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To understand financial wellness, concepts that relate to financial wellness should be examined. This section reviews the meaning and measurement of financial wellness and related terms such as well-being, economic well-being, financial well-being, and material well-being.

Well-Being

The general consensus among researchers is that personal financial wellness is a sub-construct of overall well-being. Well-being means “non-instrumentally or ultimately good for a person” (plato.stanford.edu/entries/well-being), and well-being in an ordinary term is closely related with happiness or satisfaction. While well-being is used mostly with physical health, there are six interrelated domains that construct well-being: job, finances, house, health, leisure, and environmental satisfaction (Fletcher & Lorenz, 1985; van Praag, Frijters, & Ferrer-i-Carbonell, 2000).
Well-being is usually viewed as a subjective concept. Subjective well-being refers to “how people evaluate their lives and includes variables such as life and marital satisfaction, lack of depression and anxiety, and positive moods and emotions” (Diener, Suh, & Oishis, 1998, p. 25). Self-reported subjective well-being is a stable concept that can be measured reliably over time (Winter, Morris, & Gutkowska, 1999).

Zimmerman (1995) clarified the term “well-being” as “the state of being healthy, happy, and free from want; outcome of long-term socialization and developmental processes and concurrent environmental conditions and processes; composite of satisfactions in domains of marriage, job, leisure, family, and housing; degree to which basic needs are met” (p. 8). These concepts are now accepted as the general definitions of well-being.

Economic or Financial Well-Being

Economic and financial well-beings are often used interchangeably. Generally, financial well-being tends to include broader aspects of financial life, and economic well-being is most often used with income level (e.g., Breen, 1991; Hayhoe, 1990; Porter &) Garman, 1993; Williams, 1993).

Breen (1991) viewed financial well-being as having sufficient income and assets, quality health and personal care, the right mix of products and services, as well as legal readiness and professional guidance. Williams (1993) theorized that economic well-being was 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.

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