INTRODUCTION

Personal finance is defined as “the study of personal and family resources considered important in achieving financial success; it involves how people spend, save, protect, and invest their financial resources” (Garman & Forgue, 2008, p. 4). Positive personal finance strategies are important because they translate into financial career planning, tax management, cash management, credit card, borrowing, expenditures, risk management, investments, retirement, and estate planning (Garman & Forgue, 2008). The use of a financial adviser can be beneficial to consumers because of their expertise and obligation to ensure strategies are best suited to their clients (Kitces, 2016).

To assist an individual’s practice to help clients, a key tool and resource can be a scale. By definition, a scale is “a collection of items, the responses to which scores are combined to yield a scale score” (Lee & Lim, 2008, p. 494) and can be used to measure variables that would otherwise be unobservable (Fayers & Hand, 2002). Common examples include Likert scales, qualitative and quantitative research designs, nominal, ordinal, or interval/ratio levels of measurement and the creation of variables appropriate to the particular research.

The purpose of this article is to conduct an in-depth look at published scales regarding consumer financial knowledge, financial behaviors, and financial wellbeing. In this review, 30 scales from 26 papers were identified from peer reviewed journals. A secondary goal of this study is to provide implications for both researchers and practitioners. The analysis of the scales will create more awareness when investigating how scales have been used, their purpose the results of the use of scales, and implications for future use of scales. The intent is to gain a better understanding of the reliability of the scales, the target population, and how the scales were used in each study.

For this review, three research questions are posed:

1) What consumer finance scales have been published in the last 30 years? 2) What are the contents of the scales?

3) What are the implications of the scales for both researchers and practitioners?

Conceptual Framework

In any scenario that a scale is being used, it is important that it is clear, concise, and comprehensive for it to be effective. Scales are useful when asking a client to self-report their behavior such as their spending habits or personality traits (Tay & Jebb, 2017). This is important because research has shown that one of the most significant impacts financial practitioners have on a client are not monetary differences, but changes in behavior (Hanna, 2011; Kitces, 2016; Sommer, 2020). When a practitioner is working with a scale, they are working towards understanding a particular phenomenon in a client such as behavior, decisions, feelings, or personality. This can be client’s self-reporting, direct observation, or indirect by collecting records or information from a third party (Appelbaum et al., 2016). According to researchers (Blau & DiMino, 2019; Krosnick & Fabrigar, 1997), a scale that is too long can be overwhelming for respondents, be too lengthy to fully understand and comprehend, and contain too much unnecessary information or questions. On the other hand, a scale that is too short may not have enough questions to fully understand the respondent’s answers and their behavior, attitudes, or perspectives on what is being measured (Krosnick & Fabrigar, 1997). An effective tool is versatile in the setting it can be used and in the population it serves (diverse backgrounds and cultures), sensitive and specific, and having adequate reliability and validity measures (Appelbaum et al., 2016). In any case, it is important to understand that each tool is unique and serves its own purpose.

In the scales collected and analyzed for this literature review, the researchers explicitly explained why their scale is important and practical. According to Xiao (2015) they can be a useful tool in examining financial behaviors of various populations. Furthermore, scales are tools that can bridge the gap as Tomlinson (2015) suggests; professionals can take a deeper look into consumer financial behavior with the use of a scale.

Tay and Jebb (2017) define scale development as a “reliable and valid measure of a construct in order to assess an attribute of interest” (p. 1). One method to create a scale involves using a deductive approach in which the developer focuses on theory and the pre-conceptualized constructs. A scale can also be developed utilizing an inductive approach where there is uncertainty or dimensionalities of the construct (Tay & Jebb, 2017). Regardless of the approach, a critical aspect of the development is a clear, accurate definition of the construct being used. The purpose is to verify the existing theory and see empirical data collected from the target population support predictions specified by the theory. In creating a scale, several factors must be taken into consideration according to Tay and Jebb (2017): the target population, what the items pertain to, the differences in how respondents interpret the items, type of scale format, and the applicability of reverse scoring. The factors listed by Tay and Jebb (2017) provide an outline in determining which variables will be analyzed when examining each individual scale.

