Financial Well-being – A Concept That Has Come of Age
Financial health and well-being – increasingly used interchangeably and seen as a single concept – have gained significant attention in the financial inclusion sector in the past few years. As the sector shifts its focus from simply providing access to financial services toward understanding and improving customer outcomes, there has been increasing interest in clearer definitions of financial well-being to guide efforts in achieving meaningful impact. In response to this, the Global Partnership for Financial Inclusion (GPFI) has just published a G20 Policy Note on Financial Wellbeing, which is intended to help stakeholders better understand the concept, the factors that can influence it, and ultimately to measure progress. This coincides with a new mandate for Her Majesty Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate, focused on financial health.
Interest in the concept of financial well-being initially grew in the U.S. and other industrialized countries, coinciding with the subprime mortgage crisis and financial crash of the late 2000s. More recent initiatives have sought to clarify and model the concept and develop approaches to its measurement – for example, by the Alliance for Financial Inclusion (AFI) and the UNSGSA – in the context of lower- and middle-income countries.
The conceptual frameworks – such as those by CENFRI, UNCDF, and UNEPFI, have made important contributions to the understanding of financial well-being. However, the 2024 GPFI initiative reflected a felt need to more clearly distinguish the extent to which financial well-being is directly influenced by the financial sector versus the aspects shaped by external factors beyond its scope. Conceptualizing financial well-being through this lens – and subsequently measuring it – was seen as essential for evidence-based decision-making. Conceptual clarity and measurement can help optimize the design and delivery of financial services, for example, to minimize the chance that they do harm. It is well-evidenced that increased financial inclusion does not necessarily lead to greater financial well-being. Conceptual clarity and measurement can also guide complementary interventions, such as improving financial capability or providing livelihood support.

Led by this thinking, the GPFI built consensus on a definition and created a conceptual framework. Unlike previous frameworks, this one includes a theory of change, focusing on financial sector policies and interventions that are recognized as important drivers of financial inclusion and believed to promote financial well-being. These policies and interventions are, to varying degrees, within the fields of responsibility of financial authorities and other key decision-makers in the sector. Like previous models, other factors are included. Unlike previous models, the contextual and influencing factors that are understood to affect financial inclusion and financial well-being both positively and negatively – such as household economic resources, social norms, and exogenous shocks – are located outside the central pathway in the model. This does not imply that they are any less influential than financial sector interventions in determining financial well-being. Rather, the framework’s structure is designed to guide financial authorities in focusing on areas they can influence and where measurement tools, such as indicators, should be applied.
The figure below represents the theory of change underpinning the conceptual framework developed under the 2024 Brazilian G20 Presidency. It is intended that the model will evolve as new evidence emerges on what types of financial sector interventions drive financial well-being and the development outcomes it supports. The framework allows countries to adapt it to suit their specific circumstances.
The figure presents a linear pathway from interventions by public and private actors, through financial inclusion to financial well-being and beyond, to a number of SDG-derived development outcomes, which, evidence suggests, can be supported by financial inclusion. This linear picture is intended to aid understanding and measurement. The reality is, of course, much more complex and is affected by the interaction between points on this impact pathway and a range of contextual variables included in the lower part of the model.

Note: The development of the GPFI Policy Note on financial well-being was led by the Central Bank of Brazil, representing Brazil’s G20 2024 Presidency, jointly with OECD. CGAP and the Office of the UNSGSA contributed to the development of the theory of change, which underpins the conceptual framework. The Policy Note benefitted from the support, input, and thorough review of the members of the GPFI. It was endorsed during the final GPFI plenary meeting in Rio on September 26th, 2025, by The Honorary Patron, Her Majesty Queen Máxima of the Netherlands.
A few key features worth highlighting:
- The importance of interventions designed to provide financial consumer protection is emphasized by the mainstreaming of consumer protection across the three intervention categories.
- Digitalization of infrastructure for financial services is regarded as critical.
- Financial skills, attitudes, and behaviors are important for the safe use of financial products and services and cannot be taken for granted.
- Financial well-being is an important outcome in itself, but also a facilitator of key development outcomes.
It is a big step for the GPFI and its implementing partners to have embraced a focus beyond financial inclusion and to have reached a consensus on a conceptual framework aimed at achieving financial well-being outcomes and beyond. The next crucial step is to develop technical guidance to support countries – including national financial authorities – to measure financial well-being, including with consideration to the feasibility and desirability of standardized approaches across communities and countries.
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