Understanding and Defining Financial Wellness (2)
Personal Financial Wellness
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.
Material Well-Being
Material well-being is another concept that is used as a proxy of economic and financial well-beings. Family material well-being refers to the mix of goods, commodities, and services to which family members have access (Fergusson, Horwood, & Beautrais, 1981). Indicators of material well-being include ownership (home, car, television, etc.) and economizing behavior such as cutting down or reducing expenditures. Other examples of economizing strategies include postponed visits to a physician, money borrowed to meet everyday living costs, and reduced weekly shopping to save money.
Personal Financial Wellness
Personal financial wellness is a comprehensive, multidimensional concept incorpo rating financial satisfaction, objective status of financial situation, financial attitudes, and behavior that cannot be assessed through one measure (Joo, 1998).
Financial satisfaction is a key component of financial health. However, financial satisfaction does not necessarily mean good financial health. Sometimes, people can be satisfied with their financial situation, even though they have large debts. This is why an objective assessment of a person’s financial situation is an important component of personal financial wellness. With an objective diagnosis, personal financial wellness can be measured reliably. In addition to subjective financial satisfaction and objective measures, individual perceptions (i.e., financial attitude) and financial behaviors are important components because these measure the potential of change in personal financial wellness. An individual’s personal financial wellness can be said to be “high” (or a person is “well”) when individuals are satisfied with their financial situations, their objective status is desirable, they have positive financial attitudes, and exhibit healthy financial behavior.
As indicated above, the concepts of personal financial wellness, economic well-being, and financial well-being are part of the broader concept of well-being. Much is known about well-being in general; however, little is known about personal finan cial wellness specifically. The following section presents some proxies of personal financial wellness.
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