Financial health measurement: A barometer of consumer finances

Financial health measurement helps gauge how consumers are doing financially during a given period of time. It can help consumers take account of their finances and it assists practitioners in designing programs around the needs of their clients, evaluate the effectiveness of programs and demonstrate impact. In August, Consumer Action’s Audrey Perrott shared insights into Consumer Action’s financial health measurement journey using the Financial Health Network’s FinHealth Score® Toolkit at the Financial Health Network’s “Orienting Around Financial Health” virtual meeting. The Financial Health Network works to improve consumers’ finances by bringing together financial services providers and private and public organizations.

The virtual meeting featured presentations from Consumer Action, Servus Credit Union’s manager of member and market insights, Justine Adams, and Doxo’s vice president of marketing and consumer services, Jim Kreyenhagen. Each presenter provided a perspective on best practices in financial health measurement, strategies to effectively implement a financial health measurement program and tips for solving challenges.

Consumer Action and Servus Credit Union are 2020 Financial Health Leaders with the Financial Health Network. The Financial Health Leaders program spotlights network members at the forefront of financial health and promotes their work as an example for others.

“It is an honor to be recognized amongst our peers as a Financial Health Leader, and a privilege to share our insights, implementation strategies and potential challenges with others,” noted Perrott.

Consumer Action is not a new adopter of financial health measurements. Through educational mini-grants with network partners and educational partners, we have been measuring consumers’ financial health—particularly low-income, financially vulnerable consumers—for nine years. Initially, we created in-house surveys that were deployed in paper format to consumers. In 2019, we adopted the use of the Financial Health Network’s FinHealth Score Toolkit survey in our financial technology (FinTech) education and distribution pilot. As the Financial Health Network explains, “Unlike narrow metrics like credit scores, [the] financial health [that the FinHealth survey measures] considers whether individuals are spending, saving, borrowing, and planning in a way that will either contribute to, or detract from, their resilience in the face of unexpected events and ability to thrive in the long term.”

“We digitized the survey, and required the financial coaches participating in our FinTech program to take it alongside consumers,” Perrott said. “We have continued to use the survey in subsequent pilots because it has enabled us to compare the financial health of our consumers against national, regional and local benchmarks. During the pandemic, we have had to pivot and deploy the survey in a number of new ways to make it more accessible to the vulnerable consumers we serve.”

Perrott shared Consumer Action’s approach to financial health measurement and detailed how we’ve been able to use the FinHealth Score Toolkit survey, coaching tools and technology to improve the financial health of the consumers and service providers participating in our pilots. Key insights include the importance of: knowing your audience; anticipating barriers (e.g., language differences); being realistic about the staff time needed to engage in financial health measurement and understanding the time needed for consumers to participate; ensuring appropriate access to technology; deploying your survey in ways most convenient for your clients (consumers); being willing to pivot, if necessary; and sharing findings (internally and externally) with key stakeholders.

Since 2019, Consumer Action has participated in four FinTech education and distribution pilots with 19 sites. We have trained more than 150 community-based organization (CBO) staff on financial health and technology. Nearly 2,200 consumers have been served to date by our financial health and technology education and distribution programs.