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What is Financial Wellness?

Written by
Samantha Rose
Samantha Rose is a personal finance writer covering financial literacy for OppU. Her work focuses on providing hands-on resources for high school and college-age students in addition to their parents and educators.
Read time: 8 min
Updated on March 25, 2024
young woman with long hair and glasses wondering what is financial wellness?
Is it the same as financial literacy? Is it different? Here’s what the experts have to say.

‘Financial wellness’ is a term that’s become increasingly popular in financial education circles. At first glance, it might appear synonymous with financial literacy, but there are some important differences.

Essentially, financial wellness is the overall health of your financial life. It refers to the health of your finances, as well as how your finances intersect with your physical, mental, and social well-being.

While financial literacy is the knowledge of financial concepts and skills, financial wellness can be thought of as a state of having a healthy financial outlook.

To better understand financial wellness, we spoke to personal finance educators on college campuses across the country. In our conversations, we found that “holistic” was a word that kept popping up. A holistic view looks at the entirety of something rather than its individual parts. Check out what these experts had to say about it.

What is financial wellness?

“Well, to me, financial wellness is feeling comfortable with where you are in the present, as well as feeling comfortable with where you might be in the future. Having that ability to plan ahead and being able to not only provide for your daily needs, but also those things that make our lives satisfying—the things that we want to do, the things that are interesting to us. When you have financial wellness in your life, you’re not so stressed out about your finances and that doesn’t then bleed over into the rest of your world. So to me, wellness is a very holistic perspective. There’s lots of different pieces of our personal wellness and they tend to interact with each other. Research shows that when you are worried about finances you’re not as productive with your work. If you’re a student, your grades may suffer, you may not feel well enough to attend class, so all these things interrelate to each other.”

 

Kathryn Sweedler Kathryn Sweedler

Consumer Economics Educator at the University of Illinois Extension Financial Wellness of College Students Program

 

“Financial wellness is so much more than just knowing about your finances and knowing about how to make good decisions. I think it is incorporating financial decisions into other aspects of your well-being and of your life and making sure that your finances are having a positive reflection into all of those. I think a financial wellness, and a financial identity, if you will, is such a personal thing. A good financial decision for me might be a horrible financial decision for you and it might be a great financial wellness decision for someone else. There are all of these stories behind the scenes that we all have in our lives and there are histories that we bring to the table. Our finances play a part in all of those. In my opinion, the idea of being financially well or understanding what financial wellness is is having an individual who can make an informed decision that is not going to have a negative impact on the rest of their life, but instead will integrate within the rest of their decisions.”

Nate Peterson Nate Peterson

Associate Director of One Stop Student Services at the University of Minnesota

 

“The way I see it, financial wellness represents a healthy approach to managing our financial life including behaviors, attitudes, and knowledge.”

Jimena Huaco Jimena Huaco

Research Analyst, Provost Office at Champlain College

 

“Financial wellness is the ability to confidently manage your financial resources to meet your needs and financial goals. It means knowing exactly where your money comes from and goes to each month, having money set aside for the inevitable emergency, and having no debt, or a plan to become debt free within a reasonable timeframe. It means not losing sleep at night wondering how you're going to cover the latest financial hiccup. An often unstated—or assumed—element of financial wellness is also having enough resources for which to manage.”

Karen Serna Karen Serna

Director, Student Financial Wellness and Financial Aid Outreach at Austin Community College

 

Is financial wellness different than financial literacy?

“To me, financial wellness takes a holistic approach, whereas financial literacy is important in the sense that you have an understanding of terminology and concepts in personal finance. But it’s sort of like the first step towards financial wellness. Even if you don’t know all the jargon, you might have financial literacy in the sense that you know enough about how to use financial services that are appropriate for you, but when you start looking at things like making investment decisions or choosing job benefits, just plain old literacy of understanding the language is important. I’m not putting down financial literacy in any way, but it is a stepping stone that gets you towards financial wellness.”

