Money Alone Doesn’t Make You Healthy

Can we measure the world’s financial health?

For years, the Center for Financial Services Innovation (CFSI) has been researching and articulating the importance of financial health in the United States.

Like physical health, financial health tries to capture an individual’s overall well-being. It can include the amount of savings someone has, how much they’re saving for retirement, their income versus expenses, as well as whether they have the knowledge and skills to manage their expenses, endure shocks, and seize opportunities.

It’s a powerful idea. It says a lot about the individual as well as about the whole financial ecosystem supporting — or not supporting — them.

Up until now, the idea of financial health has largely focused on the United States. We are hoping to change that. This summer, Accion’s Center for Financial Inclusion (CFI), the CFSI, and global development advisory group Dalberg will begin to try to create a global framework to assess the financial health of people living in emerging economies.

We will try to develop an international framework for financial health, but, truth be told, right now we have more questions than answers about whether our notion of financial health works for the people and businesses that we’re trying to serve. Around the world, 3.5 billion underbanked people struggle to formally save, build credit, make payments, purchase insurance, and build better lives. Determining whether we can assess their financial health could help Accion and our partners develop more impactful solutions, or address certain needs that, ultimately, might help our clients send their children to school, launch or expand businesses, visit the doctor, or purchase more nutritious food.

While we still don’t know whether “financial health” is a concept that translates to the developing world, we still think that it’s worthwhile research that could become a real asset to the people and businesses that we serve.

Over the summer, we’ll collect qualitative and quantitative information in India and Kenya to try to come up with a framework for financial health that works internationally; we’ll share our findings later this year.

With luck, we’ll find a better way to assess and provide what the financially excluded need: a range of quality financial services that our clients use and benefit from throughout their lives. I’m not sure what we’ll find — and that’s what makes this research so exciting.

Michael Schlein is President and CEO of Accion. An earlier version of this post appeared on my LinkedIn Pulse page.

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