Why a Financial Wellbeing Framework?
Worldwide trends of deteriorating social safety nets and increasing poverty and under/unemployment seen over several decades accelerated once the pandemic hit. Now, even more people are unable to make ends meet. Financial hardship occurs across the socioeconomic spectrum.
Individuals, communities, and economies are at risk.
We know from research that financial hardship, also known as financial strain and poor financial wellbeing, negatively impacts people’s physical, mental, and social health. It also shapes overall wellbeing in many ways, including increased risks of:
- Food insecurity
- Cardiovascular diseases
- Family conflict
- Depression and anxiety
- Disengagement from social life
- Low sense of self-identity
Financial hardship impacts people of all ages, and can impact them for life.
Socioeconomic and health inequalities are widening.
Financial fallout from the pandemic is most concentrated among populations at risk (e.g., single-parent families, youth). Innovative plans of action to prevent and reduce the negative consequences of financial strain and promote financial wellbeing are needed.
It’s not just about dollars and cents.
Financial strain and wellbeing have political, socioeconomic, and cultural causes and consequences. They have dynamic interrelationships at community and population levels.
It is subjective and reflects how a person feels about their current financial situation. A person may be under financial pressure according to their income, but feel like they are coping well, and, therefore, are not experiencing financial strain.
Important Definitions
Financial Wellbeing
Financial wellbeing is “when a person is able to meet expenses and has some money left over, is in control of their finances and feels financially secure, now and in the future” (p.2 of the Framework). It has two components: objective and subjective.
Objective component (i.e., income and assets): includes being able to meet regular expenses, having a buffer to cover unexpected events, and having leftover spending money.
Subjective component (i.e., perceptions and feelings): includes perceived levels of control over finances and feelings of financial security in the current moment and for the future.
Financial Strain
Refers to anxiety or worry about not being able to cope financially in the present. The term financial strain can be used interchangeably with financial stress or financial distress. It is subjective and reflects how a person feels about their current financial situation.
- Financial strain differs from poverty, indebtedness, and income, which categorize people based on quantifiable measures. For example, a person may be under financial pressure according to their income levels and yet feel like they are coping well, thus not experiencing financial strain.
- In this way, financial strain is not the opposite of financial wellbeing; rather, it is the perception of relative financial wellbeing in the present. Therefore, addressing financial strain is an essential part of strategies for improving financial wellbeing.
Learn More About the Financial Wellbeing Framework
- Outlines practice and policy actions that government units and organizations can take to reduce financial strain and support financial wellbeing.
- Presents multiple entry points for action in a complex system that are related to people’s financial hardships.
- Supports selection of high-impact areas for intervention.
- Situates initiatives within the broader landscape of multi-sectoral actions on financial wellbeing and financial strain.
- Ensures an equity approach as an integral part of initiatives to effectively address unique needs of different groups of people.
Through the Framework, you can explore policy targets, evidence-based strategies, and sample indicators to support action across the 17 entry points for action.
- Contribute to a better understanding of (i) the political, socioeconomic, and cultural causes and consequences of financial wellbeing and financial strain and (ii) their dynamic interrelationships at community and population levels.
- Provide high-level guidance on the design, implementation, and assessment or evaluation of initiatives related to financial strain reduction of financial wellbeing promotion.
- Encourage partnerships between organizations and government sectors who share similar goals and objectives for action on financial wellbeing.
- Promote equity-focused thinking in the design, implementation, and assessment phases of financial wellbeing-related initiatives.
- Support engagement with representatives from populations-at-risk for whom initiatives are prioritized.
The Framework was developed using a multi-step process comprising a realist synthesis of evidence and critical feedback from an intersectoral panel of experts from Canada and Australia. Social determinants of health, health equity, and Health in All Policy (HiAP) lenses were applied to develop, refine, and organize the draft Framework. It was then validated with a diverse group of policy, academic, and technical experts.
This process resulted in the development of two separate documents: the Action-Oriented Public Health Framework on Financial Wellbeing and Financial Strain and a companion Guidebook of Strategies and Indicators (see to the right). These documents are also available in French.
More information on the rigorous development process can be found in these documents and a paper published in the International Journal for Equity in Health.
The development of the Action-Oriented Financial Wellbeing Framework and Guidebook, and the translation of that work into the current website was supported by the Canadian Institutes of Health Research (CIHR).
This website combines content from the Public Health Framework on Financial Wellbeing and Financial Strain and companion Guidebook of Strategies and Indicators. Herein, this content is referred to as ‘The Financial Wellbeing Framework’.
