Financial Well-Being: What It Means for Canadians

From cold plunges to antiaging regimens, wellness is front of mind for many Canadians in 2024. That same focus on self-care is shaping how people manage their money: “no-spend” challenges, loud budgeting on social media and other money trends are everywhere. But before we treat every financial habit as a “wellness investment,” it’s worth stopping to ask: do these trends actually improve our financial health?

Canadians are regularly exposed to financial fads promising big returns that often don’t pan out once costs and risks are considered. Marketers have leveraged the rise of DIY trading to attract hundreds of thousands of newcomers to the stock market—many making trades without sufficient experience and suffering losses. Technologies like non-fungible tokens (NFTs) also drew millions from everyday consumers and were promoted as lucrative opportunities before many people experienced heavy losses. Fads frequently overpromise and underdeliver, leaving people with less money and, sometimes, reduced well-being.

Fortunately, decades of research from social scientists give us a clearer, more reliable framework for improving financial well-being. Their findings provide practical guidance on how to manage money in ways that support overall life satisfaction.

What exactly is financial well-being?

As a Certified Financial Behaviour Specialist, I define financial well-being as a combination of three practical and emotional elements:

• Being able to meet your bills and daily expenses comfortably today.
• Feeling confident about your financial future.
• Having the freedom to enjoy life’s pleasures without constant worry.

In short, financial well-being means managing your money so you can reach goals, avoid costly mistakes and feel at ease about your finances. Building on this idea, the Consumer Financial Protection Bureau’s 2015 framework highlights four core dimensions of financial well-being:

1. Control over day-to-day and month-to-month finances. This involves aligning expenses with income and managing debt in a sustainable way.
2. Capacity to absorb a financial shock. An emergency fund or contingency plan helps you handle unexpected expenses or life changes like job loss, major repairs or medical bills.
3. Being on track to meet financial goals. Actively saving and investing for milestones such as retirement, a wedding or education.
4. Financial freedom to make choices that bring joy. Having the time and resources to spend on activities and experiences that matter to you.

Much academic research focuses on objective measures—income, savings, investments, credit scores, debts, mortgages and taxes—on the assumption that getting these technical pieces right will produce financial well-being. While those elements are essential, this view can miss the subjective side: how people feel about their finances, and how those feelings shape behaviour and life satisfaction.

How are Canadians doing with their money?

Recent surveys paint a mixed picture. A TransUnion Consumer Pulse survey found that 32% of Canadian households struggle to keep up with debt payments. FP Canada reports that 44% of Canadians name money as their top source of stress, even as many remain hopeful about the future. At the same time, the Financial Consumer Agency of Canada (FCAC) notes that three in four Canadians describe themselves as “somewhat secure or financially secure.”

These findings suggest that while many Canadians appear stable on objective measures, financial stress and insecurity are still common. Importantly, the FCAC’s work highlights that subjective factors—confidence, attitudes toward spending and saving, and financial habits—play a major role in whether people feel financially well.

That means financial well-being isn’t just about income or balances on paper. It also depends on behaviour, mindset and the belief that you can make good financial choices. Those subjective aspects strongly influence whether objective gains translate into a genuine sense of security and satisfaction.

Why feelings about money matter

Research by Brüggen et al. (2017) and Netemeyer et al. (2018) shows that two people with similar bank balances can experience very different levels of perceived financial well-being. Personal beliefs, emotions and confidence around money shape how people interpret their financial situation and whether they feel secure.

Financial health affects more than your account balances: it influences mental health, relationships and overall life satisfaction. Paying down debt and saving for retirement are important steps, but they don’t automatically produce peace of mind. Your perception of your finances and your confidence in managing them are integral parts of genuine financial well-being.

In 2024, financial well-being means combining practical stability with a healthy relationship to money. It’s about paying your bills and planning for the future while keeping spending and saving aligned with what brings you real happiness. When your financial behaviours reflect your values, you’re more likely to both protect your money and increase your overall life satisfaction.

If you want to explore this further, Chris Rudd and I discuss financial well-being and how to be happier—not just wealthier—on Episode #175 of The Most Hated F-Word Podcast.

Read more about financial psychology:

• Flow state vs. cash flow: Make better money decisions by discovering your flow state

• What is financial freedom in Canada?
• What is the PERMA model? Can it help Canadians spend better?
• Does money buy happiness?