
ability to use knowledge and skills to manage financial resources effectively for a
lifetime of financial well-being” (Knoll and Houts 2012, p. 405).
Remund (2010) defines financial literacy as “the degree to which one understands key
financial concepts and possesses the ability and confidence to manage personal finances
through appropriate short-term decision-making and sound long-range financial
planning, while mindful of life events and changing economic conditions” (p. 284).
Hilgert, Hogarth, and Beverly (2003) directly connect financial knowledge to financial
behavior, saying that knowledgeable consumers “make good decisions for their families
and thus are in a position to increase their economic security and well-being.”
Mason and Wilson (2000) define financial literacy as “an individual’s ability to obtain,
understand and evaluate the relevant information necessary to make decisions with an
awareness of the likely financial consequences” (p. 31).
Huston (2010) defines financial literacy as a measurement of “how well an individual
can understand and use personal finance-related information” (p. 306). This work
distinguishes between financial knowledge and financial literacy. Financial knowledge is
the “stock of knowledge acquired through education and/or experience specifically
related to essential personal finance concepts and products,” while financial literacy has
an “application dimension.”

OPERATIONALIZATION
Two approaches are taken to measure financial knowledge, sometimes in combination:
objective (or actual) knowledge measured through a test instrument, and subjective (or
perceived) knowledge measured through a self-assessment of one’s level of mastery of financial
matters. These two approaches can produce different estimates of knowledge. In some cases,
perceived financial knowledge has been found to be highly correlated with and work together
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with objective financial knowledge (Allgood and Walstad 2011; Perry and Morris 2005). In other
cases, however, perceived financial knowledge has been equated with overconfidence (Shim
and Serido 2011; Perry 2008). Below we describe objective and subjective measures of financial
knowledge used in the literature.
O BJECTIVE / ACTUAL MEASURES OF FINANCIAL KNOWLEDGE
Current objective measures of financial knowledge or literacy range from a very small number of
questions to batteries of up to 70 questions. Some questions capture domains of household
finance (e.g., time value of money, inflation), while others capture people’s ability to process
numerical concepts. Numeracy is also used for measurement today, with a number of the
current scales resembling math tests. Less common are measures that attempt to capture
knowledge about what responsible financial behaviors are, such as rules of thumb for credit
card use or savings habits. Some numeracy questions have financial concepts embedded in
them (e.g., inflation and interest rate calculations), while others do not. There are scales (or
items within scales) which assess a consumer’s knowledge of financial concepts without
requiring a mathematical calculation to obtain the correct response (e.g., risk, inflation,
mortgage repayment). These scales attempt to measure the knowledge component of financial
literacy but rarely address the component dealing with action or demonstrated ability.
Operationalized domains and numeracy measures are summarized below.
Domain measures: Measures of financial knowledge that incorporate domains of household
finance vary both in terms of the domains captured and the number of questions. Measures
range from those based on as few as three questions that capture compound interest and
percent calculations to measures that are based on a battery of 70 questions that capture
financial sophistication. The reviewed literature includes the following measures, presented in
order from the fewest to the most questions:
•
•
•
•

•
•
•

Ability of consumers to correctly perform three computations: (1) compound interest,
(2) percentage calculation, and (3) lottery division (Lusardi and Mitchell 2007).
A five-item survey covering interest rates, inflation, bond price, mortgage, and risk
(Allgood and Walstad 2011).
An eight-item survey covering the following core domains: division, time-value of
money, interest paid on a loan, calculation of interest plus principle, compound interest,
risk and return, definition of inflation, and diversification (Atkinson and Messy 2012).
Two sets of questions: basic concepts such as numeracy, compound interest, inflation,
time value of money, and inflation/money illusion (5 items) and sophisticated concepts
including the link between interest rates and bond prices, safety of company stock
versus mutual funds, relative risk of stocks vs. bonds, long-term returns,
fluctuations/volatility, and risk diversification (8 items) (Lusardi and Mitchell 2009).
A 20-item scale covering a wide range of topics including interest rate, inflation, time
value of money, investing, diversification of risk, housing, debt management, retirement
savings, life insurance, annuities, and housing (Knoll and Houts 2012).
A 28-item true/false battery of questions (e.g., cash flow management, investment
management, etc.) that examine and then demonstrate the importance of total and
domain-specific measures of knowledge (Hilgert et al. 2003).
A roughly 70-item true/false battery of questions measuring knowledge of basic to
sophisticated financial concepts including portfolio diversification, compound interest,
and institutional knowledge (Parker et al. 2012; Delavande et al. 2008).
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Numeracy measures: In some instances, measures that are intended to assess financial
knowledge or literacy are solely measures of numeracy, the ability to process basic probability
and numerical concepts. The literature relies less on these pure numeracy measures. Again, the
measures differ in terms of number of questions, from just a few about percent calculation to an
11-item quiz that captures probability, risk, and basic math.
•
•

Five-item scale of numerical ability developed by Banks and Oldfield (2007) (Gerardi et
al. 2010).
11-item numeracy quiz developed by Lipkus et al. (2001) (Soll et al. 2012; Peters et al.
2006).

S UBJECTIVE / PERCEIVED MEASURES OF FINANCIAL KNOWLEDGE
Assessing subjective financial knowledge involves asking consumers to rate themselves on how
much they know. This can be based on a single question aimed at assessing overall financial
knowledge. For example, “On a scale from 1 to 7 […], how would you assess your overall
financial knowledge?” (Allgood and Walstad 2011). Subjective financial knowledge can also be
domain specific, where consumers are asked to rate their knowledge in specific areas. In Perry
and Morris’s (2005) study, consumers assess their financial knowledge on a five-point scale
(nothing, very little, some, a fair amount, a lot) in five areas: (1) interest rates, finance charges
and credit terms, (2) credit ratings and credit files, (3) managing finances, (4) investing money,
and 5) contents of their credit report.

DEFINITIONS OF FINANCIAL BEHAVIOR
CONCEPTUALIZATION
The existing literature typically provides lists of financial behaviors rather than a conceptual
definition of such behavior. In general, financial behavior has been described as "the
management of personal finance" (Cude 2010) or as "household finance" (Campbell 2006). The
most common behaviors that are included in this category are retirement planning, credit card
usage, mortgage decisions and mortgage delinquency, cash flow management and savings, and
investments.

OPERATIONALIZATION
Measures of financial behavior range from household behavior in a single domain (e.g., credit
card usage) to household involvement/choices across a set of domains (e.g., cash flow
management to investments and buffers against risk). Financial behavior measures include selfreported involvement or performance, actual choices from administrative data, or a
combination. Below we describe the more comprehensive measures of financial behavior,
followed by the more targeted financial behaviors, which are grouped into the five categories
mentioned above.
C OMPREHENSIVE MEASURES OF BEHAVIOR
Some measures of financial behavior incorporate different domains to develop a more complete
measure of behavior. These more comprehensive measures tend to combine money/credit
management and planning along with savings, although there are differences across measures
used in the literature. Dew and Xiao (2011) argue that measures of financial behavior should
recognize that households at different stages in life and finances will have different
configurations of behaviors. Four articles reviewed use the following measures:
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•
•
•
•

Atkinson et al. (2007) examine four domains—managing money, planning ahead,
choosing products, and staying informed—measured with 17 questions. These domains
capture several areas including planning for future needs and having a savings cushion.
Hilgert et al. (2003) examine five categories of behaviors: cash-flow management, credit
management, savings, investment, and other.
Perry and Morris (2005) use a five-point scale (poor, fair, okay, good, excellent) to
measure behavior in five areas: controlling spending, paying bills on time, planning for
financial future, providing for self and family, and saving money.
Collins et al. (2008) examine five categories: financial capability (having and using a bank
account, number of credit cards owned and whether paid off each month), credit score,
net worth, buffers against risk (having insurance, emergency savings, and a support
network), and income.

R ETIREMENT PLANNING
Metrics of retirement planning vary, with some measuring concrete items such as actual
retirement savings and some investigating vaguer concepts, such whether a person has ever
made a plan for retirement.
More concrete measures are offered by Bayer et al. (2009) as well as and Duflo and Saez (2002,
2003), all of whom consider the take-up of an employer-offered retirement plan. Additionally,
Bayer et al. (2009) measure the change in the retirement contribution rate. Lusardi and Mitchell
(2007) use wealth accumulated for retirement as a metric for this area.
Less specific measures include whether or not a person has planned for retirement (Lusardi and
Mitchell 2007) and whether or not a person has tried to save for retirement or has ever made a
plan for retirement (Hung et al. 2009). Also, Lusardi and Mitchell (2009) assess retirement
planning by asking, “How much have you thought about retirement?” (a lot, some, a little,
hardly at all). Lynch et al. (2010) developed and tested a scale of propensity to plan, finding that
those generally with higher propensity to plan for the use of their money over the next one to
two years tend to engage positive financial behaviors and make more responsible financial
decisions.
C REDIT CARD USAGE
All of the reviewed articles that address credit card behavior use credit card balance as a metric.
Two of the articles look at whether people carry over balances from month to month (i.e., do
not pay off the balance in full in a given month), while another looks at whether self-reported
credit card balances align with actual balances (they do not). The three articles use three slightly
different metrics:
•

•
•

Allgood and Walstad (2011) rate credit card usage according to the presence (or
absence) of five credit card behaviors: (1) paying credit card balances on time, (2)
carrying over a balance and paying interest, (3) making only the minimum payment, (4)
being charged a late fee, and (5) going over the credit card limit.
Soll et al. (2012) use frequency of card use, number of cards, and carrying over a
balance as a metric.
Brown et al. (2011) compare self-reported credit card rates and card balances to actual
credit card rates and balances.

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M ORTGAGE DECISIONS / DELINQUENCY
Behaviors with respect to mortgages do not appear widely in the literature reviewed. One
article considers mortgage delinquency, examining the percent of time in delinquency, the
fraction of mortgage payments missed, and the initiation of foreclosure (Gerardi et al. 2010).
Campbell (2006) looks more generally at household mortgage decisions, including whether
households had a fixed rate or adjustable rate mortgages and the propensity to refinance.
C ASH FLOW MANAGEMENT AND SAVING
Metrics to assess how people track their money include those that measure (1) whether or not a
person engages in a certain kind of behavior (such as budgeting), (2) whether they successfully
engage in a behavior (such as spending within a budget), (3) frequency of a behavior, and (4)
propensity for certain types of behavior.
•

•
•

Metrics that measure if individuals engage in certain behaviors and if they do so
successfully include tracking expenses, checking account access, spending within
budget, spending, and savings pattern (Shim and Serido 2011). Hilget et al. (2003)
measure participation in five types of financial behaviors: cash-flow management, credit
management, savings, investment, and other. Bucks and Pence (2008) examine whether
people made a late payment last year or filed for bankruptcy, 3 while Perry and Morris
(2005) use a five-point scale (poor, fair, okay, good, excellent) in five areas: controlling
spending, paying bills on time, planning for financial future, providing for self and family,
and saving money.
Perry (2008) uses a metric based on frequency of behavior: how often respondents
follow a budget and how often they save. Taylor (2011) looks at whether individuals
save on a regular basis and whether those savings are long-term.
Lynch et al. (2010) measure propensity to plan, as well as actual behavior. In addition to
the six-item scale measuring propensity to plan money (short run and long run), the
authors employ a frugality scale, impulse buying scale, and a tightwad-spendthrift scale,
and assess coupon proneness, financial planning, money planning follow-through,
budgeting plans, and coupon use.

I NVESTMENT
Investment behavior is measured differently across the articles reviewed, with some metrics
based on actual behavior and some on hypothetical behavior.
•
•
•

Cole et al. (2009) measure investment behavior based on whether or not an individual
has reported any positive investment income on the Census long form.
Campbell (2006) measures investment activity by asset allocation and the diversification
of investment portfolios.
Hadar et al. (2011) use a hypothetical metric that captures the choice of hypothetical
investment options (risky vs. safe).

3

Bucks and Pence (2008) also examine whether people comparison shopping when making financial decisions and if
they did not apply for credit because they thought they would be turned down.
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DEFINITIONS OF FINANCIAL WELL-BEING
CONCEPTUALIZATION
In the studies reviewed, financial well-being was rarely described or measured. Most often it
was inferred from the behaviors or, on occasion, knowledge, of consumers. Well-being is usually
addressed as an objective state—that is, one that results from responsible financial behaviors—
rather than a subjective state in which an individual feels in control of his or her finances.

OPERATIONALIZATION
Financial well-being was not operationalized in the studies reviewed. Rather, the literature
discusses well-being in the following ways:
•
•
•
•

Consumer welfare is inferred from better decisions related to credit card usage (Allgood
and Walstad 2011).
Well-being inferred from higher levels of financial literacy, knowledge, and positive
financial behaviors (Atkinson and Messy 2012).
Well-being inferred from whether the borrower knows their mortgage terms (Bucks and
Pence 2008) and from mortgage delinquency or foreclosure (Gerardi et al. 2010).
Taking up an employer-offered retirement plan is assumed to improve financial security
(Bayer et al.2009; Duflo and Saez 2002, 2003; Hung et al. 2009) and financial market
participation is assumed to support well-being through an increased accumulation of
assets (Cole et al. 2009).

One paper reviews a different approach by examining happiness (or subjective well-being) and
assessing the assumption that financial success leads to well-being (Oswald 1997). They find that
in developed nations, economic progress buys only a small amount of extra happiness. Another
paper develops a scale to measure consumer self-confidence, arguing that there may be a
relationship between levels of consumer self-confidence and financial well-being (Bearden et al.
2001). The authors find that consumer confidence is associated with subjective product
knowledge.
There are other literatures that examine general life satisfaction. While some studies recognize
the importance of personal financial circumstances in life satisfaction, they have not explored
the relationships between financial knowledge, financial behavior, and life satisfaction.

WHAT IS KNOWN ABOUT SPECIFIC KNOWLEDGE THAT PREDICTS FINANCIAL BEHAVIOR?
WHAT SPECIFIC KNOWLEDGE AND BEHAVIOR PREDICT FINANCIAL WELL-BEING?
The literature documents associations between financial knowledge and financial behaviors. In
general, higher levels of financial knowledge are associated with better financial decisions and
behavior. However, a recent meta-analysis of this research (Fernandes et al. in press)
demonstrates that this relationship may disappear when controlling for various personality
traits, such as long-term money planning and willingness to take investment risk. While more
research is needed to understand the role of personality traits in financial behavior/well-being,
this article suggests that omitting these variables from empirical analyses may have important
implications for the findings. Also, the literature does not identify causal effects. In other words,
the studies do not provide evidence that increasing the financial knowledge of Americans will
improve their financial decisions, although many studies infer this. Furthermore, the literature
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does not directly examine the relationship between financial knowledge/behaviors and financial
well-being. Rather, it generally infers financial well-being from financial behaviors (e.g.,
suboptimal financial behaviors are assumed to reduce financial well-being).
Specific studies vary in their operationalization (and conceptualization) of financial knowledge
and behavior. The summary below incorporates articles that examine knowledge of financial
domains and those that examine numeracy measures, organized by the specific financial
behaviors.

RETIREMENT
Higher levels of objective and subjective financial knowledge are associated with greater
retirement planning. Subjective knowledge is also positively associated with the intent to save
for retirement.
In terms of objective financial knowledge, Lusardi and Mitchell (2007) find that individuals with
a greater knowledge of compound interest are more likely to have planned for retirement. On
the other hand, knowledge of percentage calculation and lottery division are not associated
with better retirement planning. In a follow-up paper, the authors have similar findings in which
scores on financial literacy indices are positively associated with amount of retirement planning,
holding constant other determinants of planning (age, education, income, etc.) (Lusardi and
Mitchell 2009). In a similar vein, Hung et al. (2009) find that financial literacy is positively
associated with attempting to save for retirement and with planning for retirement, but not
with actual 401k balance.
An analysis of subjective knowledge finds that people with higher subjective knowledge are
more likely to say they would join a 401k plan when eligible (Hadar et al. 2011).

CREDIT CARDS/CREDIT MANAGEMENT
The ability to manage credit has implications for financial well-being and the literature shows
that lower financial knowledge is associated with worse credit management.
Allgood and Walstad (2011) find that higher levels of actual and perceived financial knowledge
are related to paying credit cards on time and in full, although perceived financial knowledge
has a stronger relationship than actual knowledge. Other research has shown that limited
financial knowledge is associated with incurring higher costs in credit card usage. Lusardi and
Tufano (2009) find that lower levels of debt knowledge—understanding the costs of compound
interest and how long it would take to pay off a balance making only minimum payments, for
example—are associated with paying higher credit card charges and fees. The authors estimate
that less knowledgeable borrowers pay about 50 percent higher fees than the average
cardholder, and that as much as one third of the charges and fees paid by these borrowers are
due to a lack of knowledge and not their different socioeconomic characteristics.
Financial knowledge is also related to credit scores, and greater numeracy ability is associated
with a better understanding of how credit products work. Perry (2008) finds that those with low
levels of financial knowledge, measured via a 15-item quiz and a subjective assessment of one’s
personal credit record, are more likely to overestimate their credit score, and that people who
overestimated their score were less likely to budget or save. In terms of numeracy, Soll et al.
(2012) show that those with high numeracy scores are better at predicting balance payoff times
and what happens when payments barely cover interest charges. They also find that less
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numerate individuals underestimate minimum payments more so than more numerate
individuals. In terms of understanding the workings of credit cards and interest compounding,
only about one-third of the population is estimated to do so (Lusardi and Tufano 2009).
A more severe measure of credit problems—filing for bankruptcy—is associated with worse
financial choices. Warren et al. (2000) report that bad financial management was among the
most important five reasons reported by U.S. borrowers for filing bankruptcy. Chakravarty and
Rhee (1999) find that among people who filed for bankruptcy, around 40 percent stated credit
misuse as the reason.

MORTGAGE DECISIONS/DELINQUENCY
Poor numerical ability is related to increased mortgage delinquency, while “economic
knowledge”—as measured by a two-item financial literacy scale—is not. 4 Specifically, Gerardi et
al. (2010) find that correctly answering the economic knowledge questions is not significantly
related to mortgage delinquency, but that poor numerical ability is associated with increased
mortgage delinquency, regardless of FICO score, socio-demographics, time and risk preferences,
labor market volatility, mortgage terms, prior experience with mortgage markets, or geographic
area.

INVESTMENT
The literature investigates various aspects of the relationships between financial knowledge and
stock/financial market participation. Higher levels of both objective and subjective financial
knowledge are associated with greater investment activity. Van Rooij et al. (2011) find that
greater financial knowledge is associated with greater stock market activity, and Hadar et al.
(2011) find that respondents with higher subjective knowledge are more likely to choose riskier
investments (with higher long-term returns) than those with lower subjective knowledge. On
the other hand, Cole et al. (2009) find that financial literacy education is not significantly related
to financial market participation. Some households avoid certain assets (e.g., stocks) because
they are aware they lack the skills to invest efficiently (Campbell 2006). Working adults’
investment knowledge and knowledge confidence are reliably related, but investment
knowledge itself was not a reliable individual predictor of investing self-efficacy (Forbes and
Kara 2010).

