The Link Between Financial Security and Well-Being

Introduction to Financial Well-Being

What does it mean to have good financial well-being? Simply put, it means feeling safe and secure about your money. When you have financial well-being, you’re not always worried about how you’ll pay for things like food, rent, or emergencies. You feel confident that you can meet your daily needs, handle unexpected expenses, and plan for the future.

Let’s break this down with a simple example: Imagine you’ve been saving up for a new phone. Every week, you put aside $10 from your allowance or part-time job. After a few months, you finally have enough to buy it. Now, instead of stressing when something unexpected comes up—like needing a new phone charger—you already have money saved. That gives you peace of mind.

On the other hand, if you don’t have any savings, unexpected expenses can cause a lot of stress. You might worry about where you’ll find the money to cover them, which can make it harder to focus on school or other responsibilities.

Financial well-being isn’t just about having a lot of money. It’s about building healthy habits with the money you do have. In this lesson, you’ll learn more about how financial security can improve both your mental and emotional well-being.

Financial Security vs. Financial Insecurity

Financial security and financial insecurity are two very different experiences that can affect how you feel and live your life.

Financial security means having enough money to cover your needs, like food, rent, or transportation. It also means having savings for emergencies, like a car breaking down or an unexpected medical bill. When you feel financially secure, you are less likely to worry about money and more likely to focus on your goals. For example, if your parents have an emergency fund, they might not feel stressed when the car needs repairs because they can afford to fix it right away.

On the other hand, financial insecurity happens when you don’t have enough money for your basic needs. This can cause worry and stress. You might not be sure if you can afford things like rent, groceries, or school supplies. Imagine a family that is behind on rent payments. They might constantly worry about getting evicted. That fear can affect their ability to sleep, concentrate, or enjoy life.

Financial insecurity can also make it difficult to plan for the future. Instead of saving for long-term goals, people in this situation often focus on surviving from one day to the next. This can lead to feeling trapped in a cycle of stress and anxiety.

Understanding these two situations is key to recognizing how money can impact your mental well-being. Financial security helps create stability, while financial insecurity can lead to fear and uncertainty.

The Impact of Financial Security on Mental Health 

Money and mental health are more connected than you might think. When you have financial security, you are less likely to feel stressed about money. Financial security means having enough money to pay for your needs, save for emergencies, and plan for future goals. When you feel financially secure, it can bring you peace of mind. You’re able to focus on things like school, work, or hobbies instead of worrying about bills or debt.

On the other hand, financial insecurity can take a toll on your mental health. It can lead to stress, anxiety, and even depression. Imagine if your family struggled to pay the rent every month. You might worry about losing your home or not being able to afford other necessities. Constant money worries can make it hard to concentrate, sleep, or feel motivated. Over time, this kind of stress can wear you down emotionally and physically.

Let’s consider another example. Suppose you have a lot of debt or unpaid bills. You may feel overwhelmed just thinking about how you’ll pay it off. This stress can show up as headaches, irritability, or feeling tired all the time. Financial insecurity can also affect relationships. You might avoid social events because you can’t afford them or feel embarrassed asking friends or family for help.

In contrast, someone with financial security can feel more relaxed. They have a budget and savings in place, so they don’t need to panic when a surprise expense comes up, like car repairs or a broken phone. Knowing they have a financial safety net allows them to focus on personal goals, such as doing well in school or saving for future opportunities.

Taking steps to improve your financial security—like budgeting or saving a small amount regularly—can lead to better mental health. You’ll feel more in control and experience fewer moments of stress. While money can't solve every problem, managing your finances wisely can make a big difference in your overall well-being.

Common Financial Habits That Affect Well-Being

Our financial habits have a big impact on both our money and mental health. But what exactly are financial habits? They’re the regular actions you take with your money—both good and bad. Let’s explore some examples of both and how they affect your well-being.

Positive Financial Habits
Good financial habits help you feel secure about your money and future. Here are a few examples:

1. Saving regularly: Even saving a small amount, like $5 a week, can add up over time. When you have money saved, you’re better prepared for emergencies or future needs. This reduces financial stress.
   
   

2. Creating and sticking to a budget: A budget is a plan for how you’ll spend and save your money. It helps you stay in control of your finances and avoid overspending.
   
   

3. Paying bills on time: When you pay your bills on time, you avoid extra fees and keep your credit score in good shape. This makes it easier to borrow money when you need it, like for school or a car.
   
   

Negative Financial Habits
Negative financial habits can increase stress and make it harder to reach your goals. Some examples include:

1. Overspending: If you often buy things you don’t need, you might run out of money quickly. This can make it harder to cover important expenses, like rent or groceries.
   
   

2. Not saving at all: Without any savings, even small emergencies can cause a lot of anxiety. For example, if your phone breaks and you don’t have any extra money, you might panic about how to replace it.
   
   

3. Ignoring your bills or debts: If you avoid paying your bills, you can get hit with late fees and debt collectors. This can hurt your financial security and damage your mental health.
   
   

Why Habits Matter
Financial habits affect your day-to-day life and your future. People with positive habits tend to experience less financial stress and more stability. On the other hand, negative habits can cause constant worry and lead to bigger money problems later on. The good news? You can always change your habits! It’s never too late to start budgeting, saving, or improving how you manage your money.

