Do the wealthiest of us enjoy the highest financial well-being?

by Leonore Riitsalu & Fred van Raaij
Posted on March 04, 2020

Using data from 16 countries, we aim to compare two components of financial well-being, as developed by Netemeyer et al. (2018): current money management stress (CMMS) and expected future financial security (EFFS). CMMS is the stress of managing personal and household finances in the present; EFFS is the expectancy of keeping the desired living standard in the future. Do citizens of the wealthiest countries enjoy the highest financial well-being? Are there differences between financial well-being in the present and in the distant future? Are some people stressed about their current money management whilst having sufficiently secured their financial future? These were the questions on our minds when we started our short-term research project supported by the Think Forward Initiative.

At first glance, one might think that people in wealthier countries have a higher financial well-being, both for the present and the future. This assumption is as superficial as the one about the wealthiest being the happiest. There is evidence that happiness does increase with income - but only up to a certain degree (Kahneman & Deaton, 2010). And there is evidence of those greatly valuing material possessions to assess their financial well-being to be lower (Garðarsdóttir & Dittmar, 2012). Yet people seem to assume that financial well-being is almost the same as wealth.

Financial well-being: not just a set of behaviours

Researchers and practitioners debate whether financial well-being is an objective or subjective concept, or a combination of both. It is often confused with financial behaviours. For example, indicators of financial health in the USA are behaviours such as ‘spending less than income’ and ‘paying bills on time’ (Financial Health Network, 2019). These prudent behaviours may lead to increased financial well-being, but they are not the indicators of financial well-being itself. There are many definitions of financial well-being used by various authors. Our own definition of financial well-being includes the assessment of one´s present and future financial situation, the perceived ability to keep one's current lifestyle and to reach one's desired living standard in the future. It is more than a particular behaviour or a set of behaviours.

Objective measures have some weaknesses. The pressure to keep up with the Joneses may turn even high incomes into being insufficient for reaching a desired living standard. Also, inequality may make the size of assets seem unfairly small, even if it is perfectly fine for keeping the current living standard. On the other hand, if self-expression or ecological sustainability is more important than economic security, counting assets is not helpful for understanding satisfaction with the living standard. Therefore, we support a subjective measurement of financial well-being.

Data from 16 countries

We use data collected as part of the ING International Survey (IIS) on Savings in 2019. Measures of CMMS and EFFS were added to this Savings survey. This dataset contains valuable information on financial behaviours and socio-economic background of more than 15,000 individuals from 13 European countries, Australia, USA and The Philippines.

First, we calculated the mean scores of CMMS and EFFS for all countries as the sum of 10 questions asked in the survey, and tested the reliability of these measures. It is important to keep in mind that high CMMS is negative (high current money management stress), whereas high EFFS is positive (high expected future financial security). The highest money management stress level was reported in Turkey, the lowest rather expectedly in Luxembourg. As these two countries are on the opposing ends in GDP based on the OECD data, it might relate to the economic background of the countries. However, in Romania and the Philippines the GDP is even lower than in Turkey. Therefore, it cannot be only the country wealth that explains current money management stress.

Figure 1. Mean CMMS score by country (the darker the colour, the more money management stress)

Surprisingly, the Philippines score highest on expected future financial security (EFFS). Many factors may contribute to that: large number of household members, rapid economic growth, low level of individualism, relatively young sample - or there may have been something in the translation of the statements that tilted them towards positive assessment of the future financial security. We will study these factors in more detail in the next months of our project.

Figure 2. Mean EFFS score by country (the darker the colour, the higher expected future financial security)

Countries where CMMS is significantly lower than EFFS are Austria, Belgium, Germany, Luxembourg, the Netherlands, the Philippines, Romania, Spain and the UK. These are the countries where individuals report relatively high financial well-being level. In Australia, France and the USA, EFFS is somewhat higher than CMMS. In Czechia, Italy, Poland and Turkey, CMMS and EFFS have the same value or CMMS is somewhat higher than EFFS.

Figure 3. Current money management stress (CMMS) and expected future financial security (EFFS) mean scores (max=5)

Conclusion: more research needed

We may conclude that there is no linear correlation between country wealth and financial well-being, as one might have assumed. Luxembourg is the wealthiest, but not the highest on EFFS. The islands of the Philippines have the lowest GDP of all examined countries, but they have the highest EFFS. Furthermore, it is possible to have simultaneously a high score in both CMMS and EFFS. Meaning there are countries where people say although they struggle to make ends meet in the present, they have secured their financial future sufficiently. At the first glance this seems to be against common sense.

In the next three months of our research project, we will analyse the effects of cultural factors (individualism, long-term orientation and indulgence) and economic indicators (the GDP and Gini coefficient), on both components of financial well-being. We will also test whether life satisfaction or happiness measured by international indexes correlate with CMMS and EFFS. Furthermore, we will analyse the individual differences in financial well-being in these 16 countries.


  • Financial Health Network. (2019). Financial Health Measurement. Financial Health Measurement.
  • Garðarsdóttir, R. B., & Dittmar, H. (2012). The relationship of materialism to debt and financial well-being: The case of Iceland’s perceived prosperity. Journal of Economic Psychology, 33(3), 471–481.
  • Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493.
  • Netemeyer, R. G., Warmath, D., Fernandes, D., Lynch, J. G., Fischer, E., & Toubia, O. (2018). How Am I Doing? Perceived Financial Well-Being, Its Potential Antecedents, and Its Relation to Overall Well-Being. Journal of Consumer Research, 45(1), 68–89.