SAVING AND MONEY MANAGEMENT
Only one of the reviewed studies directly examines ongoing savings behavior. Taylor (2011)
finds that higher levels of financial capability, which is defined as the ability to control and
manage one’s own finances, is associated with a higher propensity to save and save regularly,
higher household income in later years, and higher life satisfaction (Taylor 2011). Interestingly,
in a study of adults in the United Kingdom, Atkinson et al. (2007) find that although financial
education has focused on money management, this is not the area where people are weakest.
The weakest areas of capability are the ability to plan for future financial security and the ability
of consumers to make informed choices about the purchase of financial products.

4

This measure of economic knowledge was developed by Lusardi and Mitchell (2009).
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OTHER
Some literature investigates the connection between certain type of intelligence and financial
decisions. For example, those who scored higher on a three question cognitive reflection test
(CRT) were generally more "patient," and their decisions implied lower discount rates; those
who scored higher on the CRT were also more willing to gamble, particularly when the gamble
had a higher expected value (Frederick 2005). Peters et al. (2006) find that less numerate
individuals had stronger framing effects, made more suboptimal choices, and had less precise
feelings about their choices than high numerate individuals.

RELATIVE IMPORTANCE OF FINANCIAL KNOWLEDGE, PERSONAL TRAITS, AND SOCIAL
CONTEXT
A number of social and psychological factors are associated with higher levels of financial
knowledge and improved financial behavior. The research reviewed does not offer explicit
findings with respect to these factors and financial well-being. Attitudes such as patience and a
propensity to plan are associated with greater financial knowledge and positive financial
behavior (Meier and Sprenger 2013; Lynch et al. 2010). On the other hand, having spendthrift
tendencies is associated with lower levels of financial knowledge and negative financial behavior
(Rick et al. 2008). The belief that one is not in control of the forces that shape one’s life—also
referred to as external locus of control—is associated with lower levels of responsible financial
behavior and lessens the positive relationship between financial knowledge and financial
behavior (Perry and Morris 2005).
Demographic characteristics such as being a full-time college student or college graduate are
associated with greater financial knowledge and positive financial behaviors (Mandell and Klein
2009; Lusardi and Mitchell 2009). In contrast, having dependent children in a household and
being female are associated with lower financial knowledge and less favorable financial
behaviors (Allgood and Walstad 2011; Lusardi and Mitchell 2009; Hung et al. 2009; Van Rooij et
al. 2011). The research on the importance of social context—such as the influence of parents or
peers—has been mixed. Some studies have found that contextual and other factors, such as the
influence of family or peers, are related to financial behavior and knowledge (Hung et al. 2009;
Shim and Serido 2011), while others find factors such as parental influence and word-of-mouth
information are not significantly related to certain financial behaviors including saving and
investing (Perry 2008).

TIME PREFERENCE/SELF-CONTROL
Research suggests that patience and a greater propensity to plan are associated with better
financial behaviors. Meier and Sprenger (2013) find that individuals with higher discount factors
(i.e., more patience) are more likely to accept credit counseling information when offered, and
Lynch et al. (2010) find that people with a high propensity to plan impose earlier precommitment deadlines and are more likely to use coupons than those with a low propensity to
plan. They also find that FICO scores increase with increased propensity to plan. Consistent with
these findings, spendthrifts—those more likely to pay a fee or buy a good—are three times
more likely to carry debt and are more likely to have limited savings than “tightwads” (Rick et al.
2008).
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DEMOGRAPHIC CHARACTERISTICS
The research suggests that demographic characteristics play a strong role in moderating the
relationship between financial literacy and financial behavior, and it also suggests that certain
characteristics, such as age, gender, and education level are related to level of financial
knowledge. Lusardi and Mitchell (2007) find that the association between financial literacy and
retirement planning weakens when demographic controls are added to the model. The research
suggest the following demographic characteristics (age, gender, race and ethnicity, household
composition and educational attainment) are particularly important in understanding financial
knowledge and behavior and the relationship between the two.
•

•
•
•

•

Age: As people get older and gain financial experience, they generally have both better
financial knowledge and better behavior, although once age-related cognitive declines
begin to set in, financial capability also declines. Atkinson et al. (2007) find that age is
positively correlated with better performance in planning ahead, choosing financial
products, and staying informed. However, people under 30 and over 70 have the lowest
capability with regard to choosing financial products. Agarwal et al. (2009) find that
middle-aged consumers are the most likely to make good financial decisions compared
both to older consumers, who have declines in fluid cognitive ability, and younger
consumers, who lack crystallized intelligence or experience. They find that the peak
likelihood of good financial decision-making is at about age 42. Older and younger
adults have been found to make more financial mistakes (e.g., pay more fees and higher
interest rates) than middle-aged adults (Agarwal et al. 2009). Also, Bucks and Pence
(2008) find that people 65 and older are substantially less likely to know their mortgage
terms. As people reach older ages, the level of financial literacy has been found to
decline. Hung et al. (2009) find that financial literacy declines at a rate of approximately
two percent each year after age 60. Investment skill has also been found to deteriorate
sharply around age 70, and the skill declines are stronger for less educated, lower
income, and Hispanic investors (Korniotis and Kumar 2011).
Gender: Men are found to have higher levels of financial literacy than women (Lusardi
and Mitchell 2009; Hung et al. 2009) and higher stock market participation (Van Rooij et
al. 2011).
Race and ethnicity: Perry and Morris (2005) find that Hispanics have slightly lower levels
of responsible financial behavior, while the negative effect of external locus of control
on behavior is lower among African Americans.
Household composition: Allgood and Walstad (2011) find that the presence of
dependent children is associated with harmful financial behaviors. They find that having
financially dependent children is consistently associated with negative credit card usage
outcomes, such as making minimum payments, making late payments, and exceeding
credit limits.
Educational attainment: Higher levels of education are associated with better financial
knowledge and behavior. Hung et al. (2009) and Lusardi and Mitchell (2009) find that
financial literacy is higher among those with a college degree or higher, while Schmeiser
and Seligman (2013) find that educational attainment is positively correlated with asset
holdings. Mandell and Klein (2009) find that being a full-time college student or
graduate is more strongly related to good financial behaviors and financial knowledge
than taking a personal financial management course. Cole et al. (2009) find that general

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education (or schooling), followed by numerical ability, had the strongest effect on
financial market participation.

ECONOMIC CHARACTERISTICS
While the majority of studies control for income or other economic characteristics, not all do.
Among those that do, economic characteristics such as employment and fluctuating income are
related to financial behavior and well-being. Higher levels of both income and wealth are
associated with greater participation in the stock market (Van Rooij et al. 2011). Conversely,
poorer and less educated households have been found to make more investing “mistakes,”
many of which occur when families with limited knowledge outsource to banks or other advisors
(Campbell 2006). Oswald (1997) finds that unemployment has the strongest negative effect on
subjective well-being; it seems to be the primary economic source of unhappiness, and is a
major factor in suicide (Oswald 1997). Income is not consistently related to credit card usage,
but experiencing a large drop in income is consistently associated with negative credit card
usage outcomes (Allgood and Walstad 2011).

ATTITUDINAL OR PSYCHOLOGICAL CHARACTERISTICS
Psychological factors—such as feelings of control, confidence, and efficacy—may play a role in
financial behavior and well-being. Perry and Morris (2005) find that external locus of control
(feeling that one is not in control of the things that happen in one’s life) is associated with lower
levels of responsible financial behavior and diminishes the positive relationship between
knowledge and behavior. Investment knowledge confidence is associated with higher levels of
investing self-efficacy (Chen et al. 2001). As described earlier, a recent meta-analysis
demonstrates that the strong relationship between financial knowledge and behavior
disappears after controlling for psychological traits (Fernandes et al. in press). However, the
authors stress that it is not appropriate to conclude from this finding that personality traits are
the cause of the studied financial behaviors. Instead, they argue that more research is needed to
better understand the relationship between financial knowledge and behavior, to include time
series designs with panel data (i.e., following a group of individuals over time).

GENERAL CONTEXT AND PEER EFFECTS
The research presents mixed findings on the role that background and upbringing play in
financial behavior. For example, Hung et al. (2009) conclude that although consumers may
possess financial knowledge, contextual and other factors may interfere with the translation of
knowledge and intention into action.
Shim and Serido (2011) find that the role of parental influence in financial socialization is more
than twice that of friends and 1.5 times greater than that of financial education.
On the other hand, Perry (2008) finds that learning from parents and word-of-mouth
information are not significantly related to overestimating one’s credit score.
Duflo and Saez (2002) emphasize that peer effects are important to consider because they
represent an extra-economic influence on individual decision-making. Understanding the role of
peer effects on individual financial decision-making could have important implications for how
retirement plans are organized in the workplace. However, Van Rooij et al. (2011) found that

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financial literacy has an effect on stock ownership above and beyond the effects of word of
mouth information from peers.

GAPS IN FIELD
The concepts of financial knowledge, financial literacy, financial behavior, and financial wellbeing are not well defined and lack measures developed through rigorous methods. Analyses of
financial knowledge, behavior, and well-being focus on association with few attempts to assess
causation. There have not been consistent attempts to rule out alternative explanations or to
control for confounding factors. The field also lacks a research agenda laying out the most
important questions to be answered and organizing current and future studies. The one attempt
at laying out questions to be addressed does not make a case for why these questions are key
and does not focus on laying out a vision to guide future research (Cude 2010). A recent metaanalysis (Fernandes et al. in press) argues for additional, different research approaches to better
understand the relationship between financial knowledge and behavior. The lack of robust data
sets with valid, reliable measures has hindered scholarship. Developing such data sets requires
strong concepts and valid, reliable measures.

INFORMING SUBSEQUENT PHASES OF THE PROJECT
Given that the field lacks a clear definition of financial well-being grounded in rigorous research,
the task of the subsequent qualitative research was, therefore, not to refine previous
definitions, or to ask respondents to select among competing definitions, but to provide
consumers and financial practitioners with ample time and encouragement to articulate their
own thoughtful definitions of financial well-being grounded in their personal experience.
Positive financial behaviors (e.g., less credit card debt, having retirement savings, etc.) are
associated with greater financial knowledge, as well as personal traits and social context. The
qualitative research spotlighted these associations and examined them in greater detail. The
interviews also explored the degree to which researchers’ inferences that positive financial
behaviors improve financial well-being are supported. Very few studies assess the relative
importance of personal traits, behaviors, financial knowledge, and external factors. The
qualitative research, which is described in detail in the following section, was designed to clarify
these interrelationships from the consumer’s perspective.

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Bearden, William O., David M. Hardesty, and Randall L. Rose. 2001. “Consumer self-confidence:
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Brown, Meta, Andrew Haughwout, Donghoon Lee, and Wilbert van der Klaauw. 2011. “Do We
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Campbell, John Y. 2006. “Household Finance.” The Journal of Finance 61(4): 1553-1604.
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Cole, Shawn, Anna Paulson, and Gauri Kartini Shastry. 2009. “Smart Money: The Effect of
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Delavande, Adeline and Susann Rohwedder and Robert Willis. 2008. “Preparation for
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Duflo, Esther, and Emmanuel Saez. 2002. “Participation and Investment Decisions in a
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Duflo, Esther, and Emmanuel Saez. 2003. “The Role of Information and Social Interactions in
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Gerardi, Kristopher, Lorenz Goett, and Stephen Meier. 2010. “Financial Literacy and Subprime
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Gosling, Samuel D., Peter J. Rentfrow, and William B. Swann Jr. 2003. “A very brief measure of
the Big-Five personality domains.” Journal of Research in Personality 27: 504-528.
Hadar, Liat, Sanjay Sood, and Craig R. Fox. 2011. “It’s Not Only What You Know but also How
Knowledgeable You Feel: Subjective Knowledge in Consumer Financial Decisions.” Anderson
Graduate School of Business Working Paper. Los Angeles, California: University of California.
Hilgert, Marianne A., Jeanne M. Hogarth, and Beverly, Sondra G,. 2003. “Household Financial
Management: The Connection between Knowledge and Behavior.” Federal Reserve Bulletin
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Hung, Angela A., Andrew M. Parker, and Joanne K. Yoong. 2009. “Defining and Measuring
Financial Literacy.” RAND Labor and Population Working Paper WR-708. Santa Monica,
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Huston, Sandra J. 2010. “Measuring Financial Literacy.” The Journal of Consumer Affairs 44(2):
296-316.
Knoll, Melissa A.Z., and Carrie R. Houts. 2012. “The Financial Knowledge Scale: An Application of
Item Response Theory to the Assessment of Financial Literacy.” Journal of Consumer Affairs
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Korniotis, George M. and Alok Kumar. 2011. “Do Older Americans Make Better Investment
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Laibson, David. 1997. “Golden Eggs and Hyperbolic Discounting.” Quarterly Journal of Economics
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Lipkus, I.M., G. Samsa and B.K. Rimer. 2001. “General Performance on a Numeracy Scale Among
Highly Educated Samples.” Medical Decision Making 21(1): 37-44.Lown, Jean M. 2012.
“2011 Oustanding AFCPE® Conference Paper: Development and Validation of a Financial
Self-Efficacy Scale.” Journal of Financial Counseling and Planning 22(2): 54-63.
Lusardi, Annamaria, and Olivia S. Mitchell. 2009. “How ordinary consumers make complex
economic decisions: Financial literacy and retirement readiness.” National Bureau of
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Lusardi, Annamaria, and Olivia S. Mitchell. 2007. “Financial Literacy and Retirement
Preparedness: Evidence and Implications for Financial Education.” Business Economics
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Lusardi, Annamaria, and Peter Tufano. 2009. “Debt Literacy, Financial Experiences, and
Overindebtedness.” NBER Working Paper No. w14808. Cambridge, Massachusetts: National
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Lynch, John G., Richard G. Netemeyer, Stephen A. Spiller, and Alessandra Zammit. 2010. “A
Generalizable Scale of Propensity to Plan: The Long and the Short of Planning for Time and
Money.” Journal of Consumer Research 37(1): 108-128.
Mandell, Lewis, and Linda S. Klein. 2009. “The impact of financial literacy education on
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Mason, Carolynne L. J., and Richard M. S. Wilson. 2000. Conceptualising Financial Literacy.
Loughborough, UK: Loughborough University. Business School Research Series Occasional
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Meier, Stephan, and Charles Sprenger. 2013. “Discounting Financial Literacy: Time Preferences
and Participation in Financial Education Programs.” Journal of Economic Behavior &
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Parker, Andrew M., Wandi Bruine De Bruin, Joanne Yoong, and Robert Willis. 2012.
“Inappropriate Confidence and Retirement Planning: Four studies with a National Sample.”
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Perry, Vanessa G. 2008. “Is Ignorance Bliss? Consumer Accuracy in Judgments about Credit
Ratings.” The Journal of Consumer Affairs 42(2), 189-205.
Perry, Vanessa G., and Marlene D. Morris. 2005. “Who Is In Control? The Role of Self-Perception,
Knowledge, and Income in Explaining Consumer Financial Behavior.” The Journal of
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Increasingly Complex Economy.” The Journal of Consumer Affairs 44(2): 276-295.
Rick, Scott. I., Cynthia E. Cryder, George Loewenstein. 2008. “Tightwads and Spendthrifts.”
Journal of Consumer Research 34(1): 767-782.
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APPENDIX B: KNOWLEDGE CLASSIFICATION MEMO
OVERVIEW
Social Capital
The relationship between financial knowledge and financial behavior is complex. The household
finance field is still in early stages of exploring how different types of financial knowledge
influence financial behavior and what circumstances either limit or catalyze the translation of
financial knowledge into behaviors conducive to financial well-being. We explored other
literatures—health, health counseling, energy consumption, education, cognitive psychology,
sociology, social marketing—to gain insight into strategies useful for classifying financial
knowledge and for understanding its behavioral implications, even though these literatures do
not present an agreed-upon model for the interaction between knowledge and behavior.
This document describes the knowledge classification schema that emerged from this research.
It further explores a range of intermediary factors that may affect the translation of financial
knowledge into financial behavior, presents a series of insights that will inform qualitative
research and hypothesis development regarding drivers of financial well-being, then concludes
with descriptions of potentially fruitful directions for future research.
Overall, our research into the relationship between knowledge and behavior uncovered several
key insights:
1. The relationship between knowledge and behavior has not been resolved by any of the
fields we surveyed;
2. Knowledge disseminated in the form of rules of thumb has been shown to be more
likely to influence behavior than the dissemination of explicit, or fact-based knowledge; 5
3. General knowledge is positively correlated with good financial behaviors;
4. Knowledge appears to affect behavior through intermediary factors. These intermediary
factors include:
a. personal efficacy—one’s judgment with regard to one’s ability to perform an
activity;
b. subjective norms—one’s perception of the social pressure to engage in a
behavior;
c. attitudes towards the behavior—one’s positive or negative evaluation of a
behavior;
d. intention—one’s plan to engage in a behavior;
5. Social networks are a critical source of financial knowledge;

5

The influence may not always be positive because rules of thumb are not always correct or
applied appropriately.
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6. In order for knowledge to be processed so that it can inform behavior, one must be
motivated to process the knowledge and have moderate prior knowledge of the topic.

KNOWLEDGE CLASSIFICATION
The fields we surveyed harbor dozens of knowledge classification schemes. All have their uses,
but ultimately what separates one classification scheme from another is superior utility for the
end user.
Review of the household finance literature suggests that financial knowledge likely influences
financial well-being through effects on behavior. This led us to select a knowledge classification
scheme that groups knowledge into categories that have been shown to affect behavior in
particular ways. Below we discuss the perceived relationship between types of knowledge and
behavioral outcomes.
Figure 1: Recommended Knowledge Classification Scheme

Knowledge

General Knowledge

Domain-Specific Knowledge

Explicit Knowledge

Tacit or Implicit Knowledge

Heuristics/Rules of Thumb

RECOMMENDED FOR INCLUSION IN KNOWLEDGE CLASSIFICATION
At the highest level our recommended knowledge classification scheme divides into General
Knowledge and Domain-Specific Knowledge (for more discussion of these concepts see
Alexander et al 1991, Ackerman 1996, Penner & Klahr 1996). General Knowledge refers to
schooling or education that is not specific to a particular situation or topic (e.g., basic literacy or
numeracy). A basic liberal arts education, for example, yields a useful underpinning of General
Knowledge. While indicators of General Knowledge such as years of education or numerical
ability have proven to be highly correlated with behavior and outcomes, this may be due to
unobservable differences that are signaled by these measures (Fuchs, 1982). Domain-Specific
Knowledge is germane to a particular subject area such as health promotion or energy
consumption—or credit behavior. Domain-specific knowledge comprises two important types.
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 Explicit knowledge is knowledge that can be expressed in words, numbers and/or
formulae and thereby transferred in classrooms or via formal media (Kiviat and
Morduch 2012, Berry & Broadbent, 1984, 1987, 1988; Evans, 1982; Hays &
Broadbent 1988; Reber, 1967, 1976; Reber & Allen, 1978). Acquiring such
knowledge—for example facts and an understanding of their interrelationships—
does not require interpersonal contact or personal experience. Explicit knowledge
can be stored in a book, internet site or other media, then later and independently
retrieved and learned. Examples offered by the consumer science literature include
numeracy (as it applies to specific financial concepts and equations, like interest
calculation), awareness of financial products, and understanding of compound
interest, bond pricing, inflation, the time value of money, diversification and more
(Carpena et al 2011, Robb and Woodyard 2011). From the health literature,
examples of explicit knowledge with implications for well-being include health
literacy, consequences of smoking, or a basic understanding of physiology (Nutbeam
2000, Osborne et al. 2011).
 Tacit or implicit knowledge is personal knowledge acquired through experience that
resists articulation or codification and transfers primarily through social interactions
or apprenticeships (Berry & Broadbent, 1984, 1987, 1988; Evans, 1982; Hays &
Broadbent 1988; Reber, 1967, 1976; Reber & Allen, 1978; Gorman, 2002). Both
“tacit” and “implicit” are terms used to describe this concept. Knowing and
interacting with people who possess tacit knowledge are prerequisite to an
individual’s gaining or benefitting from such knowledge. Examples include working
with a financial coach or advisor, building expertise from the personal experiences
of those in one’s social circle (Alba and Hutchison 1987) and situational knowledge,
or knowledge gained through handling situations as they come up (de Jong 1996).
Elements of tacit knowledge can be extracted and made explicit. Heuristics 6 is tacit
or implicit knowledge that has been made into explicit knowledge through
imperfect rules of thumb. In using heuristics, one does not solve problems or make
decisions, but simply takes an approach that normally seems to work (Tversky &
Kahnemann 1974). Heuristics can be personal or social, acquired through
membership in a family or group. Examples include mental budgeting and
accounting (Antonides et al 2011, Kamleitner et al 2011), acting based on history,
for example of attempts to change behavior (DiClemente et al 1991), and
knowledge of the association between behaviors such as smoking, drinking or
exercise and health outcomes.

