hi i'm rick kahler thanks for joining me what is financial well-being a researcher based in
berlin recently asked me that question and i had a bit of a struggle answering it in part because i
write and talk a lot about what financial well-being is not one straightforward definition
of what financial well-being is comes from the consumer financial protection
bureau its definition its definition was that financial well-being 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 define this
even more by saying financial well-being includes a feeling of control over day-to-day
finances the capacity to absorb a financial shock and being on point to reach financial goals and
having the means to make choices that make life enjoyable cfpb's research showed that on a scale
between zero and a hundred around a third of u s adults scored 50 or below in financial ob
another third scored between 51 and 60 and another third scored 61 or above income is not necessarily
a predictor of financial well-being as someone with lower income can have a higher financial
well-being than someone with higher income the last bit of information is where things
start to get tricky because it brings emotional well-being into the equation emotional well-being
is defined by the national institutes of health as an overall positive state of one's emotions
life satisfaction sense of meaning and purpose and ability to pursue self-defined
goals so what comes first emotional or financial well-being what impact do they have on each other
well i've long contended that financial well-being embraces both financial and emotional components
it's not simply about having enough to be financially comfortable
but it's also about being emotionally comfortable around the role of money in your life
i think it's possible to have an abundance of money and still experience emotional
physical or psychological strain that precludes having emotional well-being
for example i once worked with a client who couldn't sleep because she was obsessed
with financial worry she had a net worth of 15 million dollars did she have financial
well-being well she certainly could meet current and ongoing financial obligations
yet she did not feel secure in her financial future she certainly had the money to make choices
that would allow her to enjoy life yet she was not making those choices it would appear that
there was a direct emotional component that kept her from enjoying financial well-being
it's also possible for a person to lack financial well-being and still at least appear to enjoy
emotional well-being take a person who is happily accumulating credit card debt
every month to fund their lifestyle they feel no stress they feel secure
in their financial future because of a money script that the money will always appear
they're using money which is borrowed to make choices that allow them to enjoy life
they have the money again borrowed to pay current obligations their illusion of financial well-being
falls apart when one looks at their financial future which is anything but secure as their
borrowing is just unsustainable lack of stress is unrealistic so it's felt but it's unrealistic and
anchored in denial which actually makes it an indicator of a lack of emotional well-being
so my conclusion to all this is that emotional well-being and financial well-being cannot be
viewed as separate some level of financial security is necessary to support emotional
well-being and some level of emotional well-being is necessary to enjoy financial abundance
it's almost impossible in my view to have one without the other thanks for listening