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Plan Well, Retire Well

Saving and investing your money

Financial Wellness: What does it mean to you?


Lots in the news lately about the economy. Depending on whom you ask the economy is basically just fine OR we need to make big changes to improve our economy. How do you feel? What is your state of financial wellness?

And, just what is financial wellness? The financial experts have different opinions on financial wellness. According to a review by Sohyun Joo, "Personal Financial Wellness" in the Handbook of Consumer Finance Research, some people think it's a matter of how much income you make or how much debt you carry. When asked to describe financial wellness, their descriptions included:

  • "having a sufficient income and assets to live the life you desire without having a significant debt ratio," and
  • "sufficient income and assets to support financial goals."

Other financial professionals think how people feel about their finances is an important part of financial wellness. Their descriptions of financial wellness included:

  • "overall satisfaction with one's financial situation and behavior," and
  • "freedom from stress."

Dr. Joo concludes that personal financial well-being includes four components. First, objective measures of financial wellness such as income and debt-level are a part of financial wellness. She also believes that a person's satisfaction with their finances is an important component of wellness. The last two components are a person's financial behavior (what they do) as well as a person's financial attitudes and knowledge.

Are all these components necessary for positive financial wellness?

If you're rich but always want more money – is this financial wellness?

What if you live on a very limited income, but you owe no debt and your bills are paid on time – is this financial wellness?

What if you always worry about money?

What if you make a good income, but it makes you nauseous to think about retiring so you don't open your investment statements or set financial goals?

What if talking about money causes fights with your significant other ... so you don't talk?

How do you define financial wellness? Let me know your thoughts about this – just click on my name below to send a response. I think we all have a lot to add to this discussion.



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