6

Note: fields outside cognitive psychology employ a broader definition of heuristics than the one
we use here.
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It should be noted that tacit/implicit and explicit knowledge are dynamic, not fixed categories.
Tacit knowledge can be become explicit knowledge through the development of rules of thumb.
Similarly, explicit knowledge can serve as the intellectual foundation that allows for the
absorption of more sophisticated tacit or implicit knowledge.
Note 1: While there are many ways to acquire knowledge, one of the most interesting to
consider is financial knowledge obtained through one’s social network. Social Capital can
provide access to explicit and tacit financial knowledge (see Coleman 1988). For example,
individuals do not need to have a personal knowledge of the stock and bond markets if they
have access to friends or family members with explicit and/or tacit financial knowledge who will
teach them how to allocate their investments optimally. Similarly economic capital can be
leveraged to purchase such knowledge and support through paid financial services.
Note 2: Bloom’s taxonomy of knowledge is foundational within the education literature (see
Bloom 1956). Bloom categorized behaviors in the cognitive domain from least complex
(knowledge, or the ability to recall data and information) to most complex (evaluation, or the
ability to use knowledge to make judgments and informed choices). This taxonomy has been
tweaked over the years, most notably by Anderson and Krathwohl (2001), who viewed synthesis
as the most complex behavior rather than evaluation, but the basic idea remains the same—
being able to interpret and apply a concept to varied situations represents a higher level of
understanding than basic awareness of a concept. The relationship between financial knowledge
(explicit or tacit) and financial behavior is likely to vary as one ascends the hierarchy. Research
linking this taxonomy to well-being related behaviors and the categories of tacit and explicit
knowledge is sparse. However, this taxonomy suggests that when individuals engage in higher
levels of processing, knowledge is more likely to be translated into behavior because behavior is
inherent in application, analysis, synthesis and evaluation.
Figure 2: Bloom’s taxonomy of knowledge
EVALUATION
SYNTHESIS
ANALYSIS
APPLICATION
COMPREHENSION
KNOWLEDGE

EXPLORATION OF THE LINK BETWEEN KNOWLEDGE AND BEHAVIOR-MOVING FROM MICRO
TO MACRO INSIGHTS

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MICRO-LEVEL INSIGHTS INTO THE LINKS BETWEEN EXPLICIT AND TACIT KNOWLEDGE AND BEHAVIOR IN
THE CONSUMER SCIENCE LITERATURE

There is considerable debate in the consumer science and other literatures about the role of
explicit, domain-specific knowledge with respect to behavior. Some studies have demonstrated
a clear link between explicit, domain specific knowledge and positive financial behavior. Explicit,
domain specific knowledge of financial concepts such as inflation and the time value of money
and compound interest have all been shown to be correlated with better financial decisions
(Lusardi and Mitchell 2009; Hung, Parker and Yoong 2009; Geradi, Goette and Meier 2010).
Several studies have, however, shown that participation in financial education (i.e. the
dissemination of explicit knowledge) does not necessarily lead to improved financial knowledge
(Mandell and Klein 2009, Yates and Ward 2011), although more years of general education—
particularly college education—does lead to improved financial knowledge (Yates and Ward
2011). Studies suggest that financial training based on rules of thumb (i.e. implicit knowledge)
leads to greater improvement in financial behavior than does training that focuses on explicit
knowledge (Drexler , Fischer and Schoar 2010).
The consumer science, cognitive psychology and health literatures also point to the importance
of self-efficacy, defined as one’s judgment with regard to one’s ability to perform an activity, as
a mediating factor between knowledge and behavior.
 Allgood and Walstad note that perceiving one’s financial knowledge as high (selfefficacy) was a better predictor of positive behaviors related to credit card management
than correct answers to explicit financial knowledge questions (e.g. asking individuals to
calculate interest) (2011).
 Self-efficacy and current self-care behavior are better predictors of positive health
status than explicit knowledge (Osborn et al. 2011). Individuals who were more
confident in their ability to quit smoking showed more positive non-smoking behaviors
(DiClemente et al. 1991).
In addition to self-efficacy, the literatures we reviewed suggested other situational factors that
affect the likelihood that knowledge will be translated into behavior. For example, individuals
presented with too many choices when making a decision may become paralyzed as a result
(Scheibehenne et al 2010). Health research has found that smokers are less likely to quit when
stressed even if they understand the health risks associated with smoking (DiClemente et al
1991). Similarly, individuals were more likely to make positive health changes if they felt
motivated to use their existing knowledge (Nutbeam 2000).

MACRO-LEVEL INSIGHTS INTO THE LINKS BETWEEN KNOWLEDGE AND BEHAVIOR FROM
OTHER LITERATURES

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THEORIES OF BEHAVIOR
The majority of studies examined in the literatures we reviewed for this report started from
knowledge and asked whether there was an association with behavior. Another approach is to
examine theories of behavior that seek to understand the factors driving behavioral intentions
and behavioral outcomes. Such theories provide an opportunity to examine the role of
knowledge.
The Theory of Reasoned Action is a longstanding theory of behavior and behavioral intentions
(Fishbein & Ajzen, 1975, 1980). It posits that two factors drive behavioral intentions—the
attitudes and beliefs one holds, and one’s perceived subjective norms for behavior. The core
assumption is that people make decisions based in large part on their overall attitudes toward
their possible choices.
Figure 3: Theory of Reasoned Action

Attitude Toward
Behavior

Intention

Behavior

Subjective Norm

Over the years, there have been several reactions to the Theory of Reasoned Action model. The
Theory of Planned Behavior incorporates the concept of behavioral control which suggests that
even if my attitude and perceived norms support the behavior, I will not engage in the behavior
unless I have a belief as to how challenging performing it is likely to be. Bagozzi’s Theory of Goal
Pursuit incorporates self-regulatory processes, treating them as critical to understanding how
attitudes influence behavior.
While knowledge per se plays no explicit role in these theories, the general thought is that
knowledge operates as one avenue through which attitudes and beliefs can be altered. Selfefficacy, or belief in one’s ability, would be one of the attitudes or beliefs that might be affected
by knowledge gained. A major effort in attitude theory research is exploring when and why
attitudes are updated. If knowledge can change attitudes, it can affect behavior. The question,
then, is what types of information (from above) are most likely to impact the attitudes held by
an individual.

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THEORIES OF INFORMATION PROCESSING
Possessing information or knowledge is a necessary, but not sufficient, condition for applying
information or knowledge to a particular decision or response. The ability and motivation to
apply or process one’s knowledge is a critical factor. In one study, persons with moderate prior
knowledge did more processing than those in either high- or low-knowledge groups (Bettman
and Park 1980). This is because prior knowledge is required before processing can occur and
experts are more likely to rely on well-tested heuristics and less likely to consider new
knowledge when making a decision.
Decision-makers use the information available or accessible at the moment of decision. Better
decisions result if individuals have well developed or even automatic routines stored in memory
for the occasion, although having the evaluative capacity (see Bloom 1956) to adapt stored
routines to new situations enhances one’s ability to optimize decisions. Availability of wrong or
incomplete heuristics, however, can result in suboptimal decisions (Tversky and Kahnemann
1984).
If consumers do not have complete heuristics stored in memory, they are often forced to
construct rules of thumb on the fly (Bettman and Park 1980). Such constructed heuristics are
more likely to lead to suboptimal outcomes and to incorporate information from the immediate
environment. The roles of personal mood, the atmosphere of the environment (e.g., high
pressure sales or relaxed/supportive) and even the payment method can influence constructed
heuristics.
Information processing depends, among other things, on the attention a consumer is able and
willing to give to the decision. Attention or inattention not only influence the amount of
processing, but can lead to present bias in intertemporal choices or self-control failures. External
monitoring and coaching has been shown to increase attention to the targeted decisions with
positive financial or health outcomes (Collins et al. 2013).

EXAMPLES OF KNOWLEDGE AND BEHAVIOR FROM TWO FIELDS-HEALTH AND ENERGY
CONSUMPTION
Health literature
Health knowledge is conceptualized as the consumer’s ability to associate behavioral choices
with the health states that they are likely to produce. For example, smoking leads to lung cancer
or excessive drinking leads to liver damage. The result is a list of good practices that are
expected, on average, to lead to better health outcomes. Examples of good practices include
getting 7–8 hours of sleep each night, eating breakfast, exercising regularly, not smoking, etc. In
addition to this domain-specific knowledge, general education or schooling is also included in
many studies of health behavior. Knowledge in this domain does not necessarily include
understanding of explicit mechanisms by which the health choice produces the outcome. An

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individual does not require detailed understanding of anatomy, physiology, epidemiology or
nutritional science to have health knowledge 7.
This approach to health knowledge is supported by very clear measures of physical well-being
that have evolved over time, and extensive research on the practices that enhance or detract
from that well-being. Early in the literature, the focus was on disease prevention and identifying
the current behaviors that were most closely associated with the occurrence of disease. Solid
data on disease incidence helped to focus research and the development of good practices to
avoid the disease. More recently the focus has shifted to health promotion, which is somewhat
more difficult to define. You know whether a disease is present or absent. Defining a desired
health state requires the decision of whether to apply a normative lens—how healthy medical
science says the individual should be—or a personal preference lens—the individual’s desired
level of health—or some other criterion.
The majority of research on the linkage between knowledge and behavior in the health field is
purely correlational, suggesting that higher levels of knowledge and higher levels of positive
behavior and outcomes tend to occur simultaneously. What cannot be determined is whether
improved knowledge or education leads to behavior, behavior leads to knowledge or education
or something else causes both.
While most correlational studies have shown an association between an increase in health
knowledge and a decrease in negative behavior, there is little evidence of a causal relationship.
In fact, a large percentage of consumers with the highest level of specific knowledge of the
negative impact of certain behaviors engage in those exact behaviors (Kenkel 1991). 8 For
example, in Health Behavior, Knowledge and Schooling, Kenkel states, “The proportions of the
highly knowledge individuals who smoke, drink heavily, and fail to exercise regularly are
substantial, with often roughly a quarter of the highly knowledgeable groups adopting the
unhealthy behavior (p. 302, Kenkel 1991). This suggests that perhaps we need to look beyond
education to marketing and law as means of influencing lifestyle and behavior (Rothschild 1999).
There is also little evidence of a causal relationship between health knowledge or general
education and health outcomes. Most of the causal studies have relied on changes in the
minimum number of years of education. These studies do suggest an impact in going from little

7

In household finance, the focus tends to be much more on explicit knowledge of economics
and financial concepts. Rather than assessing knowledge as recognizing links between savings
and financial well-being, the tendency is to ask consumers to calculate compound interest and
conclude that they have poor financial knowledge if they cannot.

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education to moderate education, but no evidence exists regarding any causal effects of higher
levels or higher quality of education (Cutler et al. 2006).
Energy consumption literature
In this field knowledge is typically studied as an intervention designed to increase conservation
behavior. Examples of such knowledge-based interventions include energy feedback, problemsolving strategies, and monetary impact. Problem-solving strategies include the provision of tips
for saving energy and have not been found to have a measureable impact on conservation. Nor
was monetary impact, or the communication of the price of one’s energy habits, found to
reduce consumption (some studies even saw an increase).
The idea behind energy feedback is that conservation can be triggered by making consumption
and the need to conserve more salient to the individual. Experiments have demonstrated the
positive impact of personalized, real-time feedback on an individual’s energy consumption and
the high involvement forms of feedback such as home energy audits. Providing peer
comparisons, especially in a group setting or workplace, also demonstrated positive impacts
through their ability to provide non-price signals of desired or expected behavior.
Lack of knowledge is one barrier to conservation. Others include lack of motivation,
forgetfulness, lack of social pressure and structural barriers (e.g., safety, time, money and
weather). One important challenge is the invisibility of energy usage. Current interventions are
attempting to overcome this through the use of technology to provide real-time feedback.
The primary methodology employed in this literature is the behavioral experiment with field
experiments currently being deployed in some residential dorms. There are, however, many
methodological issues to be overcome including small samples, short observation periods and
level of granularity. Most studies do not control for factors such as weather, seasonality and
demographics.

SUMMARY
Although there’s considerable debate regarding the nature of the relationship between
knowledge and behavior across disciplines, some key lessons can be drawn out:
1. Knowledge disseminated in the form of rules of thumb has been shown to be more
likely to influence behavior than the dissemination of explicit, or fact-based knowledge 9;
2. General knowledge is positively correlated with good financial behaviors;
3. Knowledge appears to affect behavior through intermediary factors. These intermediary
factors include:

9

The influence may not always be positive because rules of thumb are not always correct or
applied appropriately.
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a. personal efficacy—one’s judgment with regard to one’s ability to perform an
activity;
b. subjective norms— one’s perception of the social pressure to engage in a
behavior;
c. attitudes towards the behavior—one’s positive or negative evaluation of a
behavior;
d. intention—one’s plan to engage in a behavior;
4. Social networks are a critical source of financial knowledge;
5. In order for knowledge to be processed so that it can inform behavior, one must be
motivated to process the knowledge and have moderate prior knowledge of the topic;
6. Real-time feedback encourages positive behaviors.

HOW THESE INSIGHTS WILL INFORM OUR WORK GOING FORWARD
This section discusses the team’s reflections and those of the external experts we consulted
regarding our work going forward and other areas for potential future research.
1. Hypotheses regarding the connections between knowledge and behavior that we will
explore in the qualitative research include:
a. General and domain specific knowledge and tacit and explicit knowledge are
likely to have qualitatively different influences on financial behavior. Domain
specific, explicit knowledge is likely to have the weakest relationship with
financial behavior; general knowledge and tacit knowledge are likely to have
stronger relationships with financial behaviors. Evidence from the health
literature suggests, however, that the role of financial knowledge in financial
well-being may in fact be quite limited.
b. The financial knowledge of persons in one’s social network likely plays a large
role in consumers’ lives. Probing to understand when individuals seek financial
advice, whom they seek advice from, their level of trust in the advice and if they
followed it will yield insight into social capital’s influence on financial behavior.
Accessing financial knowledge via one’s networks may also affect attitudes,
subject norms and intentions around the knowledge and behaviors with which it
is associated.
c. Probing consumers and practitioners to talk about what makes people confident
in their financial knowledge (i.e. their self-efficacy) may help to explain why
some knowledge gets translated into behavior while other knowledge does not.
d. Theories of information processing suggest that probing consumers and
practitioners to understand additional factors that facilitate information
processing around financial knowledge may also help to explain why some
knowledge gets translated into behavior while other knowledge does not.
e. Asking questions that get after the reasons why people have engaged or not
engaged in wise financial behaviors in terms of planning, confidence, risk

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aversion, self-regulation, impulsivity, delayed gratification and other traits may
be just as important as knowledge based constructs.

2. Other hypotheses or ideas:
a. Explore the tacit knowledge of experts to derive useful ‘rules of thumb’ and test
those heuristics to determine whether they lead to desired behaviors and
outcomes when applied.
i. Assuming that such heuristics can be derived, we will also need to
explore what is required to ensure the entire heuristic is stored in
memory and available when needed.
b. Examine knowledge as the ability to recognize connections between behavior
and outcomes, as found in the health literature.
i. This effort would require the identification of ‘financial diseases,’
meaning circumstances of poor financial well-being of social concern
(i.e., with social costs or externalities), and the most problematic
behaviors producing these diseases. Limitation in the health literature
should be borne in mind.
c. Identify the most common habits influencing financial behavior.
i. As viewed in the energy consumption literature, habits formed over
years of life drive many actions. These habits cannot be considered
heuristics as there is no conscious processing or, in many cases,
awareness involved. Instead, these are automatic routines triggered by
the environment, encouraged by the current structure of the market
and continuously reinforced in the individual.
d. Assess changes in financial outcomes as consumers’ level of financial
understanding ascends Bloom’s taxonomy of knowledge.
i. If desired increases are observed, it may be fruitful to design financial
education programs that move consumers along this continuum (or to
evaluate existing for their position).
e. Financial education programs that provide extensive training to a few wellnetworked individuals may produce better financial well-being outcomes than
trying to educate a broader population.
f. The theory of information processing suggests that new knowledge is likely to
have a greater effect on behavior if an individual already has a financial
knowledge base. Research to better understand what should be a part of that
base would be fruitful.
g. Research the heuristics people currently have regarding financial matters and
identify incomplete or incorrect heuristics.
h. Research whether or not knowledge can be used to change subjective norms
and attitudes around financial behaviors.
Page 85 of 132

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APPENDIX C: QUALITATIVE RESEARCH METHODOLOGY
USE, BENEFITS, AND LIMITATIONS OF ONE-ON-ONE INTERVIEWS
Qualitative research involving in-depth interviews yields “direct quotations from people about
their experiences, opinions, feelings and knowledge” (Patton 2002, p.4). These quotations can
be sorted, coded and catalogued using computer-aided qualitative data analysis software
(CAQDAS). The software can, in turn, be used to identify oft-occurring themes in a large set of
interviews as well as to facilitate understanding of how concepts relate to one another and play
out differently in different contexts. Qualitative research lends itself well to understanding how
things work and why. Below we describe the qualitative research approach we used to gain
insight into financial well-being and its drivers.
Given the exploratory and sensitive nature of the information we hoped to gather, the team
decided in-depth, one-on-one interviews would be the most appropriate investigative approach.
One-on-one interviews yield “information-rich” data and offer a flexible tool for exploring how
respondents from varied backgrounds understand financial well-being and its drivers in a
confidential environment.
This approach is not without its limitations, however. Findings from one-on-one qualitative
interviews are neither quantitative nor generalizable to the population as a whole. This
methodological approach generates insight and in-depth understanding of a topic; it does not
employ a rigorous sampling methodology that would be necessary for drawing widely applicable
conclusions.

IDENTIFICATION AND RECRUITMENT OF RESPONDENTS
In recruiting working-age American respondents, our goal was to obtain a sample that was
diverse and broadly representative of the US population. Similarly, we reached out to
practitioners in a variety of professions with a range of client bases. Table A1 provides an
overview of our approach.

