Financial wellbeing

An Introduction to Financial Wellbeing

January 3, 2023
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We've teamed up with the Institute for Financial Wellbeing to help you better understand what it's all about.

There are five parts to financial well-being*:

  • A clear path to identifiable objectives
  • Control over daily finances
  • Being able to cope with a financial shock
  • Having financial options
  • Clarity and security for those we leave behind

A lot of financial wellbeing, particularly in the workplace wellbeing sector, focuses only on debt and budgeting – i.e. control over daily finances. One objective of the IFW is to look at financial wellbeing in the much wider context of the five areas above.

Know Thyself

The first of those parts, a clear path to identifiable objectives, is financial planning.

One way of summing up financial planning, therefore, would be: Work out what do you want from life, then spend your money on that.

However, knowing what do you want from life is not that easy. There are therefore two parts to this process.

The first is to understand what will make you happy, which will be unique to you (although will undoubtedly contain similarities to others). The second are the theories of wellbeing, which tend to be universal.

The Role of the Financial Planner

How then can the financial planner (or advisor or coach) help the client to be happier, not just wealthier?

Given the above, the first role will be to help the client work out what will make them happy. This means the use of coaching skills. Although this needs training, coaching skills are an essential part of helping a client work out what it is they want from life – to find purpose.

The second is knowledge of financial wellbeing theories. This might include some of the research available on money and happiness, and also the study of behavioural finance.

How the IFW Will Help

The IFW is a place for advisors, planners, coaches, indeed anyone interested in financial wellbeing, can come and share good practice. To learn from each other.

Secondly, the IFW will be conducting research to further our collective knowledge into the issue of money and happiness, and publish that research in a variety of ways (such as white papers and books).

They then plan to turn some of this research into tools that planners, coaches and advisers can use with clients.

In this way we help spread the idea that money is a tool to bring happiness, and not an end in itself, and ensure that dialogue is as broad as possible.

You can visit the Institute for Financial Wellbeing here to find out more.

* The Consumer Financial Protection Bureau identifies four areas of financial wellbeing. “Financial well-being: The goal of financial education” (2015)

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