Financial health is the capacity to thrive sustainably

Financial insecurity is a global problem, with millions of people around the world struggling to pay their bills and lacking the savings to weather a sudden loss of income.

Enabling 8 SDGs

More than 44 million working households—representing more than 90 million people across the United States—struggle to pay their bills each month. Nearly four in 10 households can’t withstand an unexpected monthly expense greater than $400 [1]. Globally, the majority of the population in many countries are financially ill-prepared to weather a prolonged income shock. According to a study that mapped global financial resilience, more than two-thirds of adults in Kenya, Vietnam, Greece, Chile, Colombia and Bangladesh would not be able to cover basic needs for three months using just their savings or by selling assets in the event they lost their incomes [2].

Financially included, but NOT financially healthy.

Studies have examined the correlation between financial inclusion and financial health, and the results are not promising. For example, while financial inclusion in Kenya increased from 75% to 83% between 2016 and 2019, the percentage of adults deemed financially healthy declined from 39% to 22% in the same period. Gallup’s study indicated that there is no clear relationship between account ownership and financial security in low- and middle-income countries [1]. Financial health as an approach offers a way forward and below offers a brief overview on how:

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A better approach

Financial health provides a more holistic view of welfare, and can be a more effective measure of economic wellbeing than traditional indicators. [1]

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It's complex

Financial health is a multi-faceted concept that requires understanding both the end results and the root causes.

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Measuring it

Measuring financial health offers a more nuanced understanding of wellbeing than traditional financial inclusion metrics.

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Policy Makers

Governments see the link between financial health and productivity, but policymaking in this area is still nascent.

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Financial services

By putting customers' financial health first, financial institutions can both grow their businesses and help their customers achieve long-term success.

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Inclusion or health?

While financial inclusion is a critical starting point, achieving financial health requires more than access to financial services. It requires economic resilience and financial freedom.

Financial health is the capacity to thrive sustainably.


Financial health is more layered and complex than the relatively straightforward concept of financial inclusion. In this section, the UNCDF working paper does a great job in unpacking what we mean by financial health and identify its parameters. The following two questions in particular help explain the concept of financial health in more concrete terms: (1) what are financial health outcomes? and (2) what are the drivers (or determinants) of financial health outcomes?

The outcomes of financial health are often conflated with its determinants. We must disentangle these components to be clear about what we are aiming for (outcomes) and how we get there (determinants). UNCDF uses an hourglass framework to explain financial health determinants and their relationship to financial health outcomes. Determinants are classified as environmental, human and individual, which in various combinations lead to financial health outcomes.

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