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Table C1. Data collection approach
Working-age consumers
• Individuals ages 18 – 61
How do we define
this population?

Method
Eligibility criteria
for participation 10

• One-on-one and dyad interviews
conducted in-person
• Age 18 – 61

Number and length
of interviews to be
conducted
Recruitment
method(s)

• 40 one hour interviews

Incentive amount

• $50

Geographic area of
recruitment

•
•
•
•
•
•

• Use of professional focus group
facilities
• Purposive sampling

Greater Atlanta
Greater Washington, D.C.
Greater Los Angeles, CA
Greater Chicago, IL
Central Tennessee
Southeastern Wyoming

Financial practitioners
• Financial planners, credit
counselors, financial educators,
financial advisors, financial coaches
and tax preparers
• One-on-one interviews over the
phone and in-person
• At least one year of experience
working directly with clients
• 50% or more of client base must be
between the ages of 18 and 62
• 30 one hour interviews

• Personal networks of financial
practitioners on the CFPB metrics
team and CFED’s financial
practitioner network
• $50 for in-person interviews
• None for phone interviews
• Nationwide with particular focus
on the geographic regions where
the consumer interviews were
conducted

In addition to the eligibility criteria listed above, we also recruited a mix of male and female
consumers who had diverse backgrounds with respect to the following. Data for these
characteristics are presented in Table A2 in a later subsection, Participant Characteristics.
•
•
•
•
•
•
•

race/ethnicity
marital status
age
employment status (employed part-time, employed full time, unemployed, selfemployed)
income level
household status (dependents vs. no dependents)
geographic region (urban, suburban, rural)

We also recruited individuals who had experienced a significant change in income within the
past 5 years due to factors such as:

10

Eligibility criteria indicate specific criteria that participants MUST meet in order to be considered for inclusion in the
data collection effort. Additional factors that further describe the target audience are provided later in this section.
Page 92 of 132

•
•
•

health/medical issues (for self or a loved one)
death/loss of a loved one
child/dependent returning to household

In our practitioner recruitment, we reached out to:
•

financial planners, credit counselors, financial educators, financial advisors, financial
coaches and tax preparers who worked with consumers and had at least one year of
experience working directly with clients.

In addition to the eligibility criteria listed above, we also worked to recruit a mix of practitioners
whose backgrounds were diverse with respect to the following:
•
•
•
•
•

profession type (financial planner vs. financial coach vs. credit counselor, etc.)
geographic region (urban, suburban, non-metro)
average income of clientele
race/ethnicity of clientele
average age of clientele

INTERVIEW GUIDE
The Team developed interview guides informed by the project based on the following central
research questions:
1. How do consumers and financial practitioners define financial well-being for workingage Americans? What kinds of topics do consumers and financial practitioners
incorporate in their definitions of financial well-being (presence/absence of savings, not
being worried about money, etc.)?
2. What personal traits do consumers and financial practitioners associate with financial
well-being among working-age Americans?
3. What behaviors do consumers and financial practitioners associate with financial wellbeing among working-age Americans? What choices have consumers made in the past
that influence their financial well-being now?
4. How do environment, social context and social capital shape financial well-being among
working-age Americans? How do a person’s spouse/partner, family, friends,
neighborhood and community influence his or her financial well-being? What events do
people feel have the greatest influence on financial well-being?
5. What do people need to know in order to be able to manage their finances?
6. Of the influences on financial well-being listed above, which are most important?
The Team used the interview guide to conduct semi-structured interviews that were uniform in
the topics they covered but were flexible enough to allow respondent to share from their own
experiences.

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GROUNDED THEORY-BASED ANALYSIS
The team employed a modified grounded theory-based approach to generate initial codes and
themes (Corbin and Strauss 2008; Glaser & Strauss, 1967). Grounded theory is a semi-formal
method for analyzing qualitative and other types of information that relies on deep
understanding of each subject and analysis of patterns across subjects. The objective is to
establish a theoretical understanding of everyday experiences. 11 This type of analysis begins
with the initial collection of data and evolves until major themes and insights are identified and
confirmed. Because we wanted consumer and practitioner insights to directly inform the
project’s definition of financial well-being and the identification of its drivers, we opted for a
data analysis approach that drew its key organizing themes from the data themselves. To assist
in the process of identifying significant themes in the more than 1600 pages of coded
transcripts, interviewers completed topline summaries after each interview. The team reviewed
these topline summaries and used them to compile a list of key themes (examples of themes
include budgeting, credit cards, upbringing, etc.) that formed the basis of the project codebook.

DATA CAPTURE
Audiotapes from each interview were transcribed verbatim and imported in the qualitative
software package, ATLAS.ti, a qualitative data analysis (QDA) software program for facilitating
the organization and management of text data. ATLAS.ti supports the coding process by allowing
the text to be marked for subsequent search, retrieval, classification, and cross classification.
The software contributes to interpretation of the data by permitting the construction and
testing of hypotheses about coding patterns and facilitates reporting results on the basis of the
coding patterns and accompanied by representative quotes/text segments.
The Team analyzed the data for themes, patterns, and interrelationships relevant to the study
objectives. Because of the involvement of multiple people in data analysis, activities were
incorporated into the analysis process to provide the level of analytic rigor and systematization
necessary to reduce the effects of subjectivity and selection bias. These activities included
codebook development, assessment of inter-coder reliability, and the use of ATLAS.ti.

CODEBOOK DEVELOPMENT
Codebook development was a multistep, iterative process involving the development and
definition of codes and pretests to refine the codes and definitions. The team only began
codebook development after the first interviews in Washington, D.C. and several practice
interviews, which were used as a basis to guide the codebook development. The team
developed three types of codes: content, intent and supercodes. Content codes tag specific
themes such as savings, upbringing or depression. Intent codes tell us what topic areas the
11

Note that “theory” in grounded theory does not typically refer to grand or formal theories, but more to an
understanding of concepts and how they relate to each other in everyday experience in a particular geo-historical
position.
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respondent was discussing (e.g., financial knowledge, financial well-being, etc.). Supercodes
identify actors (e.g., financial advisors, family, employer or military), the direction of the
comment (e.g, positive or negative) or the presence of a special topic we would like to capture
later (e.g., cognitive decline or use of rules of thumb).

ASSESSMENT OF INTER-CODER RELIABILITY
To ensure that the project’s eight coders had a shared understanding of the codes and were
applying them consistently, inter-coder reliability was assessed. To calculate reliability, each
coder independently coded sections of the same focus group transcript and their codes were
assessed against a gold standard. Coders whose reliability was less than 80% had their coded
transcripts reviewed and they received corrective feedback.

PARTICIPANT CHARACTERISTICS
The working-age American sample was regionally and socio-demographically diverse.
Sampled geographic areas included Atlanta, Chicago, Washington, D.C., Los Angeles, Tennessee,
and Wyoming. Each area included between 12 and 22 percent of our sample with lowest
numbers in Washington, D.C. and Tennessee and highest representation from Chicago and Los
Angeles.
There were more women (68%) than men and all age groups were represented in the sample
with the heaviest concentration among those 36 to 45 years of age (39%). Study participants
were ethnically and racially diverse and had varied educational backgrounds, although persons
with at least a college degree were somewhat over-represented (51%). The sample included
persons with different marital and employment statuses and a range of incomes.

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Table C2. Demographic characteristics of consumer participants
n

%

6
9
5
9
5
7

14.6
22.0
12.2
22.0
12.2
17.1

Geography

Atlanta
Chicago
Washington, D.C.
Los Angeles
Tennessee
Wyoming

Gender

Female
Male

28
13

68.3
31.7

Age

18-25
26-35
36-45
46-61

5
8
16
12

12.2
19.5
39.0
29.3

Ethnicity

African American
Asian
Hispanic
Caucasian/white

7
2
7
25

17.1
4.9
17.1
61.0

Education

High Sshool or less
Some college or technical degree
College/graduate/professional degree

7
8
21

17.1
19.5
51.2

Marital
Status

Single, never married
Married/living with partner
Divorced
Widow/widower

11
23
2
0

26.8
56.1
4.9
0.0

Household
Income

$0-$49,999
$50,000-$100,000
Over $100,000

16
17
8

39.0
41.5
19.5

Employment
Status

Full time
Part time
Self employed
Unemployed
Fully retired
Partially retired
Other

17
4
2
9
0
1
1

41.5
9.8
4.9
22.0
0.0
2.4
2.4

Source: Consumer demographic information sheet
Note: Working-age Americans (n = 41)

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The financial practitioner sample was diverse with respect to profession, experience,
race/ethnicity and income.
Table C3. Characteristics of financial practitioners
n

%

Self-identified roles of finanical practitioners*
Financial planner
Financial coach
Credit counselor
Social worker
Tax preparation advisor
Financial educator
Financial service professional
Other

3
8
4
1
4
4
7
5

10.0
26.7
13.3
3.3
13.3
13.3
23.3
16.7

Number of years working directly with clients
0-5 years
6-10 years
11-15 years
16-20 years
More than 20 years

6
7
2
3
8

20.0
23.3
6.7
10.0
26.7

Primary residential setting of clients
Urban
Suburban
Non-metro

12
7
7

40.0
23.3
23.3

Primary age segment of clients
Working-age Americans (18-61 years old)
Older Americans (62 years or older)

20
10

66.7
33.3

Race/ethnicity of clients served*
American Indian or Alaska Native
Asian
Black or African American
Hispanic or Latino/a
Native Hawaiian or Other Pacific Islander
White

1
4
9
12
0
18

3.3
13.3
30.0
40.0
0.0
60.0

(continued)

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Table C3. Characteristics of financial practitioners (cont.)
n

%

Household income of clients served
$0-$49,999
$50,000-$99,999
$100,000 or more

19
10
7

63.3
33.3
23.3

Highest level of education obtained by clients*
Less than high school
High school/GED
Some college/Associates degree
Undergraduate college (Bachelor's degree)
Graduate school (Master's or professional degree)

6
12
13
16
5

20.0
40.0
43.3
53.3
16.7

Employment status of clients*
Part-time
Full-time
Unemployed
Self-employed
Retired

4
18
5
8
5

13.3
60.0
16.7
26.7
16.7

Source: Financial practitioner post-discussion information sheet
Notes: *Multiple responses possible - combined percentages may exceed 100.
Financial practitioners (n = 30)

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APPENDIX D: QUALITATIVE RESEARCH THEME DESCRIPTIONS
FINANCIAL BEHAVIOR
Bad decisions
Many consumers indicated that they learned much of their financial knowledge through
personal experiences, particularly from mistakes they have made. This was especially true of
people’s early experiences with credit cards. However some consumers and practitioners both
suggested that there are behaviors that often can irrevocably damage someone’s ability to
achieve financial well-being. Commonly these behaviors included substance abuse problems
such as alcoholism or drug use. Similarly consumers and practitioners both said that smoking
and tobacco use was expensive and drained money, particularly among low-income
populations.
Being frugal or cheap
Being frugal or cheap came up often in the working-age American. Interviewees described being
frugal as a learned behavior engendered by one’s upbringing, personal experience or by
pressure from one’s spouse. Many described being frugal as being disciplined or consciously
choosing to spend less money. For many working-age Americans, being frugal was thought of as
a lifestyle that also incorporated other behaviors like saving and buying needs and not wants In
this vein, comparison shopping or shopping around in order to get the best deal also came up a
lot. Working-age Americans had many different vocabularies for talking about frugality. Some
said it was living within your means or making do with less. Others called it not living an
excessive lifestyle or not throwing money away. Some shared examples of their frugal
behaviors, such as cooking and not eating out, shopping second-hand or not buying something
new.
Budgeting
Most consumers said that they utilized some form of budget. While having a plan to guide
spending was a common theme throughout the qualitative research, the ways that people went
about creating and using a budget were varied. Some consumers developed a budget on a
week-to-week basis, while others developed budgets with a longer-term perspective. Some
consumers relied on online tools or phone apps, while others felt more comfortable using pen
and paper or their checkbook. More in-depth conversations about budgeting revealed that
consumers changed and refined their budgets depending on their purpose. For example, some
said they budgeted future expenses. Having a budget made them feel more secure because they
knew where there money was going to go from week to week or month to month. Others said
they tracked where their money was going or budgeted past expenses. In this way, budgeting
was a used to identify and cut excess spending. Many of the interviewees used both past and
future budgets simultaneously as a saving strategy.
Buying, selling and/or owning a home
Many people connected their home directly to their financial well-being. For some consumers,
their home was their stability because it represented their largest asset and gave them access to
credit. Some felt their home had intrinsic value; others felt it was mainly an investment.
However, some consumers described their home as a liability, especially in the terms of

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unaffordable mortgages or unforeseen expenses. Several consumers said that they wished they
had not purchased a home just before the 2008 recession.
Buying ‘wants’ vs. ‘needs’
Many described the importance of differentiating needs versus wants as a way of prioritizing
spending. For others, differentiating between needs and wants was a way to be sure to set aside
enough for basics. How consumers defined needs and wants was often contingent on social and
environmental context. As a consumer’s financial situation changed, their needs often changed
as well. For most consumers, needs included making sure one is able to pay bills and provide for
one’s family. Beyond that, many described purchasing needs as spending money on what is
important. Buying needs and not wants was commonly talked about in the context of budgeting.
Credit cards
Many of those interviewed had strong opinions on credit cards. Some consumers and
practitioners described credit as a safety net. They said that having access to credit was
reassuring because they knew they had something to fall back on if something were to happen.
However, most believed credit cards generally negatively impacted their financial well-being.
Many consumers used credit cards as a way of talking about more generally about
responsibility. Consumers described using excessive credit as not thinking about the future.
Many talked about the importance of avoiding debt and how getting in over your head could
negatively affect your financial well-being for many years. In this way, credit cards were a way
for consumers to talk about poorly managing your money and spending what you do not have.
Debt
Many working-age Americans thought that debt was a major threat to their financial well-being.
Some described that being in debt made them feel not in control of their finances. Both
consumers and practitioners both said that many people were unsure of what was the best way
to effectively manage their debt. Like many other financial behaviors, consumers gather
information from their social networks and from their own personal experience to develop
strategies to fit their own situation. For example, some consumers said that it was important to
pay off the highest interest debt first, to avoid paying more in the long run. Others suggest that
you should pay off the largest debt first, regardless of interest. Others suggested that it is best
to pay off the smallest debts first, so that you can eventually commit more to the larger debts
and so you do not become discouraged.
Doing financial research
Both working-ageworking-age Americans and practitioners agreed that actually doing financial
research was important. However, many of those interviewed described the sheer volume of
financial information available and knowing where to start as overwhelming. With this in mind,
many said that doing research is the act of seeking out information and evaluating its fit for an
individual’s particular situation. How and where people actually did financial research varied:
Some read financial books by practitioners like Suze Orman. Others said they read the business
section of the newspaper every day. Some said that when they need information they can go to
the library. Many of those interviewed said that almost anything you needed to know was
available on the internet. Some consumers reached out to a financial professional either as a
source of knowledge or to use as a sounding board.
Financial goals

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The importance of having a financial goal was a common theme throughout the qualitative
research. For many, a financial goal provided meaning to particular financial behaviors such as
saving or creating a budget. However, working-age Americans and practitioners said that
financial goals only affected behavior if they felt realistic and attainable to the individual. Some
of the consumers and practitioners also suggested that the kinds of strategies that an individual
adopts are guided by the kinds of financial goals that they set for themselves. Many working-age
consumers set long-term goals, like having a secure retirement or paying off their mortgage.
Others set shorter-term goals, like paying of credit card debt. Some working-age Americans
talked about goals such as travel or a new car that guided their financial behavior. Financial
practitioners commonly said that the hardest thing is to set realistic financial goals.
Financial plan
Many people talked about the importance of having a financial plan as a way to guide spending.
Financial plans differed from budgets in the interviews because financial plans were often much
longer term and more generalized than budgeting. Most consumers and practitioners said that
at the heart of a plan is a goal, or something to work towards. As the situations of working-age
Americans changed, so did their goals. For example, some consumers said that after they had
children their financial goals changed. As their goals changed, consumers changed their plans to
better fit their goals. A consumer’s financial plan encompasses all of the strategies and
behaviors that they use to achieve their goals. For many consumers, budgets were a way of
making sure spending habits match up with their plans for the life they want to live.
Getting a good education
Interviewees suggested that one of the best things that you can do for yourself financially was
making sure you got a good education. Many in the qualitative research noted that income and
education were positively correlated and talked about education opening doors to higher
paying, more stable employment. Others indicated that education in and of itself provided
financial knowledge that allowed you to make better informed decisions. Others, particularly
younger working Americans, said that getting an education was very important but that taking
out the necessary student loans has negatively impacted their financial well-being.
Hustling or doing what it takes to find work
One of the most common drivers of financial well-being in the qualitative research was having
stable employment. In the event of a job loss many interviewees said that it was important to do
whatever you had to do to provide for yourself and for your family. For some, this meant taking
jobs that they would not normally take in order to secure a paycheck. Some talked about
hustling to find work as being entrepreneurial and taking risks. Often consumers talked about
hustling to find work in the same way they talked about being hardworking or being driven.
Investing
Investing was commonly considered an important behavior to generate wealth in the short-term
as well as a way to secure an individual’s future. Like other financial behaviors, the qualitative
research suggests that investing encompasses many different kinds of behaviors. For some
consumers, investing was participation in the stock exchange. For others, however, investments
were more general and included purchasing a home or a car. Some practitioners suggested that
all purchases should be viewed as investments as a way of encouraging a more future-oriented
perspective.
Lifestyle
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In the qualitative research, many interviewees suggested that part of their financial well-being
meant being able to maintain their current lifestyle into the future. Many working-ageworkingage Americans used lifestyle to refer to their current spending habits, such as going out to eat or
spending money on “wants.” Some suggested that an excessive lifestyle was a detriment to their
financial well-being because it represented not thinking about the future. Consumers and
practitioners both said that being content with what you have or maintaining a more frugal
lifestyle is one way to achieve financial well-being.
Rules of thumb
Many of the financial behaviors that consumers described as beneficial for financial well-being
are strategies they synthesize from financial information they gather from different sources and
from personal experience. “Correct” or “beneficial” financial behaviors are often communicated
in the form of rules of thumb, such as “pay yourself first.” Some consumers talked about
learning rules of thumb from their parents.
Savings
Throughout the qualitative research, working-age consumers and practitioners spoke about the
importance of saving as a means of securing their future and protecting against unforeseen
expenses. For many, saving was thought of as a conscious decision and most interviewees
thought of saving as a daily activity that is tied to being frugal. However, the qualitative
interviews showed that saving is a not a singular behavior, but rather it encompasses multiple
behaviors and strategies. For some interviewees, saving was putting money in a bank account.
To other consumers spending less or shopping around was a way of saving money. For others,
investing was a different kind of saving strategy. In particular, using a retirement account as a
savings investment was common among working-age Americans. Many of those interviewed
suggested that people employed different saving strategies based on their circumstances and
their time horizon. Most consumers and practitioners both agreed that budgeting was an
important saving strategy.
Watching others or seeking advice from others
Working-age Americans commonly described the importance of actively using the people
around them as resources. Many consumers described gaining knowledge from watching others
who have gone through the process and made mistakes. Many people talked about soliciting
advice from family and friends in their social networks. For others just having friends or family to
use as a sounding board to be confident they were doing the right things or making the right
choice was important. Working-age Americans commonly sought out information on investing,
saving strategies, buying a car or buying a home.