The scales examined in this paper pertains to personal finance and hold implications for both researchers and practitioners. The contents of these specific tools include consumer behaviors relevant to major components of consumer economic wellbeing including spending, borrowing, and saving/investing (Xiao, 2015).

The use of a financial advisor has grown exponentially in recent years (Hanna, 2011) and can impact various aspects of a consumer’s life such as income, estate tax planning, insurance, and retirement planning (Kitces 2016; Tomlinson, 2015).

According to Sommer and colleagues (2020), advisors in the field of personal finance are expected to be the experts and are heavily relied on to help clients make sound decisions. To make these decisions, a tool that could be used to determine best practices for clients could be a scale.

When choosing what scale to utilize for a study, it is important to determine the dimensionality of the construct, or the items that make up the scale (Bhattacherjee, 2012). By definition, a unidimensional scale is one that has only one single dimension whereas a multidimensionality means a scale has two or more dimensions (Bhattacherjee, 2012). A professional not only chooses a target audience to work with, but also determines which items and dimensions are appropriate for the creation of an effective scale. It is paramount that professionals understand the assessment they are using because it can then influence later treatment (Lenz & Wester, 2017).

Analyzing such tools provides professionals the opportunity to assess correlations between measures and values, create item pools, assess reliability and validity of their obtained measures, and can be repeated on different occasions (Tay & Jebb, 2017). Typically, there are two types of scales: 1) criterionreferenced scale measuring ability and 2) norm-referenced scale measuring individuals against a given construct (Lee & Lim, 2008, p. 494). For example, scales can be used to assess a particular behavior or attitude which can aid advisors in better understanding their clients. On the other hand, researchers can study these behaviors and phenomena to assess personality, the psychology behind behaviors, attitudes, or decisions and create hypotheses to contribute to the consumer and personal finance research.

Methodology

Data collection and analysis of scales for this literature review took place in the fall of 2020. Keywords such as construct, instrument, scale, measure, financial behavior, financial attitudes, money management and scale development were used to identify relevant articles. Databases Scopus, EconLit, and Google Scholar were searched. The literature search identified 26 articles presenting 30 different scales The articles were published between 1990-2020 and most of them used data from the US.

Each article was read and analyzed, and characteristics were documented in an Excel file. Variables used are target population, the number of items, the number of factors, sample size, and the framework used were recorded. From there, scales were put into a table showing the quantitative characteristics of each scale. A second table analyzed the qualitative characteristics of each scale. The tables were combined to display both the qualitative and quantitative characteristics of scales and their respective papers. Following a procedure outlined by Aghdam et al.’s (2019) article, each scale was grouped and categorized based on the topic the scale covers, creating five categories. Table 1 displays the type of scale used, scale reliability, scale validity, the intended purpose of the researcher’s scale, and the framework used in the development of the tool. This allows an understanding of the purpose of each scale as well as the population it intends to serve.

Table 1. Compilation of 30 Scales and their Qualitative and Quantitative Attributes

Lown (2011) Financial SelfEfficacy Scale Bandura’s concept of selfefficacy (1977)

Prochaska’s Transtheoretical Model of Behavior Change

(2019) Women’s Financial Self-Efficacy Scale Bandura’s (2006) suggestions of social cognitive theory examine the validity and reliability of the Women’s Financial Self Efficacy Scale

Financial Behavior Scales

Dew & Xiao (2011)

The Financial Management Scale

Theory

Means-End

Measure consumption goals encompassing integrative, multidimensional, context sensitive and general uses hoping to analyze gain, hedonic and normative functions

Motivation Scale General 101 5 (13) 5-point Likert .76-.91 construct

Help practitioners and researchers identify and determine the severity of compulsive spending habits in clients

