Financial Wellness Meaning of Financial Wellness The terms economic well-being and financial well-being are used interchangeably in this study. Economic well-being and financial well-being can be proxies of financial wellness. The meaning of economic well-being has evolved from simple happiness or general satisfaction with one’s material or financial situation to a complicated perception of both the material and nonmaterial aspects of an individual’s financial situation. The complicated perception includes satisfaction with income and savings, awareness of opportunities, ability to make ends meet, sense of material security, and sense of fairness of the reward distribution system (Strumpel, 1976).
Williams (1983) theorized economic well-being as a function of material and non-material aspects of one’s financial situation. To identify economic well-being, she included money income, real or full income, agreement about distribution, and psychic income or perceived adequacy of income as independent variables. Fergusson, Horwood, and Beautrais (1981) described economic well-being with the level of financial inputs, such as income and assets.
Chapter II. Literature Review
Hayhoe (1990) observed that “economic well-being is an individual’s perception of satisfaction with their financial situation” (p.119). Porter (1990) defined financial well-being as “a sense of one’s financial situation that is based on objective attributes and perceived attributes that are judged against standards of comparison to form evaluated attributes of that financial situation” (p.22). Porter and Garman (1993) asserted that financial well-being depends upon an individual’s perceived objective attributes of the financial situation after comparing it with certain financial standards of comparison as well as objective and subjective attributes of the financial situation. They assumed financial well-being to be a function of personal characteristics, objective attributes, perceived attributes, and evaluated attributes of the financial domain.
Draughn, LeBoeuf, Wozniak, Lawrence, and Welch (1994) discussed economic well-being as consisting of three components: financial adequacy, perceived economic well-being, and satisfaction with level of living. Financial adequacy was an objective assessment of adequacy of income to meet overall economic survival. Perceived economic well-being was defined as a subjective assessment of overall economic survival. Satisfaction with level of living reflected the perception of ability to meet financial demands for needs.
In summary, financial wellness can be conceptualized as a level of financial health. It includes satisfaction with material and non-material aspects of one’s financial situation, perception (or subjective assessment) of financial stability including adequacy of financial resources, and the objective amount of material and non-material financial resources that each individual possesses.
Measures of Financial Wellness Financial wellness can be measured by several different types of scales. First, an objective scale of economic status, such as income, consumption,...