Kathryn Sweedler Kathryn Sweedler

Consumer Economics Educator at the University of Illinois Extension Financial Wellness of College Students Program

 

“Yes, it is, I would say! The term of literacy, if we’re looking at it from an education standpoint, it’s knowing how to do something; it’s knowing how to read. But when we are learning how to read we’re actually learning how to synthesize that information on the outside and incorporating it into the other parts of our understanding. And I think that financial wellness is that exact same difference. Financial literacy is understanding the basics, it is understanding on paper what things look like, it’s knowing how to talk the talk. Financial wellness is where you start to walk the walk, where you’ve incorporated it into your life and where your finances start to have a spot at the table when you’re making a decision. So if you’re looking at it from a wellness perspective, people have social wellness, they have spiritual wellness, they have all these different wellness-type identities and financial wellness needs to sit at that same table with those individual wellnesses to have that inclusive conversation, and that holistic conversation, and that holistic identity that someone is building.”

Nate Peterson Nate Peterson

Associate Director of One Stop Student Services at the University of Minnesota

 

“Financial wellness differs from financial literacy in that financial wellness seeks to address the complexity of personal finance beyond just having the knowledge of what different financial concepts mean.”

Jimena Huaco Jimena Huaco

Assistant Director of Talent Education Management at Champlain College

 

“Yes! Financial literacy is the knowledge of how our financial system works. It's like knowing that a budget includes income and expenses, or knowing how credit card interest is calculated. It's knowing how to open a bank account, and what questions to ask a financial advisor. Financial wellness is implementing the knowledge to make wise financial decisions that help YOU reach YOUR financial goals.”

Karen Serna Karen Serna

Director, Student Financial Wellness and Financial Aid Outreach at Austin Community College

 

Why is financial wellness important?

“It impacts so many, if not all, of these different areas of our lives. Relationship problems are often related to disagreements over finances. Stress over finances is just huge and in every survey that’s done right now, people are commenting across age groups that they are stressed about finances or that they’re worried about finances and that it keeps them up at night and makes their stomach hurt. In just the way people describe it—‘it keeps me up at night’ —clearly that’s impacting their wellness, because they’re not sleeping. So it is such an important piece in our lives that I think working towards improving your own financial wellness will likely improve your quality of your life.”

Kathryn Sweedler Kathryn Sweedler

Consumer Economics Educator at the University of Illinois Extension Financial Wellness of College Students Program

 

“Financial wellness, in my opinion, is important because it involves self-reflection and it involves making informed decisions that will have a positive impact, however, one defines positive. I think if someone says, ‘Oh, I am financially well,’ they’ve really missed out on what the opportunity is. The idea is that you as a person, you as an identity, you as a being are always developing. Therefore, your financial habits and your financial understanding should also continue to develop. The idea of financial literacy is that you’ve learned something and you’re good to go. For financial wellness, it’s so much more than that. It’s about knowing how your life changes and knowing how your financial decisions and how your financial capabilities and understanding have to change in order to be congruent with the rest of yourself.”

Nate Peterson Nate Peterson

Director, Office of Student Finance at the University of Minnesota

 

“Financial wellness is important because we are humans. We have emotions that sometimes get in the way of rational behavior. We have past experiences that affect how we relate and ultimately behave when it comes to money. And as human beings, we know that learning concepts and theories doesn't necessarily mean that we are going to do what we know we should be doing, let alone having the right attitude towards a certain topic. Financial wellness acknowledges this complexity and making that distinction is the first step towards making steps to becoming financially ‘fit.’”

Jimena Huaco Jimena Huaco

Research Analyst, Provost Office at Champlain College

 

“I think everyone would agree that the ideal situation for each one of us would be to not to have to worry about money. And I'm not talking about waking up one day and having millions and millions of dollars simply handed to us so we could literally buy anything and everything we want and need. I mean not being stressed when the car insurance bill comes due because you have money set aside to cover it. I mean not being stressed when you have to make an unexpected visit to family out of state because you're prepared and were expecting the unexpected. Financial wellness frees you up to focus on other things in life like family, friends, and pursuing what you love.”

Karen Serna Karen Serna

Director, Student Financial Wellness and Financial Aid Outreach at Austin Community College

 

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