Validation and Measurement Invariance of the Personal Financial Wellness Scale

Abstract. In 2020, 17.1% of the population in the European Union was at risk of poverty ( Eurostat, 2021 ). Poverty is often assessed using objective measures such as absolute and relative income levels. However, different individuals may experience different levels of financial stress at the same income level. Therefore, it is crucial to have measures that capture the subjective components of poverty. In this multinational study, we tested the validity and measurement invariance of the Personal Financial Wellness (PFW) scale across six European countries (Germany, Italy, the Netherlands, Slovenia, Spain, and the UK) and the US, and six languages (German, Italian, Dutch, Slovenian, Spanish, and English). Results provided mixed evidence for the fit of the expected one-factor structure. Exploration of a modified one-factor structure indicated an improved fit. The scale showed excellent reliability, and convergent and discriminant validity. This suggests that the PFW scale captures subjective financial stress and is a dependable self-report measure. Measurement invariance testing of the modified one-factor model showed metric invariance across Slovenia, Spain, the UK, and the US. Given that scalar invariance was not achieved and the invariance testing was based on an exploratory model, we do not advise the use of the scale for comparisons between countries.