Financial health is a concept that is attracting ever more public attention in the debate around financial inclusion and will naturally feature in future discussions around the nature and purpose of the Direct Express® program.

This post is intended to provide background for these discussions, by looking at what exactly is meant when we speak of “financial health”.

In search of a simple definition, we find that Investopedia defines financial health as:

“A term used to describe the state of one’s personal financial situation. There are many dimensions to financial health, including the amount of savings you have, how much you are setting away for retirement and how much of your income you are spending on fixed or non-discretionary expenses.”

A more detailed take, which the Direct Express® team has found useful, can be found at the Financial Health Network (FHN) (formerly, the Center for Financial Services Innovation).

FHN lays out four components of financial health and eight indicators for its measurement (see table below). The eight indicators measure relative levels of financial health.

Source: Financial Health Network (Health Pulse pp. 4-7)

The FHN’s financial health indicators underpin the organization’s Financial Health Pulse, a research initiative designed to shed light on the financial lives of Americans and provide a snapshot of the nation’s financial health.

Increasing use of the word “health” as it relates to the finances of individuals and families is a way to link financial situations to “well-being,” a connection that is in some ways obvious, but often discussed in the abstract.

Making a contribution to the well-being of cardholders who, prior to Direct Express®  had fewer options to improve their financial health, was an important factor in the development of the Direct Express® program.

We believe Direct Express® can contribute to cardholders’ prospects for a “healthier” financial life. The program offers convenience, safety, and money management advantages, as well as the PayPerks financial capability program, which, at its heart, is aimed at improving cardholders’ financial health.