Social

Married partners construct,

There were a total of 30 scales in 26 different papers compiled from the literature search. Each scale has its own unique purpose of development and serves various objectives and target populations. The studies published regarding scale development had sample populations ranging from 80 participants to 1,662 participants. Many researchers performed multiple studies to ensure accuracy and reliability in the development of their scales. When reading and analyzing the research, the number of studies was recorded, the number of participants in each study, and Cronbach’s alpha of each study’s internal consistency were also recorded. Unless written otherwise in the articles, only the final study’s participant size was reported in this paper. Reliability values of each factor and all methods of validity measures were recorded. The 30 scales were categorized based on the topics they address: financial wellbeing, financial self-efficacy, financial behavior, financial management and decision styles, and financial attitudes. Table 1 shows the compilation of the articles along with details about the variables that were analyzed, respective framework, and the researcher’s purpose behind the development of the scale(s).

The financial wellbeing category contains eight scales. Financial wellbeing refers to doing well financially, and can be measured with both objective measures such as desirable financial management behavior and subjective measures such as financial satisfaction (Xiao, 2015). These scales all have their unique purposes such as examining different aspects of financial stress (Heo et al., 2020) or working to better understand financial wellbeing such as Financial Wellbeing

Related Scales (Abrantes-Braga & Veludo-De-Oliveria, 2019), Financial Strain Survey (Aldana & Liljenquist, 1998), InCharge Financial Distress/Financial Well-Being Scale (Prawitz et al., 2006) and Financial Anxiety Scale (Archuleta et al., 2012). The final scale, Northern et al.’s (2010) Financial Stress Scale is used to examine undergraduate college student’s levels of financial stress.

The second category is Financial Self-Efficacy and Knowledge, comprised of three scales: Financial Knowledge Scale: Short Form (Houts & Knoll, 2019), Financial Self-Efficacy Scale (Lown, 2011), and Women’s Financial Self-Efficacy Scale (Nguyen, 2019). According to Nguyen (2019), financial self-efficacy is defined as “beliefs in one’s capabilities to organize and execute the courses of action required to produce given attainments (p. 143) with Bandura’s theory of self-efficacy (1977) used in both Lown and Nguyen’s scales.

The third category of scales focuses on financial behavior, which encompasses the decisions and choices individuals make based on their finances. The scales in this category were created to use in measuring a consumer’s behavior and habits such as saving, spending or money management. There are 10 scales are in this category. Researchers’ goals included measuring consumption goals (Barbopoulos & Johansson, 2017), looking at the psychometric properties of financial management behaviors (Dew & Xiao, 2011), looking at the severity of spending and habits (Edwards, 1993; Weun et al., 1998) and examining financial transparency (Koochel et al., 2020). Other scales such as Ksendzova et al. (2017) and Prochaska-Cue’s (1993) were to measure financial management behaviors while Puustinen et al. (2013) worked to measure investment value associated with investment behavior while Lampenius and Zickar (2005) developed a tool to measure financial risk taking with their scale Measure of Financial Risk Taking.

Category four encompasses financial management and decision styles with three scales. This category looks at consumer money management style or decision style.

Lichtenberg Financial Decision Screening Scale (Lichtenberg et al., 2016) seeks to develop a scale to understand exploitation of consumers and decisional-ability deficits. The second scale, Process of Retirement Planning Scale (PRePS) (Noone et al., 2010) developed a tool to better understand the retirement process in regards to financial preparation. The final scale in this category, Rettig and Schulz’ (1991) Financial Decision Making Styles, assesses decision making styles.

The fifth category is financial attitude scales. Six scales are included, each one measures attitudes towards finances. Researchers such as Loix and colleagues (2005) took a psychological approach to understand attitudes. On the other hand, Hanna et al. (2001) created a scale regarding risk tolerance, while Lown and Cook (1990), and Webb and colleagues (2000) developed scales to understand attitudes towards helping others. The final two scales in this category targeted a specific audience with Beutler and Gudmunson’s (2012) scales studying 16-year-old adolescents.