Guidance for policymakers on financial health
Guidance for policymakers on financial healthSeptember 20, 2021 •
The UNSGSA Financial Health Working Group (FHWG) was convened by HM Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).
The working group has released two publications aimed at helping policymakers understand and measure financial health, notably in the context of financial inclusion.
Financial health or wellbeing is the extent to which a person or family can successfully manage their current financial obligations and have confidence in their financial future. Four elements shape a person’s financial health: day-to-day finances, resilience, being able to pursue and achieve long-term goals, and feeling secure and in control of finances.
Poor financial health is a pervasive global problem. According to the latest World Bank Global Findex (2017), most people in Africa, Latin America and South Asia report an inability to respond to a financial shock, along with significant shares of people in other regions. COVID-19 further underscored that financial health is a universal issue in both developed and emerging economies as the pandemic’s impacts exacerbated these vulnerabilities for many.
Financial health: An introduction for financial sector policymakers explains why and how policymakers can incorporate financial health into their work. A more explicit recognition of financial health as a goal, accompanied by measurement of gaps in the financial health of the population – especially the newly financially included – can help policymakers set a financial inclusion agenda that is clearly focused on positive outcomes for individuals, households and small businesses.
Measuring financial health: Concepts and considerations outlines current approaches to measuring financial health and provides detailed examples for policymakers. It also offers recommendations for developing a financial health survey module containing simple, plain-language questions that can provide insight into an individual’s overall financial health, and, in the aggregate, of a population or specific group.
The FHWG’s subgroup of private sector members released also released supplemental introductory information on the business case of financial health for financial services providers, with case studies from three leading companies. Its aim is to help inform why and how to integrate the financial health of customers and employees into business strategies.
You can read the reports here:
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