What if the key to improving financial well-being is not simply about better budgeting or more savings, but about fostering joy in one’s life? This provocative question lies at the heart of recent groundbreaking research conducted by behavioral policy experts and philanthropic leaders, challenging conventional banking wisdom on financial health. While banks traditionally focus on educating customers about financial products and encouraging saving and investing behaviors, it has become clear that many people remain reluctant to engage in these activities. The emerging evidence suggests a profound disconnect between what financial institutions promote and what individuals actually value when it comes to their financial lives.
Financial well-being has long been recognized as a critical factor underlying mental health and overall life satisfaction. Acknowledging this, the OECD G20 issued a policy note emphasizing the integral relationship between financial security and personal well-being. Despite this recognition, translating the concept into effective policies and practical support mechanisms remains a challenge. Banks and policymakers seeking to improve the financial lives of their clients often struggle with how to connect with people’s real motivations and behaviors, which do not always align with traditional notions of financial literacy or investment.
To bridge this gap, Leonore Riitsalu, a Research Fellow in Behavioural Policy at the University of Tartu, partnered with Boris Marte, CEO of the ERSTE Foundation, to embark on an ambitious research initiative spanning nearly four years. Their collaboration brought together academia, philanthropy, and the banking sector in an unprecedented effort aimed at developing a more nuanced, human-centered understanding of financial well-being. Their work culminated in the publication of a comprehensive book titled "Beyond Money: Exploring Financial Well-Being through a Human Lens," alongside presentations to broad audiences both online and in Vienna. This multi-stage research incorporated diverse methodologies, including the largest qualitative study of its kind involving 630 interviews across seven countries.
One of the most striking revelations from this research is the identification of three core dimensions of financial well-being: security, freedom, and pleasure. While the first two have historically been the focus of financial assessments and policy interventions, pleasure—the enjoyment of life and the sense of joy derived from financial resources—has largely been overlooked. This insight challenges the assumption that financial well-being is purely a matter of accumulating wealth or planning for the future. Instead, it elevates the idea that financial health should also encompass the capacity to experience life’s simple pleasures and personal growth.
The ambivalence many individuals express toward financial investment further underscores this paradigm shift. Unlike traditional views, where investing is narrowly associated with financial gains, participants in the study often prioritized investments in personal well-being, such as holidays, education, or family experiences—areas that contribute to their happiness and sense of fulfillment. One interviewee candidly reflected, "I don’t like investments, I invest in holidays; those stocks and funds, these are all the things I didn’t believe in; maybe I am wrong, maybe I could have been wealthier, but I don’t believe in investing." This sentiment reveals a fundamental misalignment between conventional financial products and the lived experiences of ordinary people.
To operationalize these findings, the researchers developed a novel measurement tool grounded in their three-dimensional conceptualization of financial well-being. The tool consists of nine rigorously tested statements that have demonstrated reliability and validity across multiple languages, personality types, and longitudinal contexts. Importantly, this instrument is designed to be accessible and user-friendly, free from the intimidating scores or diagnostic verdicts common in existing financial health assessments. Instead, it encourages self-reflection, goal setting, and an exploration of how various life domains—such as education, family, or even pets—affect one’s financial well-being.
A digital implementation of this scale is now freely available online in English and operates independently of any banking institutions. Unlike many financial assessment tools that yield a numerical score or a warning, this platform provides personalized feedback aimed at enhancing enjoyment of life through financial decisions. This approach invites users to reposition money not as an end in itself but as a means to living well, hence reframing financial well-being as a holistic, human-centered construct.
Perhaps most surprisingly to stakeholders in the banking industry was the finding that a substantial number of people do not actively desire to improve their financial well-being in terms of amassing greater wealth. Many interviewees expressed a contentment with their financial status quo but voiced a desire to afford life’s simple pleasures more consistently—such as social outings or cultural experiences—without increasing their net worth significantly. This nuance challenges prevailing narratives around financial motivation and indicates that measures aimed solely at wealth accumulation may miss key drivers of well-being.
Delving deeper into the factors influencing financial well-being, the study combined qualitative interview data with extensive longitudinal bank transaction records, covering multiple accounts for each participant over a 14-month period. This comprehensive dataset showed that traditional socio-economic and financial indicators explained only about one quarter of the variance in subjective financial well-being. This finding suggests that financial status alone is a poor predictor of how people experience and evaluate their financial lives, inviting more interdisciplinary approaches to understanding well-being.
The research also introduced an experimental component exploring interventions that extend beyond monetary considerations. For example, the use of the mindfulness application Headspace was shown to improve both psychological and financial well-being persistently over time. These results invert the common perspective that financial stress causes mental health issues; instead, enhancing mental health through mindfulness can catalyze improvements in financial well-being. This bidirectional relationship provides powerful evidence for integrated strategies that address psychological and financial challenges together.
The publication "Beyond Money: Exploring Financial Well-Being through a Human Lens" thus represents a paradigm shift in how researchers, financial institutions, and policymakers conceptualize and approach financial well-being. By foregrounding the dimensions of security, freedom, and pleasure, it calls for more compassionate, realistic, and multidimensional frameworks that resonate with people’s actual experiences. This research advocates for a broadening of the financial inclusion agenda, suggesting that supporting individuals in enjoying life today is as essential as planning for financial security tomorrow.
Ultimately, this human-centric perspective on financial well-being has practical implications across various sectors. It encourages financial service providers to rethink product design, communication, and customer engagement strategies, placing emotional fulfillment and life satisfaction at the core. For policymakers, it highlights the importance of integrating mental health and social support programs with financial education and assistance. Through collaborative efforts, it is possible to foster environments where people not only survive financially but thrive holistically.
The innovative digital tool emerging from this research empowers individuals to explore their financial well-being on their own terms, setting personalized goals and receiving tailored suggestions to cultivate joy and freedom. Such empowerment facilitates a shift away from fear-based or prescriptive financial advice toward a more supportive and experiential approach. In turn, this may inspire greater engagement, reduce financial anxiety, and build resilience against economic shocks.
In sum, moving beyond traditional metrics and considering the intangible yet profound role of pleasure in financial well-being represents a transformative development for the field. As this research demonstrates, financial health entwined with mental and emotional well-being has the potential to unlock deeper, more sustainable improvements in people’s lives. The future of financial empowerment may well lie in embracing joy as an essential ingredient, redefining success not just by numbers in the bank but by the richness of human experiences those numbers enable.
Subject of Research: People
Article Title: Beyond Money: Exploring Financial Well-Being through a Human Lens
News Publication Date: May 7, 2024
Web References:
- OECD G20 Policy Note on Financial Well-Being: https://www.oecd.org/en/publications/2024/11/g20-policy-note-on-financial-well-being_5eade0bc.html
- ERSTE Foundation Book and Event:
- New Digital Financial Well-Being Tool: https://fwb.skytte.ut.ee/
- Issuu Publication of the Book: https://issuu.com/erste-foundation/docs/beyond_money_exploring_financial_well-being_thro
Image Credits: Valerie Maltseve, ERSTE Foundation
Keywords: Financial Well-Being, Behavioral Policy, Mental Health, Joy, Security, Freedom, Pleasure, Human-Centered Research, Mindfulness, Financial Health Assessment, Digital Tool, ERSTE Foundation
