Definitions and Frameworks page
Financial Well-Being is a higher-level, overarching construct. The U.S. Consumer Financial Protection Bureau defines it as ‘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.’ This aligns with the G20 Policy Note on Financial Well-Being and other leading definitions.
Definitions and Financial Well-Being Framework
The Personal Financial Well-Being Framework, developed by our organization in 2016, was first presented at the Financial Consumer Agency of Canada’s 2017 Financial Literacy Research Symposium and peer-reviewed by many organizations. Developed through extensive desk research, quantitative and qualitative research, consumer consultations, and peer review by leading academics, financial health experts and financial institution leaders, it provides a holistic view of the complex, multi-dimensional construct of an individual’s financial well-being. It also underpins the Institute’s longitudinal Financial Well-Being Studies instrument (2017–2026), with applications across other countries.
The holistic Financial Well-Being Framework and definitions remain highly relevant and continue to evolve with new evidence and people’s changing financial lives. The Framework defines and connects the inter-related constructs of financial health, financial resilience, financial wellness, financial inclusion and financial capability within the over-arching construct of financial well-being.
It considers consumer and financial behaviours across the financial spectrum: daily financial management; saving, planning and investing; debt and credit management; and protection over the short, medium and longer term. It combines reported objective and subjective indicators with administrative and other data. Many of these indicators are tracked through the Institute’s Financial Well-Being Studies instrument, together with customized questions.
The Framework also encompasses financial inclusion, access to financial help, financial agency and locus of control, including the extent to which people feel able to influence their financial circumstances, make informed decisions and take meaningful action towards their goals. It considers financial and debt stressors, consumer and financial behaviours, and key levers that consumers can pull, and organizations can lean into, to help drive improved financial health and resilience and financial well-being outcomes. Through our wider body of research and work, it also links financial well-being to overall health and well-being.
The Framework considers the financial services enablement support that consumers can put in place themselves or receive from Financial Institutions, Employers, policymakers and other organizations. This includes financial products and solutions, access to and delivery of credit, financial education and digital tools, as well as programs and interventions from Policymakers, Employers and Non-Profit organizations that support consumers, employees and families.
Shared widely, the Framework contributes to an evolving international body of knowledge, frameworks and thinking advanced by the CFPB; world-leading financial well-being academic and expert Professor Elaine Kempson; the OECD; CGAP and the World Bank Group; UNEP Finance Initiative; Financial Health Network; and other organizations. Together, these frameworks and bodies of work are helping to advance financial health and financial well-being impact and enable financial systems to move beyond access and usage towards measurably improving people’s financial lives.
More information and insights on the Financial Well-Being Framework and Financial Well-Being Studies instrument are available here.
The framework has also shaped the development of the Financial Health and Resilience Index Model and the Financial Well-Being Index Model and Toolkit. Access all Institute reports to see how we are using these instruments in tandem.
Business Financial Health and Resilience Framework
Small and Medium Sized Enterprises (SMEs) are an integral part of many of the economies around the world. These businesses stem job creation, drive innovation and contribute to GDP growth. Financial Resilience Institute recognizes this and the intense need to better understand and aid entrepreneurs in ensuring strong financial health and resilience for SMEs globally.
The proprietary Business Financial Health and Resilience Framework provides a framework for analysis of the financial health and resilience of Small and Medium Sized Enterprises (SMEs) and the relationship with the respective business owner’s personal financial health, financial resilience and financial wellness.
The framework focuses on business financial practices and behaviours across the spectrum of daily financial management, cashflow management, saving, planning, and investing (including succession planning), borrowing, debt management, and protection. It brings a holistic lens and set of indicators related to business financial health, financial resilience and business owner financial wellness. It brings a holistic lens on the business and personal financial health and resilience of a SME business; the business owner, their family and employees as appropriate.
The framework was developed over ten years by Eloise Duncan, CEO and Founder, Financial Resilience Institute. It has been informed by quantitative Business Financial Health Studies and research from the US, Canada, India and other countries; several qualitative consultations with Business Banking experts and SME bank customers in Canada [1,2]. In addition, the framework builds on the Personal Financial Well-Being Framework developed in 2016 [3].
For more data and insights around SME financial health and financial resilience, check out our Small Business Financial Health and Resilience Report.
Source: Financial Resilience Institute, Business Financial Health and Resilience Framework
[1] ‘Business Financial Health and Resilience Framework’ refers to a model developed by Seymour Management Consulting Inc. in 2021 and licensed by Financial Resilience Society (dba Financial Resilience Institute). This provides a framework for analysis of the financial health and resilience of Small and Medium Sized Enterprises (SMEs) and the relationship with the respective business owner’s personal financial health, financial resilience, and financial wellness. The framework focuses on business financial practices and behaviours across the spectrum of daily financial management, cashflow management, saving, planning, and investing (including succession planning) borrowing, debt management, and protection.
[2] ‘Financial Well-Being Framework’ refers to a proprietary framework developed by Seymour Management Consulting Inc., used under license by Financial Resilience Society, with this outlined on page 107. The framework provides a holistic view of the complex construct of an individual’s financial well-being. It includes definitions, indicators, and connections between the inter-related constructs of financial health, financial resilience, financial wellness, and financial capability which together impact an individual’s financial well-being. The framework has a focus on individual consumer and financial behaviours that impact individuals’ financial well-being across the spectrum of daily financial management, saving, planning, and investing, debt and credit management and protection. The framework is published on the Institute’s website at: https://www.finresilienceinstitute.org/definitions-financial-well-being-framework/
Building financial health and resilience can strengthen overall resilience, financial empowerment and peace of mind, contributing to improved financial well-being and overall personal well-being. It can also increase the capacity to achieve other outcomes that matter in life, including secure housing, supporting a family, education, business ownership and retirement.
The opposite of financial health and resilience is financial vulnerability. The Financial Health and Resilience Index measures it as the ‘flip side’ of financial resilience, helping identify household strengths and vulnerabilities, the factors contributing to different outcomes and where targeted support or intervention may be needed.
Financial health and resilience is not a fixed state or simply a measure of wealth. It can change as circumstances, needs, behaviours and external conditions evolve, and can be strengthened through the right evidence, choices, support, policies and interventions.
For individuals and households, financial health is about balancing the financial needs of today and tomorrow through decisions and behaviours that help people move forward. Financial resilience is the ability to withstand and recover from financial hardship, stressors or shocks arising from unplanned life events, such as job loss, illness, medical expenses, extreme weather events or economic downturns, while continuing to pursue life and financial goals.
Financial behaviours and decisions contribute meaningfully to these outcomes. Healthy financial behaviours, social capital and relevant financial products, services and interventions can all make a difference. Wider economic, social and structural conditions also matter, including income, employment, housing, health, caregiving responsibilities and access to appropriate support.
Like other leading organizations in this field, the Institute applies a Theory of Change approach to advancing improved financial well-being for individuals, households and other key stakeholders. This recognizes that outcomes are shaped by interconnected policies, market conditions, institutional practices, products, services, behaviours and personal circumstances, and helps identify how actions and interventions are expected to contribute to measurable outcomes over time.