What is Financial Wellbeing?

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What is financial wellbeing? A researcher based in Berlin recently asked me that question. I had a bit of a struggle answering, in part because I write and talk a lot about what financial wellbeing is not.

One straightforward definition of what financial well-being is comes from the Consumer Financial Protection Bureau. It published its first report on “Financial Well-Being in America” in 2017 and issued a updated report covering 2017-2020. Its definition is “a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future and is able to make choices that allow them to enjoy life.” The authors of the report define this even more by saying financial well-being includes a feeling of control over day-to-day and month-to-month finances, the capacity to absorb a financial shock, being on point to reach financial goals, and having the means to make the choices that make life enjoyable.