Dorien Bangma

114 | CHAPTER 5 comprises two aspects: (1) financial knowledge (e.g., knowledge of financial terms and concepts and knowledge of one’s own finances; also procedural knowledge of how to pay a bill or how to take out an insurance), and (2) financial judgment (i.e., ability to make financial decisions or choices based on one’s best interests). Financial performance is defined as the success in dealing with financial tasks in everyday life. It is highly influenced by the context in which those financial tasks are performed, with the result that financial competence does not always match financial performance in everyday life: the subject may be sufficiently financially competent but display reduced financial performance due to depression, for example. Or the subject may have reduced financial competence but nevertheless appear to be financially capable as a result of social support and assistance. Contextual factors thus play a major role, having an influence on both financial competence and financial performance in everyday life. An important – but difficult – question is how best to assess the capability to make financial decisions. This is a question that needs careful answering, as an incorrect assessment of a person’s capability can result in loss of autonomy, financial shortfalls or even financial abuse. There are, however, no tests or questionnaires to measure a person’s capability to make financial decisions directly. There are several performance tests and questionnaires that focus on financial competence and financial performance, but to date they have only been usable in a research setting. Appelbaum et al. (2016), Ghesquiere et al. (2019) and Bangma, Tucha, Tucha et al. (2020) all provide an overview of the tools available, and some of those articles describe the pros and cons of those tests and questionnaires. Most of the tools available focus on measuring financial competence and claim to measure financial knowledge and/or financial judgment. Financial knowledge is examined, e.g., by assessing whether the subject is able to explain what a mortgage is or to show how to pay a bill. As regards financial judgment, case studies of a hypothetical financial problem are presented and five different skills are assessed (Appelbaum et al., 2016; Bangma, Tucha, Tucha, et al., 2020; Ghesquiere et al., 2019; Marson, 2016): 1. Identification: competence to identify the financial problem. 2. Understanding: competence to understand information relevant to a financial situation or transaction and related situations or transactions. 3. Appreciation: competence to relate information on a financial situation or transaction and related situations or transactions to one’s own personal situation. 4. Reasoning: competence to reason and think logically about the various choices involved in a financial situation or transaction. 5. Communication: competence to make a choice within the context of a financial situation or transaction and articulate it clearly. There are a few tools that claim to assess financial performance in everyday life. That aspiration is not an easy one to meet in view of privacy considerations, as the patient needs to be willing to provide at least some insight into their personal finances. Tools that focus on financial performance in everyday life mainly assess whether the patient is able to meet their basic needs while they may still be able to do so (especially if they have sufficient funds) while their capability to make financial decisions is reduced. A converse scenario is also possible,