How we developed the Financial Fitness Tool to help individuals measure and quantify their financial wellbeing

These nine questions encapsulate the key outcomes of financial wellbeing – feeling confident, resilient and empowered. They also cover the key enablers and behaviours that are shown to positively impact financial wellbeing, in particular savings, credit use and retirement planning. 

In 2020, the Money and Pensions Service (MaPS) launched the UK Strategy for Financial Wellbeing following a lengthy listening phase. The term financial wellbeing can mean different things to different people, at MaPS we describe it as follows:

For us, financial wellbeing is about feeling secure and in control. It’s about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered.

The questions have been selected from previous research and analysisOpens in a new window that MaPS has undertaken to understand the building blocks of financial wellbeing.  

The building blocks comprise over 80 different elements, so the aim of the analysis was to establish a short list of questions that covered the breadth of various components of financial wellbeing, but also to be a coherent overall construct that aligns to the narrative definition.  

Where appropriate, the short list of questions were also chosen to align with the agendas for change and the breadth of MaPS’ advice and guidance services. We also aimed to include income neutral questions, where possible, to ensure that the score was built independently from simply financial means or wealth.

• Step 1: The first step was to screen the building blocks and only use those Enablers/Inhibiters and Behaviours that were highly correlated to either the “current financial wellbeing” or the “long term wellbeing” outcome blocks. This yielded 10 building blocks, comprising 42 measures. The remaining measures were not pursued as these would likely have weak associations with the outcomes.
• Step 2: Using a correlation matrix, we screened this list further to remove seven outliers. This returned 35 measures. 
• Step 3: We tested the scale reliability of these variables and went through successive reduction stages to maximise the Cronbach’s Alpha, at 0.92. The result was an optimum set of 22 questions, which provides reassurance that there is a coherent and consistent overall wellbeing construct within the wider questionnaire.  
• Step 4: To help reduce the questions to a more manageable set, we created a simple overall composite score from the 22 questions, then used step-wise regression to find the questions that could most efficiently reflect the longer composite score.  
• Step 5: Using an element of judgement to ensure that we covered the actual National Goals (or close proxies where these would normally be sourced from another study), we settled on nine questions that still retained a high Cronbach’s Alpha, of 0.81. Many of these are “Outcomes” measures (two current, and two long term). We also aimed to ensure that the shortlisted questions aligned to the narrative definition of financial wellbeing, and were income neutral, if possible. 

A final requirement of the design process was that the nine questions could then be compiled into an overall composite Index score to provide a straightforward and clear measure of financial wellbeing. This scoring yields results on a scale of 0 to 100, where the middle is close to the average of the UK population (i.e. around half the population would score under 50 and around half over 50). It is worth noting that some questions are worth slightly more points than others, with the rationale outlined below. 

Construction of the scoring system involved the following principles: 

• Try to give equal weight to questions, except where valid rationale suggests merits for higher or lower weight 
• Higher weight for questions which are more like “Outcomes” rather than behaviours or enablers 
• Higher weight for questions with longer answer code options (to minimise the sensitivity of adjoining answer code options) 
• Aim to yield a non-skewed summary statistic by scaling scores such that the median answer code option was aligned to the mid-point of the item’s maximum score 

Using data from our 2021 Adult Financial Wellbeing Survey, we have produced local area estimates of the financial wellbeing score by lower tier local authority, and parliamentary constituency. We have also produced a report that covers each of the nine questions in detail and explores the characteristics of those people with higher and lower aspects of financial wellbeing.  

Various other thematic reports that we have produced recently also use the nine questions as the primary measures of financial wellbeing. These either make use of the nine questions individually, or the overall 0-100 Financial Fitness scoring system:

• Nine key findings from the Adult Financial Wellbeing Survey 2021Opens in a new window 
• Lower tier local authority and parliamentary constituency results for 2021
• Deprivation and Financial Wellbeing

Download a copy of the questionnaire containing the nine questions that comprise the Financial Fitness Tool: 

Our hope is that this new measure will help organisations avoid re-inventing the wheel when they’re considering how to measure financial wellbeing, and to improve standardisation and comparability of financial wellbeing insights.

Should organisations wish to adopt the nine questions, then please get in touch with us via your MaPS regional partnership manager.