There are five parts to financial wellbeing:
- A clear path to identifiable objectives
- Control of daily finances
- Ability to cope with financial shocks
- Having financial options
- Clarity and security for those we leave behind
A great deal of research has been done on the subject revealing two universal truths.
Firstly, money itself does not make us happy – it is how we use it that matters. For example, Professor Tim Kasser of Knox College has produced research that shows the value of accumulating wealth for its own sake is in direct contradiction with happiness.
Secondly, and best highlighted by the Harvard study on happiness, the largest contributor to our wellbeing is the quality of our social relationships.
Therefore, in many ways financial wellbeing is about how we use our money to support the other areas of wellbeing.
One of the aims of the Institute is to explore these issues much more deeply, to develop a consensus of what financial wellbeing means. The IFW is at the forefront of such research. We also provide a space where the advice and planning profession comes together to explore ways in which we can help clients to become happier and more fulfilled, not just wealthier.
Financial wellbeing isn’t
Many financial organisations have adopted the expression ‘financial wellbeing’. Unfortunately, some seem more concerned with promoting financial products than increasing happiness.
There are times when financial products are appropriate, for example when coping with a financial shock, we feel financial wellbeing is a much broader topic.
Therefore, the Institute aims to take back the expression ‘financial wellbeing’ and ensure it is used correctly.
Find out about IFW membership.
The initiative will be member-led. We’d love to hear from individuals and organisations who would like to get involved.