FINANCIAL KNOWLEDGE
Budgeting
Many consumers talked about the importance of budgeting either as a guide for future spending
or as a way of identifying spending habits. Like other financial behaviors, budgeting
encompasses many different strategies that change depending on an individual’s purpose. Some
consumers said they learned to budget from their parents, who actively encouraged them to
participate in creating the household budget. Other consumers learned from friends, especially
if they saw them as good money managers.
Buying, selling and/or owning a home
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Many consumers expressed that they knew very little about purchasing a home when they first
went through the process. Some reflected back and said that they wished they knew what you
need to know before buying a house, or needing to know what owning a home entails. For some
understanding the terms and conditions concerning their mortgage was something they wished
they had known more about. Others said they wish they had inspected their home prior to
purchasing it. Still others said that they had difficultly knowing when it was safe to purchase or
when they were financially secure enough to purchase. Others said that they had
underestimated the costs and expenses that come along with owning a home.
Credit cards
Many consumers had reservations about using credit cards and suggested that using credit and
credit cards responsibly was important for achieving financial well-being. For some working-age
Americans, this meant knowing the lexicon involved with credit cards, such as APR and annual
fees. Some talked about knowing what a bad deal is. Most consumers said that they learned
how to use credit through personal experiences and mistakes. Some consumers also talked
about how once they were in debt, it was important to know how to manage debt effectively.
Some consumers said that it was important to pay off the highest-interest debt first, to avoid
paying more in the long run. Others suggest that you should pay off the largest debt first,
regardless of interest. Others suggested that it is best to pay off the smallest debts first, so that
you can eventually commit more to the larger debts and so you do not become discouraged.
While the strategies varied, it is apparent that consumers feel that debt has a major impact on
individual’s financial well-being, and knowing how to manage credit card debt effectively is
important.
Doing financial research
Both working-age Americans and practitioners agreed that doing financial research was
important for acquiring financial knowledge. Many consumers indicated that this was
particularly important regarding complex issues like taking out a loan or purchasing a house.
However, many of those interviewed decried the sheer volume of financial information available
and felt that knowing where to go for information is critical. How and where people actually did
financial research was varied: Some read financial books by practitioners like Suze Orman.
Others said they read the business section of the newspaper every day. Some said that when
they need information they can go to the library. Many of those interviewed said that almost
anything you needed to know was available on the internet and blogs. Some consumers reached
out to a financial professional either as a source of knowledge or to use as a sounding board.
Family and spouse or partner
Both working-age Americans and practitioners said they primarily relied on those closest to
them for financial information. For many working-age consumers, parents were seen as
particularly useful because they may have gone through similar experiences before. For other
working-age consumers, their spouse or partner was a source of knowledge because they had
their own lived experiences and resources to draw from. Many of the conversations consumers
described were informal. Some consumers solicited advice by asking what seemed like the best
option or by asking how they should go about engaging in a particular financial behavior. Others
used their family members simply as sounding boards in order to feel more confident that they
are doing the right sorts of things and making the right choices.
Financial advisor

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Financial advisors played an interesting role in the qualitative research. Many consumers cited
them as important sources of knowledge, but people said they actually used an advisor less
frequently. Working-age Americans indicated that they used financial advisors primarily as a
source of knowledge about managing finances or making investments. Others said that they
sought out an advisor because they wanted help finding employment. Some consumers wanted
to use a financial professional as a sounding board to legitimize the knowledge that they already
had but were unsure of. Perhaps unsurprisingly, it was most commonly financial practitioners
who suggested that financial advisors played a major role in people’s lives. This should not take
away from financial advisors, because for some consumers, especially as they age, having a
financial advisor can strongly affect their financial well-being.
Financial plan
Many of those interviewed described having a financial plan as a critical part of achieving
financial well-being because it gives meaning to other behaviors. Both consumers and
practitioners indicated that developing financial plans is not easy and strategies to do so are not
universal. Most consumers and practitioners said that the most successful financial plans were
ones that were anchored by realistic goals. Most people develop them on their own or with
input from close friends and family. Some create budgets to see how they spend their money
and create their plan accordingly. Sometimes people may not even refer to them as financial
plans, just as general things they’d like to do. For some consumers, plans were long-term, like
saving for retirement or to buy a house. For others, they were short-term, like paying off debt or
saving for the holidays. Regardless, the kinds of goals individuals create for themselves greatly
affects the kinds of information they seek out and deem important in their lives.
Government policies
Some consumers said that they did not know as much about paying taxes as they thought they
should. As some practitioners suggested, this was particularly true in applying for refunds or
claiming exemptions that can provide working-age Americans extra flexibility. In addition to
taxes, some consumers and practitioners suggested that government-funded welfare programs
were influential in some people’s lives. However, how to apply and access these programs was
often thought of as difficult and complex. Supports such as unemployment which could be
hugely beneficial for those who need them were left underutilized. Some practitioners also
noted that some of their clients over-utilized these welfare programs. Some said unemployment
and welfare programs promoted complacency.
Investing
Throughout the qualitative research, consumers commonly said that they would feel more
confident in their financial knowledge if they had more information about investing. Among
many consumers investing was commonly seen as the “next step” beyond what the average
person knew with regard to finances. Some working-age Americans said that they wanted to
enter the stock market, but were unsure of how to start. More commonly, working-age
Americans were already investing but wanted to know differences between investment options,
or to know when to invest. Many consumers indicated that their primary investment strategy
was through employer-provided retirement accounts, such as a 401(k).
Personal experience
Most of the consumers indicated that they primarily acquired financial information through
personal experience. People said that they learn by doing and, frequently, learn from mistakes
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they have made. This is was especially common with learning how to use credit cards
responsibly. Many consumers said they made mistakes with getting into debt when they were
young, especially if they got a credit card in college. Consumers noted that those bad decisions,
as long as they were not too great, were critical to improving their financial well-being because
they learned from them. Many interviewees also indicated that they evaluated information they
received from others against their own personal experience. In this way, consumers often
learned and developed strategies around behaviors over the course of time.
Savings
Throughout the qualitative research, consumers commonly said that saving and knowing how to
save was an important step for most people in reaching a higher level of financial well-being.
Many consumers had different approaches to saving money. Some consumers suggested that
the different saving strategies reflected differences in knowledge. Some learned saving
behaviors from friends and family. These were often described as rules of thumb such as “pay
yourself first.” Other consumers developed tools such as budgets to identify ways they can save
more. Others learned from personal experiences such as trying to save money for a purchase.
Consumers and practitioners both said that best way to save was to have a goal. Regardless of
the approach, consumers indicated that they constantly tested and evaluated the efficacy of
their saving strategies.
Teaching children about money
Both consumers and practitioners recognized that upbringing was very important as it often
serves as the first place people acquire financial knowledge and behavior. However, many
interviewees noted that our upbringing can provide and reinforce bad behavior just as easily as
it can good behaviors. Some consumers and practitioners said that as a country we should
emphasize financial education and literacy in school. Many consumers indicated through their
own experiences or through observations that young adults often lack the necessary financial
knowledge. Most consumers said that they learned primarily through mistakes they make
during this period of time.
Trust in source
Being able to trust financial knowledge was another theme that came up among consumers.
Consumers indicated that evaluating the information presented to them was a critical part of
translating financial information into behavior. Some practitioners indicated that this may be
why consumers tended to gather most of their financial knowledge from family, friends and
their own personal experiences. Trust may also play a role in why most consumers said they
were referred to their financial advisor through friends or family. Other consumers also said that
they trusted their financial advisor because they were introduced in the workplace, therefore
legitimizing their interests. Both older and working-ageworking-age Americans throughout the
qualitative research discussed the importance of trust and trusting the source of knowledge.
Upbringing
Upbringing was among the most common themes in the qualitative interviews. For many
consumers, upbringing was the most important source of knowledge. Watching parents and
how they navigated their financial lives greatly impacts the way an individual will behave for the
rest their life. For some, upbringing was the “first classroom,” a place to learn financial
knowledge but also the primary place to learn cultural norms. Practitioners commonly said that
individuals learned from their parents not only how to engage in financial behaviors, but also
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why to engage in financial behaviors. Some consumers also said that watching their parents
struggle was motivation to do things differently.
Watching others/seeking advice from others
For some consumers, friends and social networks played a similar role to family with regard to
acquiring financial knowledge. Many working-age Americans used friends and social networks as
information resources about investing, financial products, choosing between financial
institutions, and any number of financial behaviors. In this way, common cultural and social
norms are reinforced. Working-age Americans specifically said that social networks were
important sources of knowledge about job opportunities. Financial practitioners also noted that
the information consumers get from friends is not always right and said that social networks can
just as easily reinforce bad behaviors as they can good behaviors.

PERSONAL CHARACTERISTICS
Being frugal/cheap
In the qualitative research, frugality was thought to positively influence an individual’s financial
well-being. Many interviewees indicated that some people are better able to make do with less.
Some talked about frugality as a mindset, that they consciously decide to spend less. For some
this accompanied being far-sighted or future orientation. Others suggested that some people
simply just do not like to spend money.
Being materialistic
Some interviewees described materialism as a major cause of overspending. In the qualitative
research, materialism was described similarly to not giving into social pressures and not needing
to keep up with the Joneses. Some described it as knowing being able to enjoy the simple things
in life and knowing what makes you happy. Others described not being materialistic more as
making due with less and not spending money on “wants.”
Driven
Being driven was used to describe highly motivated individuals. While often spoken in the same
breath with hardworking, being driven reflected having a goal and being motivated to achieve
that goal; it does not necessarily constitute willingness to work. Most of those interviewed felt
that being driven correlated positively with “good” financial behaviors like saving and budgeting.
For others, driven individuals were seen as more likely to overcome adversity.
Far-sighted/planner/future-oriented
The ability to cope with unforeseen events or shocks was commonly thought of as critical to
achieving financial well-being. Many interviewees recognized that some people tended to be
better at planning for the future than others. For some, those that were future-oriented or farsighted tended to be more frugal, have more self-discipline, or were better at sticking to a
financial plan.
Hardworking
Many of those interviewed felt that hardworking individuals were more likely to achieve
financial well-being. Some working Americans felt that being hardworking led to more
opportunities in the work place, providing those individuals with more stable employment and
allowing them to climb the income ladder. Others recognized that having a spending plan and
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using a budget was not a one-time decision. Maintaining the self-control necessary to stick to
the plan requires work.
Not needing to keep up with the Joneses
Many of the interviewees indicated that social pressure was one reason that people overspend.
Individuals feel the need to “keep up” or “fit in” with family members, friends or others in their
social network. Some described the ability to not give into these social pressures was influential
on an individual’s financial well-being. For others it was describe more as really knowing what
makes you happy and not needing to spend money on things you do not need.
Responsible
In some of the interviews, working-age Americans suggested that more responsible individuals
would be more likely to achieve financial well-being. For some, responsible individuals were
thought of as more likely to be able to distinguish between a need and want. Others believed
that responsible individuals were more likely to pay their bills on time and not fall into debt.
Similarly, responsible individuals were thought of as better able to avoid risky behaviors like
overly using credit cards.
Risk
In the qualitative research, figuring out how to balance risk was a common theme. Many
recognized that financial behaviors such as investing were inherently risky, but many considered
them important or even necessary for their financial well-being. Some thought that being willing
to engage in some risky behavior or being able to tolerate risk positively impacted financial wellbeing.
Self-control/discipline/patience
Many of those interviewed suggested that at times spending money was easier that not
spending. We are constantly presented with choices, and most felt that achieving financial wellbeing required having the self-discipline to be able to make choices that work towards our goals.
Some described this as making sacrifices in the short-term for long term gain. Other
interviewees described that there are social and culture values that encourage consumption.
Having the self-control and the discipline to resist these pressures to keep up with the Joneses
and “delay gratification” is thought to be beneficial for achieving financial well-being.
Self-esteem
Having good self-esteem was commonly thought of as important for achieving financial wellbeing, but what constituted “good self-esteem” varied. For some it was having confidence, or
being able to handle what comes your way. Many of the interviews described spending that was
driven by emotion tended to negatively affect financial well-being. Some thought that being
insecure or not feeling good about yourself led to impulse spending or spending that was
primarily meant to make themselves feel better in that moment.
Stressed/worried
Throughout the qualitative research, stress and worry was thought of as a product of a low level
of financial well-being. Living paycheck to paycheck and not knowing where the next money was
coming from was stress inducing. Some, however, thought that stress was itself a driver of
financial behavior. For some, being stressed led to impulse spending or spending that was
primarily meant to make themselves feel better in that moment. Others thought that being
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stressed made people focus on only the obstacles at hand and made planning for the future
more difficult. On the other hand, some thought that being stressed or a worrier made some
people focus on the details and actually made it easier to make better-informed financial
decisions.

SOCIAL AND ENVIRONMENTAL CONTEXT
Community
For some consumers, the community was talked about synonymously with social networks.
Others, however, saw the community as also including community resources which provided
resources and financial knowledge. These resources included the library, banks, and other
institutions. For others, community resources included places like churches or food banks which
offered support during hard times.
Culture
Many of the interviewees indicated that cultural values and social pressure caused some people
to overspend. Some referred to it generally as a “culture of consumption” where status was
intrinsically tied to material goods. Others talked about it more specifically as feeling like they
had to keep up with friends and family. The role of culture varied with geography, and some
consumers even noted this. For example, consumers in Wyoming felt much less pressure to
have a nice car whereas in LA the pressure to own a luxury vehicle was much greater.
Economy
The role of the greater economy on people’s financial lives was particularly salient in the
qualitative research. Many had friends or family that had lost jobs or were forced to take pay
cuts to stay employed. Some described losing a lot of money on their investments, which made
them feel a lot less stable. For most, it was the local economy and local job market that had the
most immediate impact on their lives. Others discussed the economy on the national level and
some even described the international economy.
Family
Family was among the most common themes in the qualitative research. The impact of “family”
on financial well-being is multifaceted. Many relied on family members, especially parents, as a
source for financial knowledge. Others even relied on family members for resources such as a
vehicle or loans to cover expenses. Especially for younger working Americans, parents
sometimes provided a place to live. Some received a windfall in the form of an inheritance that
provided additional security and/or allowed them to make a large purchase such a car or a down
payment on a home. For others, family was a detriment, especially for the “sandwich
generation.” Many thought that children were major drivers of spending, especially with regard
to paying for education. Others talked about the costs involved with taking care of aging
parents, especially in cases of cognitive decline.
Friends
Friends were thought of as similar to family or spouses. Some viewed them as sources of
financial knowledge or connections to job opportunities. Some even provided resources during
hard times. Some consumers thought of friends as a detriment, noting that they often spend
more money with friends than they would have otherwise.
Good employment
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Employment was viewed by many consumers and practitioners as one of the key drivers of
financial well-being. In addition to providing a stable income, employment often provided
benefits such as health insurance which consumers described as crucial for their financial wellbeing. For some, the workplace provided them with important financial knowledge, particularly
about retirement.
Government policies
The most common theme with regards to government policies was taxes. Most felt that taxes
negatively impacted their financial well-being, though some thought that they were necessary.
Some thought that affordable public transportation improved their financial well-being. Some
working-age Americans and practitioners opined that welfare programs such as unemployment
benefits and rent-controlled housing could greatly impact an individual’s financial well-being.
Social networks
Social networks encompassed friends, family, co-workers, and their connections. Most
consumers thought that having an extended social network positively impacted their financial
well-being, as they believed that they had more resources to draw from. This was particularly
true in the case of connections to job opportunities. Social networks also were a source of social
pressure, and greatly shaped and individual’s expectations for their financial lives.
Spouse/partner
An individual’s spouse or partner was a common theme in the qualitative research. For some a
spouse or partner was a major source of financial knowledge, providing their own life
experience and social networks. Some described having two incomes as greatly improving their
stability because they had something to fall back on. For others, a spouse had a positive
influence on an individual’s financial behavior. Many interviewees said this was particularly true
when partners shared common goals or were working from a common financial plan. When
partners did not share the same financial values, many said the opposite was true and they may
actually be a detriment to financial well-being. Some described how one partner is affected by
the behavior of the other, like if one partner has a poor credit score.
Upbringing
In the qualitative research, nothing was thought of as more influential on financial knowledge
than upbringing. Some said they learned how to engage in particular financial behaviors because
their parents explicitly talked to them about saving or opening a bank account. Others said they
learned just by watching their parents handle money. Most of those interviewed agreed that
childhood was a key time period where individuals adopt values and cultural norms that greatly
structure the way they behave financially.

