‘How are you?’ We are asked this several times a day and almost always answer ‘fine’. But if you really stop to think about it, the answer is often mixed. Your work is going well, but you are sleeping badly. You have good friends, but you look at your bank account with a knot in your stomach. Well-being is rarely one thing. It is a whole made up of domains that influence each other. In this article we look at what well-being actually is, which domains researchers distinguish and why money deserves a full place among them, without determining everything.
More than not being ill
As early as 1948, the World Health Organization (WHO) wrote in its constitution that health is a state of complete physical, mental and social well-being, and not merely the absence of disease. That definition is sometimes criticised for being too ambitious (who is ever ‘completely’ well?), but it made an important point: you can have no diagnosis and still not feel good in yourself.
Psychologists make a useful distinction here. There is your judgement of your life: how satisfied are you when you step back and look at it? And there is your emotional well-being: how do you feel from day to day, and how much stress, worry or joy do you experience? The two do not always move together. You can be satisfied with the broad outlines and still feel tense every evening.
Five domains of well-being
A widely used framework comes from the research firm Gallup. On the basis of large-scale surveys in more than 150 countries, Tom Rath and Jim Harter described five domains in Wellbeing: The Five Essential Elements (2010):
- Purpose and work: liking what you do every day, paid or unpaid.
- Social well-being: strong relationships and love in your life.
- Financial well-being: managing your money in a way that reduces worry and gives security.
- Physical well-being: enough energy and good health to do what you want.
- Community: feeling connected to and involved in the place where you live.
The strength of this model is not the precise division, but the observation that the domains interact. If you are struggling in one domain, you usually feel it in others too. Other frameworks, such as Martin Seligman’s PERMA model (Flourish, 2011), divide well-being up differently, but reach a similar lesson: well-being rests on several pillars, and a strong pillar only partly makes up for a weak one.
Where does money fit into the picture?
Money is not an end in itself, but it touches every other domain. Money worries can disrupt your sleep (physical), create tension in your relationship (social), keep you in a job that wears you out (work) and make you drop out of activities in your neighbourhood (community).
In Scarcity (2013), economist Sendhil Mullainathan and psychologist Eldar Shafir showed how a shortage, of money or of time, swallows up your attention. If you constantly have to calculate whether you will make it to the end of the month, you have less mental space left for everything else. That is not a character flaw, but a normal effect of scarcity.
At the same time, more money does not automatically mean more well-being. Daniel Kahneman and Angus Deaton (2010) found that in the United States a higher income went hand in hand with a better judgement of one’s own life, but that day-to-day emotional well-being barely rose any further above a certain income. Later research by Matthew Killingsworth (2021) did not find that levelling off. In a joint study, Killingsworth, Kahneman and Barbara Mellers (2023) reached a nuanced conclusion: for most people, well-being keeps rising with income, but in the least happy group it levels off at a certain point. Money helps, but it does not solve everything.
That is why we prefer to talk about financial well-being rather than wealth. The American Consumer Financial Protection Bureau (2015) described financial well-being as having control over your day-to-day finances, being able to absorb a financial setback, being on track to meet your goals and having the freedom to make choices that allow you to enjoy life. So it is mainly about peace of mind and freedom of choice, not about an amount in your account.
A score on a well-being measure is a snapshot, not a school report. The aim is not to reach the maximum in every domain, but to see where your energy is leaking away and where your strength lies. If you have been feeling low or exhausted for some time, talk to your GP as well. If you want to talk things through anonymously, you can contact a helpline in your country.
Sofie takes stock
Sofie (38) works as a nurse and has two children. She feels useful at work and has a close group of friends. Even so, she notices that she is irritable and sleeping badly. When she goes through the domains one by one, the penny drops: since her energy bill went up, she has lost track of her money. She would rather not open her banking app, and that avoidance costs her more energy than she thought.
Sofie decides not to tackle everything at once. She sets aside half an hour one evening a week to look at her accounts and has a small amount transferred automatically to savings every month. After a few months her income has not changed, but the way she feels has. ‘At least I know where I stand now,’ she says. She sleeps better, and she notices that she is more patient at home again. One domain pulled the other one up with it.
A small exercise: your five domains
Take ten minutes and a sheet of paper.
- Write the five domains one under the other: purpose and work, relationships, money, health, community.
- Give yourself a score from 1 to 10 for each domain. Do not think about it for too long; your first feeling is often the most honest.
- Look at your lowest score. Write down how that domain affects the others. Does it cost you sleep, patience or enjoyment?
- Choose one small step for that domain that you can take this week. Small means something you can do in less than half an hour.
- Repeat the exercise in a month’s time and compare your scores.
If you would like something more visual, use the well-being rose. It shows you at a glance where you are strong and where you need attention.
Financial well-being as a lever
Money is only one of the five domains, but it often works as a lever. It is concrete, you can get an overview of it fairly quickly, and small steps soon bring more calm. A buffer for unexpected costs, a budget that fits your values, or simply knowing what comes in and goes out each month: these are forms of financial self-care that free up space in your head. You need that space for everything else that well-being involves.
Curious about the state of your own financial well-being? Take the financial well-being test and discover which step could bring you the most peace of mind.