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APPENDIX E: QUOTES FROM WORKING-AGE AMERICANS AND
PRACTITIONERS

FINANCIAL KNOWLEDGE
“I think that I manage the money that I have, but as far as investments or stocks or anything like
that, I don’t really know much of what I do. I get these quarterly reports from my IRA and you
know, from my 401[k], but like I don’t…. I mean I should read them because it’s my money. I
just kind of look at the balance. I wouldn’t think ‘oh, what other stocks could I be investing in
that would maybe make this this percentage more.’ I feel like if I had a better grasp on that for
myself, my well-being would be higher.” – Working-age American, Chicago
“We had employee stock option plans. I couldn’t convince enough people to take the employee
stock option plan because they didn’t understand numbers. I was like wow; so I would draw it
out for them. You know, beginning price, ending price is lower than what they’re going to buy
the stock at. If the beginning price is really low and the ending price is really high. You can make
a crapload of money and you can sell it the next day. You walk away with all this extra money.
Or you can just let it ride. It’s not your life savings. It’s just X amount every month. So I
Googled a lot of that. That paid off well.” – Working-age American, Los Angeles
“Not many people are saving their money for investments, and even if they did, how financially
literate are people with respect to investments? I mean people can tell you the difference –
price difference between Ross and H&M and Marshalls – but they can’t tell you what they
would do with that money if I told them to put into something that would earn a return other
than a savings account…. Smart people invest their income in income generating assets that add
net worth – that grow their net worth over time.” – Practitioner, Los Angeles
“I mean having your investments perform well is obviously will result in you feeling better about
your finances. However, that is cyclical and that changes literally day-to-day. So I think another I
guess basis of financial well-being would be making sure you’re not overly exposed to market
risks. Trying to, you know, participate in market upside while at the same time have your
money in other vehicles or products that minimize the market risk that you’re exhibiting. I mean
go ahead. I guess I was going to say having the wide variety – like the diverse portfolio, and I
don’t mean just diverse mutual funds diverse types of investments. You know, having things in
very safe places which don’t have the volatility.” – Practitioner, New York
“I got out of college right at a time when you know how everybody knows about FICO scores. 30
years ago I knew what FICO were. FICO and MDS. MDS must have been absorbed by FICO. So I
knew at a young age, right out of college – how bad you could hurt your credit.” – Working-age
American, Los Angeles
“They need to understand what a credit report is, what a credit score is and how to access and
leverage capital and that credit is a good tool when applied appropriately. It can be a bad tool
when applied incorrectly.” – Practitioner, Florida
“So we’re in the process of putting together a series of seminars that we hope to launch in
January geared through that GenX, GenY about that exact thing. So again, some of the things
that we came up with are things like just even understanding … simple things like credit scores.
Understanding how the different debt instruments work that maybe mortgage interest debt is
not nearly as bad as credit card debt.” – Practitioner, Washington, DC
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“I would like to see an actual class in a high school level that teaches the kids how to balance a
checkbook, how to use a credit card. The simple, what your credit score is, why it’s important. I
mean it affects everything – your car insurance – and that’s just something they don’t teach in
school. They don’t have time.” – Practitioner, Wyoming
“Yeah, I think education is key to financial anything. I think one reason we’re kind of in the mess
that we’re in is we borrow, borrow, borrow, and I don’t think people are taught that they have
to wait to have what they want. I don’t think they’re educated – not only at school but at home
about because I have noticed that parents are just as bad as kids. They want what they want
right then. They can charge it. They can get it – they can have it.” – Working-age American,
Tennessee
“Learn about revolving credit. Learn about principal balance vs. what your interest is. And
actually, I have noticed I pay all of my credit cards online. And now they actually have a field
that says how much of this payment is going to principal and how much is going to interest. And
I don’t know that people read it, but at least it’s there so they can say like well, you know – you
had the option to know. And I kind of want to know how much is being applied.” – Working-age
American, Wyoming
“When I started the job, I expected them to have this I guess – everyone kind of has this basic
knowledge of credit cards. But how that affects your credit – you think you know, the idea of
credit – yeah. I think ah – kind of fixing it before it gets too bad. You know, doing little things
here and there instead of just letting everything go and not paying anything.” – Practitioner, Los
Angeles
“I remember coming out of school getting my first credit card and you know, realizing as I spent
it – that I only had to pay back a certain amount. That seemed pretty easy. And then after about
a year I realized I was paying a higher amount. And the number kept on growing, and then I
started thinking about well, what would it really pay to get this paid off? And I realized that the
credit card companies weren’t helping me pay off. In fact, what I was doing was digging a bigger
hole…. Then I realized the minimum amount of pay off on my credit card was not getting me
ahead. That was something I learned on my own at least back then. I was paying enough but
my balance wasn’t going down. I thought that was rather insidious.” – Practitioner,
Washington, DC
“Depending on how long you had that house and how long ago you bought it. Even if you
acquire a house, there needs to be information that talks about the cost of home ownership.
Everybody brags about how wonderful it is to own a home, but I don’t hear anybody just in
casual conversation talking about how much it costs to own a home. There needs to be specific
education on that – even if it’s after they make the big purchase. You know, so you make the
big purchase, you didn’t know about a whole first time home buyer program, or you didn’t
qualify. So now the education afterwards of how do you financially live where you are and
make this thing work without going into foreclosure.” – Practitioner, Los Angeles
“Buying a house they have to know how much they have to put down, and the interest rate,
what their monthly payment's going to be how is going to impact their monthly finances and
their future ability to accomplish their goals. You know, where to save the money to save for the
down payment, how long it's going to take.” – Practitioner, New York
“(Okay, alright. And so you started putting that money away and how did it feel when you did
that every month when you first started doing it, what were you thinking?”) Christmastime.
(“Christmastime? To put it away at Christmastime?”) Yeah. I set it aside for Christmas and I
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would say ‘Christmas money.’ But then I started thinking, and I might, you know, Christmas
time come, I might spend a hundred or two hundred dollars then I say, you know what? I ain't
even going to do that. I'm just ain't even going to do that. I'm just going to let it stay and build
until I get it to where I want it to be. If I go through it at Christmastime, then I'm going to be
right back where I started from.” –Working Age, Washington DC
“Yeah, because I think when I first because I’ve been out of college now for like eight or nine
years. But when I first graduated, I wasn’t thinking about the importance of savings at all. I
mean, I was just thinking like oh, pay my bills, pay rent, and then I wasn’t thinking at all about
long term savings. Now that I’m almost 30, my friends are getting married and having kids and
buying houses, and you start realizing I’ve got to start saving. I took like a Dave Ramsey
Financial Peace class; I took that three years ago. My mom pretty much made me do it. She
said it would be the best [inaudible] and it really was. It made me think completely differently
about why it’s important to save and managing your money.” –Working Age, Atlanta
“Yeah, he is just like I mean his car was running kind of rough just take in the shop and get a
tune up. No, no, let’s go you and I. We took the whole engine out, put it back in. In the end, he
was like you know, [x] we spent all day there – all day. Really, we’re taking jacked up this car in
the driveway, took it out and he’s all I did it not because it was cost effective. I did it to show
you a lesson that you can do whatever you need to do. You don’t need to rely on anyone else
and pay a premium to have it done right away. If you don’t have the funds, you don’t have it. I
have money to buy a brand new car. But the lesson learned was that you could do whatever
you need to do with your own two hands. Now it’s going to cost you. It’s not going to be cost
effective, but if you need to do what you need to do not spend the money just because you
want it done quicker or more convenient or whatever, you don’t have to spend that money. You
don’t need to.” –Working Age, Los Angeles
“…older folks I guess I think they always make good decisions when they have taken the time to
really think about retirement. To really understand what life is going to be like afterwards. He
had an employee here who worked here like 40 years. She didn’t want to retire. I think she was
scared to retire. But her son-in-law is a major financial like a wealth management type person.
And so he told her he said you know what you’re supposed to get social security wise. She said
yes. He said live on that for 9 months and she said okay. And he said put everything else in
savings.” –Practitioner, Wyoming
“Another thing that we think is very important is making sure people are saving money. The
average American does not save very much money and it’s causing some serious issues right
now with people who are leaving the work force. (“Definitely yeah. It’s only going to get
worse.”) Yeah, absolutely. People just are saving small, small quantities of money when they
should in fact be saving 15-20% of their gross income every single year.” - Practitioner, New
York
“I think that some people are better educated in how to secure financial well-being than others.
I can make a lot of money, but if I spend it frivolously, there’s nothing wrong with having fun,
but if I spend everything that I take in then I don’t think I’m going to have financial well-being
because I haven’t secured anything for the future or for a raining day or whatever.” –Workingage American, Atlanta
“My oldest son – you know, he an Xbox and it broke and he said dad, I don’t know what to do. I
can either send it into Microsoft and they may or may not fix it – but I won’t get my $100 bucks
back, or I can go buy a brand new $300 one. And I told him I said – [x] are you ever going to be
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without an Xbox in your life? And he looked at me and he said no. I said okay, so I said you
know, when you buy an Xbox, you immediately start putting $10-15 bucks away every month for
that replacement so that once you build up that replacement but you’ve taken such good care
of your Xbox – it’s in great working order, and you don’t need to replace it. Now you’re working
on the second replacement – so you continue to do that so you don’t have to – when you come
up with these decisions, it’ll be easy for you because you can just buy the new one. So at the
end of the day he sent it in and got it fixed. But what he’s done now is he has a reserve set up
that he can then replace that broken Xbox if and when it ends its lifecycle which it eventually
will. That was an example of you know, trying to teach my kids about you know, money.” –
Practitioner, Montana

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FINANCIAL BEHAVIOR
“You have to really compare what you make to how much money you spend. So you can’t really
spend you know, $1,000 if you only really make $800. I see a lot of people doing that where um,
they’ll be like oh, my gosh, I just got paid, and I did this and that. And XYZ, and I didn’t get a
chance to pay my light bill. Well, for me, I like to pay my bills first. And whatever I have left
over, then that’s what I will do you know, to use for groceries or you know - going out with the
kids, activities or whatever.” – Working-age American, Chicago
“As she would do it she would say things like – ah, well, this is just a little gift for Future Me like
talking about if she wanted to make a purchase. Like she was talking about buying her wedding
dress. She’s like I know but Future Me is going to have to pay for it. So just having that idea of
Future Me and doing yourself right in the present so you can do yourself right in the future.” –
Working-age American, Wyoming
“You need to balance your budget and make sure that you’re budgeting properly – that stays
with you – and you utilize that no matter what the level of income you have. You know that you
only have you know, a certain amount of money per week – then, you budget that out so you
can survive inside of that week. And then you also become resourceful when you realize that
the amount of money that you have is not going to make ends meet.” – Practitioner, Los
Angeles
“The successful clients know what a balance sheet is, and they don’t just look at oh, here’s my
income. Here are my expenses. This is and what I – the money I have to spend. So they spend
beyond their real capacity – and they get themselves in trouble with that.” – Practitioner,
Wyoming
“He said you want to sit down with a budget and list out all your expenses and what you think
it’s going to be every month. And it’ll change – for example {too soft} and this and that. Maybe
your house might be the same. And then how much money you’re bringing in. And then you
compare your revenues to your expenses and hopefully at the end, you’ll have some money left
over.” – Practitioner, Washington, DC
“You always pay off your credit cards every month. That’s nonnegotiable, right? Which means
if you want to have enough money in your hand to be able to do some fun stuff - you got to be
careful how you spend it all during the month right?” – Working-age American, Chicago
“I keep a budget, I have everything budgeted from here until December, and then I have two
years prior, how I spent my money, tells me everything, where I spent this because I have to see
myself and see what I’m doing. If I just started doing stuff and I didn’t have a record, then I
would be really out of control. I think a record keeps you in control and a lot of times, people do
not want to write stuff down. It’s just the little things, and they say, ‘Why did you have to write
it down? I know what I’m going to spend.’ No you don’t. Write it down.” – Working-age
American, Atlanta
“That’s their choice on what they need to do. But that’s why I say it’s old school – you know,
you write things down. You keep track of things. And you know where you’re at each month.
You adjust your spending habits accordingly.” – Practitioner, Montana
“They need to know how much it’s costing their family daily – annually. They need to know
what the costs of products and services are. They need to understand the formula to determine
how much revenue they need to have in order to save for their retirement which is defined in
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the manner that they choose to define it. They need to actively be monitoring their spending
habits to ensure that they are incorporating their goals into their spending habits and monthly
budget management.” – Practitioner, Florida
“They also need to know a budget but like I said before, they kind of do, but practicing it would
be better. And maybe understanding the importance of tracking where you actually spend
money. I mean because if you don’t keep a budget, that’s fine. But you at least you should
know do you go out to eat 4 times a month – or do you go out to eat 20 times a month? I mean
you should know where your money is going.” – Practitioner, Wyoming
“We have a debt plan now that we – a snowballing effect is what it’s called, so we are paying off
and but I could add more to it, but we have a plan set up by this date that you have this done,
2015 her car, 2016 my car, but part of the challenge is to make sure because I want to stay on
the same track.” – Working-age American, Atlanta
“Having a goal, what do you want? How old do you want to be when you retire? What do you
want to be able to do when you retire? You know, do you still want to have your home? Do you
want to downsize? Would you want a second home? You know, how much money are you
going to need to be able to maintain your current lifestyle without having to dip into savings
significantly to give you a chance to kind of reap the benefits of working so hard. As well as you
know, knowing what you need to do to reach that goal.” – Working-age American, Chicago
(“What leads somebody to have financial well-being?”) “Having goals, knowing what it is you
want so you can prioritize how you allocate your money.” – Working-age American, Wyoming
“I don’t know exactly what causes people to make good decisions other then they have been
trained well. Maybe they have big goals. And they are really doing it the way they should –
taking it step by step and figuring out what do they need to do to get there? And so those
people tend to make good decisions because they are really trying to work towards something. ”
– Practitioner, Wyoming
“It’s one thing to have more but to save money is harder if you don’t know what you’re saving
for. But if you have aspirations to buy a home or if you have a home and you aspire to have
rental property, then you need to know what you’re saving for. You need to know what you’re
trying to accomplish because otherwise, even if you’re saving just for retirement – if you don’t
know what the cost of that retirement, it’s going to be harder for you to save even $100.” –
Practitioner, Los Angeles
“Create a plan. Well, we first be realistic. Being realistic in where you are in your life at that
given time. And then creating a plan short term, midterm and long term to get to the point
where you want to be. And then, you know, take steps a little bit at a time to get there.” –
Practitioner, Los Angeles
“We’re people that don’t even have a will yet. A little fly by nightish. But then when you look
around the world, it’s like why try? Why care? It can all be pulled right out from under you in
an instant…. What I need to do, we don’t have wills. I know. We don’t have wills, and I found
out all about probate and how much money they take and…I’m just like oh, my God, I have to
get a will. That’s on our to-do list right away.” – Working-age American, Wyoming
“You also need to do a trust too. That’s the one thing that my husband and I know we need to
do where we’re running into a roadblock. We haven’t done it is a couple of things is we haven’t
decided who is going to be the trust, the executor of it.” – Working-age American, Los Angeles

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“Someone’s got to start a conversation. Usually it’s the person who’s older and seeing this for
themselves. But usually or but sometimes it’s kids who are coming into the family – in-laws or
it’s kids themselves who are starting ask questions about you know, what would happen to
whatever personal property or what would happen to – what would you want us to do if
something were to happen?” – Practitioner, Wyoming
“I managed to start saving and had enough for like a down payment on a condo. And so I own
property. You know, and going through that process and you know, basically it wasn’t all my
savings that went towards the down payment but like a good chunk of it. So then I was like oh,
no, now I have to build that up again. You know, like I have a 10 year old car that eventually you
know will need a new one. Just that fear of anything medically should happen - you know, you
need to have backup.” – Working-age American, Chicago
“Just make the investment. I’m wondering now - I should have continued to pay rent. But I
think the investment - because it will return later. You know, as long as we keep that thing. I’ll
probably move out of it and he can take over. But that’s an investment. You will get a return
later in years - you know, on that. You sell it and you walk away.” – Working-age American,
Chicago
“Then, for probably 10 additional years, I worked two jobs. I never had summers off. I worked
all summer to pay for my house, and now I mean I paid it off 15 years ago. It’s completely paid
off. I own it free and clear….This is the best thing I ever did was buy this land, this house. I paid
$42,000 for my house and land back in 1977. It’s probably worth $400,000 right now. So when I
think of the future, that’s kind of part of my financial security.” – Working-age American,
Wyoming
“When you say financial well-being - to me, I get you’re financially stable. Which I know a lot of
people, and I don’t think anyone is actually financially stable. There’s a lot of people still living
from check to check. Um, so me personally, I just take one day at a time. I know there are
people out there saying to invest. But it takes money to actually invest in money. Some people
don’t have that money.” – Working-age American, Chicago
“I’m getting older, and it’s starting to hit me - okay well, kids are going to be out the door soon.
Financially better {laughter} that much to spend. And I’ll have that extra money to put aside.
But looking into the housing market and real estate also I’m thinking of investing money - the
money I have now into real estate. And hoping that either do that or kind of figure out what we
can invest into our retail store or open a business as our form of retirement.” – Working-age
American, Chicago
“I mean I think the big thing it’s what people invest in. So successful people tend to invest in
assets that grow – that appreciate and create revenue streams.” – Practitioner, Los Angeles
“Well, you know, I have some clients they go into the stockmarket and lost a bunch of money –
and I think some of them that don’t really go and look at the background or really don’t do a
research I think stock investing you really need to know what you are doing and they don’t.
They just go in and just follow the crowd and lost a bunch of money.” – Practitioner, Houston
“You would gain financial comfort through working hard and saving your money, working two or
three jobs and putting that money aside, put it into a 401K, buy some of your company’s stock
options and just saving, put it in the savings account. Oh, yeah, you can amass whatever
because when I read the book The Millionaire Next Door, the average millionaire in America was
like 60 years old, they either worked on a job or started a business ad just put money aside in
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savings and investments. And it grew over a period of say 30 years. It wasn’t any magic that
happened.” – Working-age American, Atlanta
“I mean I think I’m doing for the most part the things I should be doing. I probably could be
saving more money than I am. Like I contribute to a 401[k], and then you know month to month
basically. Whatever is in my checking account if there’s like more than normal, I’ll put that, but I
don’t have like a regular routine. It doesn’t really happen all that much.” – Working-age
American, Chicago
“All of a sudden I hit 40 and I realized oh, my God, I’m halfway through life. If I want to retire at
60, I’m halfway through my career. It was turning 40 that really caused me – I was {talking
together} 40 is what really, really got me thinking about oh, my God. I need to get serious. I
need to start dumping as much money as I can in my 401[k].” – Working-age American, Los
Angeles
“What do you need when you stop working? Right, once you stop punching in at work, you stop
getting a paycheck. But you still want to eat food – maybe travel in your retirement. So the
reason why we’re working is not only to sustain our lifestyle, but to do what? You want to save
money to maintain a future lifestyle.” – Practitioner, New York
“You still have to be frugal. I don’t care how much money you have, you still have to be frugal
because you do not know what will happen next year. And it’s stupid to throw money away just
because you’re making more money than you thought you were making and all that stuff.” –
Working-age American, Washington, DC
“I’d say don’t blow your money on unnecessary luxury stuff you don’t need. Stay frugal. Just
the bare necessities - exactly what you need - bare necessities - be frugal until you don’t have to
be frugal anymore.” – Working-age American, Chicago
“My wealthy clients tend to be extremely cost conscious about everything. I have noticed that.
Someone once said to me there’s a reason why they still have a couple million bucks in the bank.
They don’t let go of the money.” – Practitioner, New York
“$3 a day – $2 a day – you know, over the course of a lifetime, that’s easily a $30,000 decision
that you’re making a chunk at a time. A small chunk at a time. Doesn’t really hurt you. But
what if you had $30,000 extra dollars. Would that make life better for you?” – Practitioner,
Wyoming
“I be seeing stuff I want but I go to the store, you know, you see cookies, you see all this junk
food. You like, ‘I wish I had this. I want a box of doughnuts. I want to do this." Then you say,
"You got some money. Go get the money out your cabinet.’ And then you realize once you get
it out your cabinet you go to put it back to build your money back up so I said, ‘No, alright, no
just, you know.’” – Working-age American, Washington, DC
“That’s the thing is patience. You can’t have it all at once. You can’t try to have it all at once
because when you do, you’ve got to pay the price. And usually that price is much higher than
what is showing. That price is interest that accumulates 24/7. Is a payment that never stops. Is
a something else that you can’t afford to buy because you’re paying all of this interest.” –
Practitioner, Montana
“Just people are not really good thinkers. They think really just, to me, it’s like so illogically. I
just don’t understand it. It’s like basic things they have problems with. There’s like a disconnect

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between I owe this, I only make this, and this is what I want.” – Working-age American,
Washington, DC
“Just to not overdo it I suppose. To not ah - feel the need to spend - to not do things on impulse
I guess. Not to spend money on impulse. To really think about what you got to do - what you
want to do and what you have to do with your money.” – Working-age American, Chicago
“Yeah, sure I can put it on a credit card and make a purchase. Satisfy an immediate need. A felt
need. We talked about needs vs. wants. We have to be careful about the terminology.
Anyway, they felt they needed it at the time. And then not really thinking about the downside.
Thinking about the scenarios. If something were to happen to their earning ability and they
weren’t able to make a credit card payment, what would happen? What would that mean
further down the road?” – Practitioner, Wyoming
“I would say just be a comparison shopping – you have heard me mention that. So that –
especially the internet makes it so darn easy to comparison shop. Oh, my God, the first thing I
go to is I want to buy something major – I’m going to look at the internet and do comparison
shopping – um, so those would be key.” – Working-age American, Los Angeles
“The rule of 3 when you go in and you have to make a decision about a new sort of a purchase –
perhaps a large sort of a purchase – let’s say it’s life insurance – let’s say you’re buying a new
refrigerator or something like that. Take a look at three vendors and compare apples to apples.
Put them in a little chart so you’ve got them and you can compare features of all of them.” –
Practitioner, Wyoming
“Like Suze Orman – she if you can’t afford it, you know, don’t do it unless you can pay cash.” –
Working-age American, Los Angeles
“Many of the clients who make the better financial decisions are better educated. So they um,
and they have their own resources to put into the business rather than having it come from the
debt place, rather than an asset place – which of course, the {too soft} savings accounts are
perfect for assisting with some of that.” – Practitioner, Wyoming
“I think that’s probably the greatest threat to financial well-being is the debt. That’s something
that my elderly clients do not have. They do not – they don’t even like debt. Most of my clients
will tell me that they don’t use a credit card for anything unless they’re buying a major appliance
and they just don’t want to walk into a major appliance store with $1,000 of cash. Most of these
people they know what they have in their pocket, and they know what they have in their
checkbook.” – Practitioner, New York
“Buy property. Even if you can’t build a house on it – buy a piece of land. Because that
investment – no one can take that away from you.” – Working-age American, Wyoming
“Work hard and save money. I do tell them that to start with. And then I keep telling them the
same thing.” – Practitioner, Houston
“Especially in terms of credit, a lot of people to the people specifically who improve credit – are
focused on the future so that they either have positive accounts – that they either have been
paying on time or start paying on time – and they first make their efforts concentrated on
establishing positive credit. And then they worry about cleaning up any bad information.” –
Practitioner, New York
“I know how to do it now and how to set it to the side and "Look you can't touch this, this is for
a rainy day." For the rainy day does not mean when it rains outside. It means hard times. Hard
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times is going to come again one day and I want to be ready when it comes because I'm forty-six
now, so when I get like sixty or sixty five or seventy, I can save up.” – Working-age American,
Washington, DC
“I have a cousin, and she only makes $16,000. She’s a medical assistant, and I try to help her
save, but it’s very hard to save because once she gets her paycheck, it’s pretty much done. And I
know there’s - they say all the time - save, save, save, save. But if it’s not practical, then how do
you actually, you know save?” – Working-age American, Chicago
“You have to save for your future, save for your future. And the financial planner to put that in
motion and see how you know, how that goes. I always believe - {muffled} invest in the 401[k].
They {muffled} I don’t need to do that. No, just put $25 in. So I always preach that to the young
people about the 401[k] and matching it, and it’s going to grow, and this, that and the other. It’s
important. Put it there, leave it there - and you’re going to need it. Like when you lose your job
- and also I have learned you should always have - back in the day - making sure you have 3
months of your spending like necessities - 3 months put away. Now I need a year.” – Workingage American, Chicago
“It’s just like I don’t know what you want to use as an analogy but it’s if you don’t work at it, you
lose it. If you don’t – and so if you don’t keep working at your savings account, then eventually
you’re going to spend it all and end up with nothing. And so that’s why I tell people that. You
know – do what you can.” – Practitioner, Montana
“Never live beyond what you make, always spend less than what you make…. There are people
who never spend more than what they make. And then it’s just saving. If you can save. What
I’m saying is saving is the most central theme to have you know, financial well-being at the later
age of your life.” (“What about for younger clients?”) “I would tell them to start saving now.
Whatever you could afford. It doesn’t matter. Even if you can save 5% or 8% of some financial
advisors advise you – whatever you can save. You know, it’s a starting point.” – Practitioner,
Houston
“You know, and sometimes we get clients who they may have one aspect, like I have a woman
like she doesn’t really have permanent work, but she saves every dang penny she has. And I
was so shocked when I see it – okay, so even though you’re not working consistently, you’re a
really good saver. You know what? If we could just get you that permanent job, you’re set.” –
Practitioner, Los Angeles
“Basically not doing those dumb things like charging up your credit cards and paying the
minimum payments. I use credit cards, but I pay off the balance every month. I’m the type of
person that I like to get my frequent flyer miles. That’s why I throw everything on my credit
cards, pay off, I usually have one or two. Pay it off at the end of the month. We just do one
payment. Plus, it’s on the credit card. I have got the record of it there.” – Working-age
American, Los Angeles
“So the people then, so again, back to what they never understood that they have to plan for
you know, the possibility that their life may change in the future. And so people they live at 99%
of their income every – we can put – every month or every year – so in other words, people are
leveraged at least to their income if not more – when we throw in credit cards. So the issue
when something like that happens to them, out of their control, that is devastating to them
because they can’t just stop on a dime and change their lives.” – Practitioner, Montana

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“Oh, credit cards is a huge one. Do a lot of coaching on that. You should never use more than
30% of your limit. Always make your payments on time. Try not to carry a balance, but you
need to use it in order for it to affect your credit.” – Practitioner, Wyoming
“Lost the house. It was difficult. At the time, I never like – our mortgage payment was over
$2,000. I remember that when he was paying half it was okay. When he stopped paying half, it
was like oh, my God, what are we going to do. I’m sure I – I am trying to remember. This is back
20 years ago. But I remember that I got through it without messing up my credit. That was –
{talking together} and somehow – to me that was like an achievement.” – Working-age
American, Los Angeles
“They need to know how much it’s costing their family daily – annually. They need to know
what the costs of products and services are. They need to understand the formula to determine
how much revenue they need to have in order to save for their retirement which is defined in
the manner that they choose to define it. They need to actively be monitoring their spending
habits to ensure that they are incorporating their goals into their spending habits and monthly
budget management. They need to understand what a credit report is, what a credit score is
and how to access and leverage capital – and that credit is a good tool when applied
appropriately. It can be a bad tool when applied incorrectly.” – Practitioner, Florida
“Especially in terms of credit, a lot of people to the people specifically who improve credit – are
focused on the future so that they either have positive accounts – that they either have been
paying on time or start paying on time – and they first make their efforts concentrated on
establishing positive credit. And then they worry about cleaning up any bad information.” –
Practitioner, New York
“Getting a credit card. I know I shouldn’t get one, and I did it anyway. Or I shouldn’t use it and I
did it anyway. There was a time; there was one, maybe two years when we were debt free. The
only thing we had was our mortgage for two years. And that was the best feeling in the world.
And we really didn’t need to get into that much debt, but we did it anyway.” – Working-age
American, Atlanta
“When and if you do accrue debt, be sure that you prioritize paying off your highest interest
debt first. Another one that went along with that is sort of different but pay off your high
interest debt. But another one is if you have smaller bills or smaller debts, just get those
knocked out so you can focus more of your money into the principle and higher debt.” –
Working-age American, Wyoming
“People just kept borrowing and borrowing and not really thinking about having to pay it back.
They just felt like well, we’re just taking the equity out of our home as if it was spending – I
guess they were. They were spending their equity but they really weren’t thinking that the day
they would have to keep paying that money back. So I think that’s probably the greatest threat
to financial well-being is the debt.” – Practitioner, New York
“It's not a lot of jobs for everybody because there's a lot of people in the city so a whole lot of
jobs got to have the right education and then they don't have enough jobs for people, so then,
you know, if you don't get hired fresh out of college, fresh out of high school, you better take
that job, be nice, get to work on time, do what you have to do so you won't get fired because if
you get fired, it's going to be a long time until someone hires you again.” – Working-age
American, Washington, DC

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“Yeah, there were some challenges, but you have to do what you’ve got to do, especially when
you have family at home. You really have to expand. I’m just waiting for things to happen. You
got to get out there and hustle.” – Working-age American, Chicago
“You’re like okay, our bills are this much, and he’s only bringing in this much – you know, I had
to step up to the plate, and I had to go and get two part-time jobs just to help us make our ends
meet. Then, we have 3 kids at home and a car payment. So yeah.” – Working-age American,
Los Angeles
(“What leads somebody to have financial well-being?”) “Willing to work. Willing to work more if
ends aren’t meeting.” – Working-age American, Wyoming
“You may not be able to get there on your own. You may need some help.” (“Help in what
way?”) “Financial planning.” (“How do you think, have you ever done that?”) “Yes, after my
second was born it’s like I need to know. My husband’s in finance. And I mean don’t get me
wrong. I trust him. I’m like if you had it your way, I would be working until I was 60. It’s like, you
know what? That’s not going to work. The kids are going to need somebody around. We can’t
keep going at this pace. I want to go to somebody objective, and so we did.” – Working-age
American, Chicago
“But letting them know that’s okay, like I’m here with you even when you make that bad choice
that’s going to – you know, we looked at this, and we both agreed that we should go this way
but you chose to do this anyway, to know that I’m still here. Okay, you made that choice, but
I’m still here, and I’m still going to point you in the right direction – that at least allows them to
look within themselves and say hey well, [x] still here. And no I don’t have what I wanted by
doing what I wanted. So now maybe I’ll be more open to the fact that maybe what he told me
made a lot of sense.” – Practitioner, Los Angeles
“Now maybe the successful ones that haven’t had experience, they again, from that mentorship
from somewhere know that they should know in their budget how much payment they can
afford. Maybe they searched online for a loan calculator to find out how much that means I can
borrow. And maybe they have seen somewhere that it’s better to put down a little bit of money
because then you can get a lower interest rate. I mean there’s some other benefits to doing
your homework, whether you’ve gone through it before or not.” – Practitioner, Wyoming
“Staying current with financial information seems to be another one. I mean they actually look
at the columns in the newspaper that are money oriented or perhaps even subscribe to money
type magazines. I don’t see many people doing that honestly. Buying money books. There’s
tons and tons of them out there, and they’re essentially free. So they buy books. They talk
about it with people. They do a little bit of research. That seems to be one of the things that
really translates.” – Practitioner, Wyoming

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PERSONAL CHARACTERISTICS
“Discipline, you have to have discipline to say I’m going to stick with this plan for 10 years or 15
years or for 20 years because at the end of this road, this is going to benefit if you have the
discipline to do that, put that money aside every month or every pay period…. If you don’t have
discipline, you’re not going to stick with it. You’ve got to be wise, which means that you’re not
blowing money. It’s Friday, I’ve worked all week, I just got paid, let’s go to the club, then
Monday morning you’re broke, but you’ve got bills. Well, I shouldn’t have did that, I shouldn’t
have.... So you’ve got to be wise with your money. Like I say, a fool and his money will soon
part.” – Working-age American, Atlanta
“I think most people who are financially well off are successful. I chose smart. I don’t think you
have to be the smartest person to be financially well off, but I think you do have to be wise and
there is absolutely a difference between those two terms. You can be intelligent but not
necessarily wise. I’ve already talked about discipline, discipline, discipline. Delay, delay.” –
Working-age American, Atlanta
“Everyone knows how to lose weight. They do two things. They eat less and they move more
period. Everyone knows that answer, but yet not many people do it…. You have to discipline
yourself not to eat the food. You have to discipline yourself to get up and run. With your money
you have to discipline yourself not to spend. It’s nice to go to the nicer restaurant or buy the
new pair of clothing. I mean why not? Looks good, feels good, all that stuff. But you have to
discipline yourself not to do it because it’s better to have the money for something else.” –
Practitioner, New York
“My aunt was so cheap, at least that’s the way I thought of her when I was little. I was like oh
my gosh, Mary has money. Why are we going to the thrift shop? Because that’s how she kept
her money. So some people might be described as cheap, but what they are is frugal and
hardworking.” – Working-age American, Atlanta
“Being resourceful and knowing how to live a good life without squandering money. Like people
eating out. We eat better than most people, but we cook at home.” – Working-age American,
Wyoming
“Are you doing to do what you said you’re going to do at the time you said you were going to do
it? That goes back to making payments on time. That goes back to overextending yourself.
People who have a high character level are usually not going to try to keep up with the Jones.” –
Practitioner, Los Angeles
“People that have a strong sense of value with respect to managing expenses and living a simple
life. I think those people have a huge advantage on other folks that buy into keeping up with
the Joneses.” – Practitioner, Los Angeles
“Well, some people it don't make a difference because you have some people that's always
going to be stuck at a one because their self-esteem is so low and they have been told, "You
never going to amount to nothing, so you know, once you drill that in a person's head, and
unless they got self-esteem, then they'll always going to be what we would consider that one
because you can't go lower than a one.” – Working-age American, Washington, DC
“So someone whose personal happiness is that muscle car or fancy clothes and gambling or
whatever, it’s totally different than mine. So um, I can’t state that for them. I think {too soft}
America and especially when we add in the television and the magazines and glamour models
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and all that – so many things that are materialistic and very shallow. But some people might live
off that. Their piece is their presence, their show.” – Working-age American, Wyoming
“I think an individual and/or family that feels oppressive – has a sense of feeling depressed and
being in an oppressive situation is – has to clear that lens first – before they can move to that
next paradigm, and as soon as they can clear that lens – they are stuck. That’s one of the hard
lessons learned in any type of financial coaching and counseling that if you – you can bring all
the tools and the products that are available. But the individual has to have that motivation and
desire to learn.” – Practitioner, Florida
“I also know friends and whatnot that have spouses who the only way they can kind of build
their self-esteem or feel good about themselves is a new wardrobe every month or every two
months or whatever it may be. And or you see people with obesity – they feel good by
overeating or they feel good by spending more money on food that I think people who are very
confident with themselves and are much able to do the things that they need to do – they don’t
get caught in those financial – or whatever it is – traps.” – Practitioner, Washington, DC
“Outgoing, if you’re an outgoing person, you’re inquisitive, you’re positive, you’re happy, then
you draw that to you, so a financial planner, people want to be around you that are happy. If
you are not outgoing, you’re shy, you’re afraid to ask questions, I don’t know, what might they
think? You don’t have the confidence to ask the right questions about your money, you let
somebody take your money; you have the confidence to say what are you doing with it? How is
it going to help me, how is this going to help my family? Break it down and explain it. If you’re
too shy, then you know you’re not going to be financially successful. You’re afraid to ask
questions.” – Working-age American, Atlanta
“If you’re shy and reserved and not willing to like talk to people, figure out if you’re on a low
level, figure out what type help you need, you know? And you’re worried about all that. I think
that’s going to be a barrier to getting to a high level…. I feel like if you’re outgoing and you can
always make the best of the situation and find somebody that might be able to help you.” –
Working-age American, Chicago
“I think more outgoing people, more curious people like myself tend to know a little bit more
about how things work than people who let stuff happen to them or people who go oh, yeah,
Bob – figure that out. It’s not my problem. You know what I mean? I think that the more you
touch with other people, the more you learn, the more you know the more you see how other
people do things kind of thing.” – Working-age American, Wyoming
“I also have a son who’s not doing good. But at the same time, when I try to talk to him, he
won’t listen. And I see him making [inaudible] …. I’ve gone through where he needs to go and
I’m not saying that I’m right all the time, but suppose I was wrong and I told him and he would
say, oh, momma, you’re just wrong, instead of saying, well, momma, tell me why you think that.
Let me see where you’re coming from. Then after he sees, he can see a little further. We need
to use people as sight-seers for us to get where we want to go.” – Working-age American,
Atlanta
“I think my more successful clients I think are more open to options. My – yeah, my less
successful clients they’re very I guess closed minded in some ways. They don’t like change.” –
Practitioner, Los Angeles
“It’s just an open mind, and knowing, like I said before, where your strengths and someone
else’s strengths begin. And being able to listen to other people. And not be just so proud that
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you take no advice from anyone else. I guess open minded. Open minded – being open minded
and listening.” – Practitioner, New York
“Not thinking about the future. It’s just like it’s tough because the definition of financial wellbeing vs. like what I would say is you know, what they would say cause they’re saying I’m
financially well off. I feel fine. My well-being is high. It’s good. Because all everything is
running properly. All cylinders are going or are on high gear. But that’s assuming everything
keeps working. I keep getting my positive rates of return…. I stay healthy, all these things. So
yeah, they’re well. But from my point of view I’m like if anything breaks, your whole machine
falls apart.” – Practitioner, New York
“It would have to be responsibility. If you were a responsible person, it’s unlikely you’re not
going to pay bills, it’s unlikely you overspend, it’s unlikely you won’t do some research as to how
you can get something cheaper.” – Working-age American, Washington, DC
“Okay, the person who is um, willing to make sacrifices, willing to achieve goals, who is focused.
I think they make that commitment, they will have a better sense of financial well-being vs. the
person who plays the victim role and always blames others and always try to um, say it’s
somebody else’s fault and not take any responsibility.” – Practitioner, Washington, DC
“Are you doing to do what you said you’re going to do at the time you said you were going to do
it? That goes back to making payments on time. That goes back to overextending yourself.
People who have a high character level are usually not going to try to keep up with the Jones.” –
Practitioner, Los Angeles
“If you’re hardworking, if you’re a hard worker, then you’re not taking shortcuts. You know
there’s no shortcuts. You have to put in the effort to draw the results.” – Working-age
American, Atlanta
“From my perspective to be where I really think is like a high level of well-being later on down
the road, it will be a lot of hard work. I think you have to put in that hard work whether it be
during college at your job and in all aspects of your life, I think you have to put in hard work to
attain the high level of financial well-being and that comfortable lifestyle.” – Working-age
American, Chicago
“It takes a lot of hard work. You know, your parents have a lot and it just keeps getting handed
down. But you know, a lot of people that grew up like I did or you’re not wealthy or even really
middle class, you have to work hard. And wise. You have to use a little bit of wisdom to you
know, hopefully have a little bit that you can make you know, good decisions and be prepared
for you know, the good or bad. I mean, you know, things don’t always go the way we plan.” –
Working-age American, Chicago
“I think most higher level people are hardworking people. Most people don’t get things just
handed to them. They have worked really, really hard…. The majority of wealthy people that I
know few personally and that I see – they have worked for it. They have got their education….
You can’t be lazy – and expect to have – expect to reap the benefits.” – Working-age American,
Tennessee
“Driven, you have to be driven, confident, driven, you know I would say those are the main
ones, confident and driven. (“What does driven mean to you?”) Just don’t stop. Keep going you know, if you want something you don’t stop but you keep going, you try to further your
education. Just you don’t you know, sit back on your laurels. Just keep going at it. Some people

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work 12-14 hours a day. I couldn’t do that, but some people do.” – Working-age American,
Chicago
“I think it’s more internally driven. It’s a drive you get that you just have it or you don’t. My son
I tried to show him this is what - I’m okay working 9-5. I’m okay paying my bills. And dad is the
same way.” – Working-age American, Chicago
“The confidence, and I think maybe just more of a drive to say look man, I am getting out of this
crap hole, and I’m going to do something.” – Working-age American, Los Angeles
“If you’re hardworking, then you have discipline and you have drive and you make – hopefully
because of that you’re making money.” – Working-age American, Los Angeles

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SOCIAL AND ENVIRONMENTAL CONTEXT
“And then I think the family is there also there is numerous examples of a family that can help
somebody at a crucial time in their life and that little bit of help made a difference in their
wealth creation for you know, so it’s like if you get a small push and somebody doesn’t get a
push where you end up at the finish line could be a lot farther distance than your you know,
you’re just so…. if you’re both in you know, racers and somebody’s got to do a running start and
somebody doesn’t have a running start, even if they’re both equal athletes, the other person is
going to the person has to go push start is going to end up a lot farther down the way. So if a
family can help somebody at a crucial time in their career with an investment that can make a
huge difference.” – Practitioner, Los Angeles
“But I am seeing it more so now where the younger group is leaning more on their parents.
(“That’s really interesting.”) I’m also seeing— and maybe off subject on this— I am also seeing a
lot of mid generation taking care of their elderly parents. And so where their elderly parents are
no longer able to support themselves, so that middle kind of has their college kids and their
parents that they’re trying to match so they’re struggling in the middle and doing cash out
refinances from their properties in order to support their children and their parents.” –
Practitioner, Wyoming
“So surveys also say that we learn from our parents, and if our parents aren’t getting it from
school when they were in school and they’re not learning it anywhere else, so they have got
poor habits to begin, then it’s kind of a bad cycle. So it’s a total mix. Lots of people make lots of
bad decisions. Everyone does.”- Practitioner, Wyoming
“The kids who are raised in a family setting where they talk about money definitely are going to
be and are much more mature in this environment where they’re understanding. I mean there
is the access to information which is incredible. Where they understand the consequences of
decisions. They can go and find any software package that will help them manage their money,
but their motivation and their desire to do that is going to also come from other aspects of their
emotional well-being that are not necessarily tied to their financial knowledge.” – Practitioner,
Florida
“I have seen families where the parents are not they don’t really care if they make their
payments on time. It’s not a big deal if they have savings accounts. Their children have the
same mentality. I have also seen it go the absolute opposite where the children are now young
adults, and they say I have watched my parents struggle. I have been very diligent, I have a
savings, I make my payments on time. It can go either way.” – Practitioner, Wyoming
“Also family makes a big difference because that’s where we get our you know, our cultural
mythologies are passed down that way. So you know, born into a wealthy family – that is
prideful and arrogant and doesn’t trust anyone for advice will breed children who are prideful
and arrogant and don’t trust anyone for advice. Born into a poorer family that is humble and
community oriented will breed children that tend to seek out community and have a great sense
of well-being whether or not they have got a million dollars or not. And vice versa.”Practitioner, Washington, DC
“I think it’s huge. It’s huge. I mean the family is the first education – so before you go to school,
you have the family that’s educating you. Even when you’re in school you have the family that
is – that is you know, transferring values and cultural habits that could influence the way you
build financial wealth.” – Practitioner, Los Angeles
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“And if you’re in some sort of joint relationship – you certainly have more opportunities
available to you. And the support is so important because you – you’ve also got two people to
worry about. Like I have said before – one of them could be a spendaholic and you have that
kind of risk. But um, you know, if you – typically, in relationships, what I have seen too is when
there’s two people involved, typically one of them is good at money and one of them’s not.
That’s just the way it is. But if that one who’s good at it is good at controlling how things are
done, then it tends to work out just fine.” – Practitioner, Wyoming
“So getting married, let’s see – because now we are two people working toward the same goals
and working toward mutual good. So having that connection and having that dedication and
knowing that we are both so willing to give it our all, to give our marriage our all, to give this
partnership everything we’ve got for our beautiful home and our lovely family and our gorgeous
{too soft}. You know, I mean it’s getting married is a huge step toward financial well-being.” –
Working-age American, Wyoming
“But another thing too I have to say about financial planning to is – from a female point of view
too – is it is a lot easier when you’re married and you’ve got the economy of scale when you’ve
got two people. I spent, oh, God, I didn’t get married until I was 31. Divorced a little over 5
years later. Then married again 9 years ago. And so I spent a significant amount of my adult life
single on my own. (“Right.”) And there were times that it was tough because it’s just the
economies of scale. You don’t have that second income.” – Working-age American, Los Angeles
(“What role do you think sort of a person’s spouse or partner plays in their financial wellbeing?”) “Critical role.” (“Can you talk more about what?”)” Well, they’re the person that
would have to ask the questions of their spouse if the spouse is making a decision. Of course,
they’re the person to bounce ideas off as well. So help – being helpful with critical thinking.
Perhaps providing resources. Pointing out good and bad examples of similar situations –
models. Perhaps modeling personally good behavior.” – Practitioner, Wyoming
“My kids have always been… they have completely changed my life. When they were born, my
education, my goals, my everything was pretty much based on giving them a better lifestyle.” –
Working-age American, Chicago
“My big issue, if I have made poor decisions, are related to my children because I want them to
have opportunities and access to things that I did not and sometimes I don’t think I
always….they could wait, but it’s just, as I became a mom, that’s an area that I could screw up or
make some poor decisions with regards to them, really.” – Working-age American, Atlanta
“And then I think if there’s children is probably the most significant driver of people’s spending.
I think that probably impacts their finances more than anything because I think then people
want the best for their children, and that might include nice clothing. My kids have always
dressed nicer than I do. {laughter} And that might include expensive even preschools and you
know, lower education. Then, you get into the college education I think. I think the decision to
have children is probably the most significant driver.” – Practitioner, New York
“A lot, but especially if you don’t have a budget because now it’s more channels for the source
of income to now go out of. It’s you know, if you could imagine being – your own body of water.
Like you’re your own manmade lake, and you’re full of water. And then all of a sudden,
somebody decides that they’re going to start tributaries off from you – going to go into other
bodies of water. (“That’s a great analogy.”) {laughter} And if these bodies of water are
sustained, then you’re not going to lose much water. But if these bodies of water are depleted,

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and dry, they’re going to take a lot from you. Your community, your spouse, your friends, your
family, they all have a huge, huge impact on that body of water.” – Practitioner, Los Angeles
“I kind of hate to say that, but well, I think it would be based on where you live also basically
too. Sometimes that makes a difference. (“Can you give me an example?”) Like if you were
brought up in the projects. Some people do get out, you know, and go on to better financial
means, but others don’t. It’s like the path – I wouldn’t say the path they chose to go down, it’s
just what happens.” – Working-age American, Washington, DC
“Oh, I think definitely a difference where you grow up. You know, where, in what neighborhood
because your neighbors, your friends I mean yeah, neighborhood, friend, school, whatever they
all make a difference in shaping a personality of a person.” – Practitioner, Los Angeles
“And I think that we can surround ourselves with a supportive community. We can – sometimes
we make poor choices with that. We surround ourselves with people who are not supportive.
They’re negative. They don’t think in positive ways and that makes it difficult” – Practitioner,
Wyoming
“I think friends definitely play a part in it just because I’m influenced by wanting to do stuff with
other people and if they’re paying for something, I don’t want to be the one person who’s not
going to do that.” – Working-age American, Washington, DC
“…a larger close network like close brothers and sisters or close children. So they you know,
they don’t have anything to fall back on. They don’t have the savings, right. And then like when
we have tax clients come in, and they come year after year. We see them kind of like catch up.
You know, the ones who are not coming here for help, it’s because, you know, they lost their job
or whatever they moved in with the brother or sister. A larger network is tremendous for that
type of support.” – Practitioner, Los Angeles
(“…a couple times saying they’re really resourceful. So describe a little bit about what you mean
by that.”) “You know, they know where to get like clothes for a dollar a piece. They know
where to get – it just depends. Some of my clients will tell me where they go to food banks, and
they know the schedules. They know all the agencies that will do utility assistance. Free you
know, karate for their kids or whatever. Something like a community event or something um,
you know, not just like a financial like free karate or free yoga for their kids or something. They
know the other nonprofits or the city programs.” – Practitioner, Los Angeles
“It could be. I’m not sure that I really see the work that I’m doing these days it seems like a
library is a better source. Is a good source. It’s a stronger source. It’s probably one of the only
sources. Maybe the extension office is doing an occasional personal finance class. Maybe the
library is hosting a series like the one I mentioned.” – Practitioner, Wyoming
“No, I haven’t. But I’m actually thinking about doing that because they’re going to start offering
the classes at my church, so I think I’m going to probably go again. I mean, it’s the same, you
just watch videos and talk, discuss them afterwards, so it’s going to be the same thing I’ve
already seen. But it’s just good to hear it and keep it in your mind.”- Working-age American,
Atlanta
“Yeah, I mean their church and their community center. Very often the place that we’re
coaching at is a community center that they go to for everything. I mean they go to they have a
food bank. What am I talking about? You know, where they can eat – get meals. They can get
their haircut. I mean I have seen community centers that do a whole lot of things. Some people
are sort of hanging out there. But they’re a real huge help to people.” – Practitioner, New York
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“But I think you know, at some point, like my husband {too soft} didn’t finish high school and
had no checking account. I met him, and I’m like how do you do that? He paid everything in
cash. He banked basically used the grocery store as a bank like. (“Go cash a check.”) You’re
basically undocumented when you like use the grocery store as a bank. God, get a checking
account. Seriously, get yourself on the map. Do something. I think it’s weird. Plus, why do they
get 3% of your paycheck? You know, that’s stupid dude. - Working-age American, Wyoming
“The job is the key because if I get back to work, then I’m stable. Paycheck stability. I can count
on it. Would a company that - we would pray every 2 weeks I was going to get paid. Payroll
manager, and I had to wait. We don’t have enough in the bank yet, we don’t have - so that was
really unstable and nerve-wracking and scary. That wasn’t stable even though I had a job. But a
good stable job is what I guess I’m saying.” - Working-age American, Chicago
“Now, I went on a job interview, it’s with the railroad, and the lady, this job has really good
benefits. Really good benefits, and she’s like I couldn’t believe. I was like God, this is my
blessing because this is what I need at this moment. A job with some benefits, but I didn’t get
the job. But that’s what I would need now. A job with some good benefits with a pension after
5, 6 years - so you know, that’s - invested in it. You know, for anything so those are my hopes
and prayers that I could get a job. (“And do that.”) And get some benefits.” - Working-age
American, Chicago
“…my father was a very educated man and this happened to him. I guess, it put less emphasis on
education for me and more on working hard and getting experience, and being able to have a
job that I actually qualify for, and, you know, not having to worry about being laid off, being in
an industry that's always blooming.” - Working-age American, Los Angeles
“Then, a job. Finding a good job. You have to continue to work, bring money in - you know? To
live. You don’t live any other way. You’ve got to have income.” - Working-age American,
Chicago
”So yeah, it was through work that we met this financial advisor. Still have her today.
Unfortunately, I have nothing to be advised about. She called me yesterday actually. She said
we got to get together. You and Amy are you know, each making your own plans. So I need to
call her today actually and rearrange my benefits beneficiaries and so forth.” – Working-age
American, Los Angeles
(“Kind of just generally, what do you think causes someone to experience lower or higher levels
of financial well-being?”) “ Higher or lower… where they work can influence it, because like say
for instance, say someone I guess where you work and the environment that you work in – can
either stimulate you to make more and have more or stimulate the fact that where you are is
okay.” – Practitioner, Los Angeles
“So but if the government discriminated against who could get in this program, who could get in
this program, then some people would be farther behind. So let’s say I live on one side of the
city and somebody else lives on the other side of the city. They get a loan and I don’t get a loan
because of my neighborhood is determined by FHA to have deferred maintenance and other
stuff. Now, I’m still a renter. This other person now owns a home that they bought for $20,000
and my income I keep renting and they keep getting cash deductions and building equity. So 510 years from now, I may be buying my first house, but they’re selling their first house and you
know, that gap never gets closed.” – Practitioner, Los Angeles

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“I mean they’re dependent on the system, you know, for money. For government funds. And a
lot of them you know, get to the point where they depend on it to the degree that they abuse
the system to get money. (“Can you elaborate on that a little bit?”) Well, they find different
ways to get money. They’ll declare that they are disabled to get a disability check or they will
get on top of the disability check, they get what the call, what we call here in California general
relief dollars. Some of them are on TANF, and so you know, they just work the system.
(“Interesting.”) Rather than going out and finding a job, balancing your checkbook and making
sure you don’t overspend. You know, you’re not bouncing checks. You know, you have a life
and you’re a productive citizen. Find other ways.” – Practitioner, Los Angeles
“I think if I had a different career because my job is very dependent on how like the market is
doing, how people perceive the economy is doing. So when tourism is really up and down, and
if you have a really bad year, even though you may be making the same income, but your
thoughts are no, I’d better not take a trip to DC this year, I’ll skip it. So the economy really
affects my job.” – Working-age American, Washington, DC
“So you know, like my job I was making money, I had a vehicle and so it’s right unfortunately, I
picked a time I wasn’t aware of the economy downturn. Of course I guess the politicians don’t
let you know until after the fact. So the government doesn’t let you know - so I wasn’t aware of
the situation until I was down there. It was just like right during the time I was just starting to
…economy was just starting to tank, and employment was unemployment rate was going up.
It’s just bad timing. That’s all.” – Working-age American, Chicago
“Well becomes we spent many years and years being a….because of a situation that was forced
on us basically with no employment opportunities, and all of the barriers that exist whether they
be…like the tribal land status. You can’t even own land here for the most part. You know? There
is some deeded property or whatever, but most of it is held in trust by the federal government.
Many barriers to creating to the businesses, to offer the employment opportunities. It’s been
that way since it was a reservation, so it makes it super, super hard to rise above that, which
many people have done here. But the population here face many more barriers than the general
public do in that.” – Practitioner, South Dakota
“But I mean at the same time, a lot of people I know who struggle financially want material
wealth more so in many more ways than my affluent friends. But yet they’re not getting it, so
it’s not just the drive. (Yeah, it’s not such a cut and dry thing.) So I think there’s just a lot of
access to information that comes into play.” – Working-age American, Los Angeles
“(What causes someone to have higher or lower levels of financial well-being?”) “If you’re male
or female.” (“Tell me more about that.”) “Well, if you’re a white female – a white male, you’re
going to do a lot better in the workplace than if you are a female. It’s just always been that way.
I think race has a lot to do with it. You know, I don’t like to stereotype a lot – that’s just not, but
I mean looking at the news and you don’t see too many colored or Hispanic CEO’s of major 500
Fortune companies. You just don’t. So I know that probably race would have to be a factor.” –
Working-age American, Los Angeles
“It’s like you lose your job, and unless you have like your 6 months savings like you’re supposed
to that’s going to get you through a tough period like all of a sudden you’re hurt. So I would say
that’s out of your control. I would say if there’s any kind of medical crisis - whether it be for
you, your children, your parents, your family, I would say that’s another one that’s more out of
your control.” – Working-age American, Chicago

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“I see a lot of divorces devastate people. Finance is great, credit looks great. And child support,
different – all the equity is in the home, the other partner gets the home. I see a lot of those
circumstances. I see illnesses. I see a lot of medical crises that occur in someone’s life that I see
– this is one that sticks out the most because I have seen it a few times – our – happily moving
along, everything is going great. They have a baby. Mom and baby get into stress, they end up
in the hospital. Dad’s having hard time working because he wants to be down there with mom
and baby. Still maintaining, but now the medical bills have really racked up. Now – so I do see
things like that.” – Practitioner, Wyoming
“It’s a huge, huge blow, especially you know, when he’s the breadwinner and you know, I have –
worked small part-time jobs here and there. (“Yep”.) And when he’s not even bringing a third
home a third amount of money home from not unemployment, disability – and you’re like okay
our bills are this much, and he’s only bringing in this much, you know? I had to step up to the
plate, and I had to go and get two part-time jobs just to help us make our ends meet. Then, we
have 3 kids at home and a car payment.” – Working-age American, Los Angeles
Well, my husband I are um, trying to reestablish ourselves. A few years ago, my husband got
really sick and our credit went down into the toilet pretty much just because we couldn’t, you
know, pay our bills. We were barely making ends meet. And so when he had his kidney
transplant, that just kind of like blew up. You know, and that – so here we are 3 years – almost
3 years later, and we’re trying to reestablish ourselves. – Working-age American, Los Angeles
And that was a job you know, to go to the doctors’ appointments and make sure they go and do
- my mother has dementia. I was like wow, this is a hard job to be a caretaker. – Working-age
American, Chicago
“I could go higher, yeah. I could definitely go higher, open up some new advertising markets that
would expand my income, definitely. As an entrepreneur, the sky is the limit, in terms of your
financial achievements as an entrepreneur. And I’m glad I got my education, though, first, as
the foundation and a springboard because I’ll always have something to fall back on. And it
gives me that exposure to say hey, you have to have the whole package. You have to be well
rounded with a foundation.” – Working-age American, Atlanta
“But education is the most important thing. The more education you have, the more degrees
you have, the higher education you have, the better school you go to counts. I don’t always
believe that, but sometimes it’s true. Like I said before, driven, and you know, know what you
want and go for it and be driven.” – Working-age American
“I would think that the more educated someone is they have been exposed to more resources
and more understanding of what it is. They have been able to kind of maybe glean here and
there from things. It’s not like they are experts but so I find that the more education someone
has – the more likely they are to at least have a foundation you know, that they can move
forward. It’s the less educated people that really sit there and kind of look at you with a blank
stare. You know, because they’re really just about hey working 8-5, paying my bills and really
not thinking about the future.” – Practitioner, Montana
“Well, just the knowledge itself they can you know, a lot of times they can go to college and take
a course.” – Practitioner, Montana
“No, I mean I think I grew up in this generation you know, in the ‘80's, you know, where if you
buy more, you save more. Put it on credit. Definitely taught that it was part of the American. I
mean I laugh but in our constitution we have the right to happiness. There’s one or two other
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countries in the world that declare happiness as their right. In that vein, my generation or at
least the middle class generation I grew up with really got this message of like luxury is your
right. Just because you don’t have the money today doesn’t mean that you shouldn’t have you
want today kind of thing.” – Working-age American, Los Angeles
“…for the masses of people, for the huge majority of people, they’re in a culture that’s really
built upon you know, Coca-Cola and you know, Kellogg and all that’s based upon spending.
Spend mentality. So in this culture it’s very hard I think to have good financial habits.” –
Practitioner, Los Angeles
“I chalk it up to our great society, and I love America. I love this country, but this country is built
on you know, you deserve it. Go spend it, and if you don’t have the money, you’ve got really
good credit, use your credit to buy it. And people are buying BMW’s when they could be buying
Fords.” – Practitioner, Washington, DC
“And I think the media has just made that a huge amount – I mean, you’re able to see how
people live who have extraordinary amounts of money where you couldn’t before. Like 20 years
ago there wasn’t this reality stuff where you could just see people would spend incredible
amounts of money, spend stuff. And you go I want that.” – Working-age American,
Washington, DC
“And we are bombarded with images that present the optimal – and it’s really not, they’re not
images of financial well-being – they’re images of a good life which is different than financial
well-being. So I think people chase the good life at the expense of financial well-being.” –
Practitioner, Los Angeles
“It’s not just for like the Korean or low income immigrant community. Everyone has this idea.
At this point in my life, I should have these things – and it’s hard to kind of let go of that. And I
think that’s kind of the same struggle these folks have. Immigrated, and it’s been this long. I
should have these things. I think that motivates them a lot to um, make poorer financial
decisions.” – Practitioner, Los Angeles
“I always tell people that you know, people really spend what they make. And it’s really the rare
people that are able to kind of then be minimalistic and put the majority of their money either
into savings or doing all that. And so the people that come in to see me that have $50,000 let’s
say average credit card debt because they have had to use credit to supplement income – and it
really is a reality of trying to live like their neighbors. They have to have the cars, they have to
have the you know, the house, and they just have to have these things and the negative then
there is that it’s hard for people to understand that they don’t – you know, they don’t have to
be like their neighbors.” – Practitioner, Montana

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