Think about your own habits. Do they help you feel more secure, or do they create stress? Small changes can make a big difference over time.

Self-Assessment Activity Instructions

Now that you’ve learned about financial habits, it’s time to reflect on your own. This self-assessment will help you identify which habits may be helping or hurting your financial well-being. It’s important to be honest when answering the questions—there are no right or wrong answers. The goal is to learn more about yourself and how your habits affect your life.

In this activity, you’ll answer simple yes/no questions like:

• Do you save money regularly, even a small amount?

• Do you often worry about not having enough money?

• Do you have a budget that helps you track your spending and saving?

• Do you pay your bills or debts on time?

After completing the assessment, take a moment to think about the results. Are there any habits you’d like to change? For example, you might realize you spend more money than you want on small things like snacks or entertainment. Perhaps you don’t have a savings plan yet but want to start one.

Understanding your financial habits is the first step toward improving your well-being. Use this activity to guide your next steps toward creating a more secure and stress-free future.

Reflection Questions and How to Use the Answers

Now that you’ve completed the self-assessment, it’s time to reflect on what you’ve learned. Reflection helps you think about your habits and how you can improve them. Answer the following questions honestly and thoughtfully:

1. What is one financial habit you could change to improve your well-being?
   Think about habits that cause you stress. For example, maybe you spend money on things you don’t need and often run out of cash. A small change, like saving a few dollars a week, could help you feel more secure.

2. How does financial security impact your stress levels?
   Consider times when money worries have made you feel anxious or distracted. What might change if you had enough money to cover emergencies or your basic needs?

3. What new habit would you like to develop to help with financial security?
   Choose a simple goal, like setting up a budget or saving for a specific item. Starting small makes new habits easier to stick with.

For example, a student might answer:
"I want to spend less on snacks and save $5 each week. Having extra money saved would make me feel less stressed if I needed something unexpectedly."

This reflection helps you take control of your habits and build toward a better financial future.

Strategies for Developing Positive Financial Habits

Improving your financial well-being starts with building positive habits. These habits don’t need to be complicated—small, consistent changes can make a big difference over time. Here are some practical strategies to help you develop better financial habits.

1. Set small, achievable goals

Big goals, like saving for college or a car, can feel overwhelming. Instead, break them down into smaller goals. For example, start by saving $5 a week. Once you meet that goal, you can increase your savings little by little. Reaching small goals gives you confidence to keep going.

2. Use tools to track your progress

Budgeting tools can help you stay on track. You can use a budgeting app, an online tool, or even a notebook to plan your spending and saving. A budget helps you see where your money goes and makes it easier to avoid overspending.

3. Reward yourself

When you reach a financial goal, it’s important to celebrate your success! Give yourself a small reward—maybe a favorite treat or a fun activity. Rewards keep you motivated to stick with your habits.

4. Be ready for challenges

It’s normal to face challenges when changing your habits. You might feel pressured to spend money when your friends are going out or feel like you don’t have enough money to save. To stay on track, remind yourself why your goals are important. You can also plan ahead by budgeting for social events or putting aside even small amounts of money.

5. Start now, no matter how small

It’s never too late to change your financial habits. You might not be able to save large amounts of money right away, and that’s okay. Even small actions, like saving spare change or setting financial goals, will help over time.

By focusing on these strategies, you can improve your financial security and reduce stress. Remember, positive habits build a foundation for long-term well-being and success. Start small, stay consistent, and celebrate your progress!

Conclusion

Financial well-being is an important part of living a healthy, balanced life. When you have financial security, you feel more confident and less stressed because you know you can meet your needs and handle emergencies. However, financial insecurity can lead to anxiety and frustration, making it harder to focus on your goals.

Your financial habits play a major role in your well-being. Positive habits, like saving regularly and sticking to a budget, can help reduce financial stress and give you peace of mind. On the other hand, negative habits, like overspending or not saving at all, can create long-term problems.

The good news is that you can always change your habits. Start by reflecting on your current behaviors and choosing small, achievable goals. Over time, these small changes can lead to greater financial security and a healthier, happier life.

Vocabulary

Understanding these key terms will help you better navigate financial topics:

1. Financial Well-Being – Feeling secure and safe about your money, knowing you can handle your needs and emergencies.

2. Financial Security – Having enough money to pay for your daily needs and save for the future.

3. Financial Insecurity – Not having enough money to meet your needs, often causing stress and worry.

4. Budget – A plan for how you will spend and save your money.

5. Savings – Money you set aside to use in the future for emergencies or specific goals.

Multiple-Choice Questions

Instructions: Choose the best answer for each question.

1. What does "financial well-being" mean?
   A. Spending all your money on fun things
   B. Feeling safe and secure about your money
   C. Having more money than everyone else
   Answer: B

2. Which of these is an example of financial insecurity?
   A. Having money saved for emergencies
   B. Worrying about paying bills on time
   C. Planning your budget for the month
   Answer: B

3. What is a good financial habit?
   A. Spending all your money without saving
   B. Ignoring your bills and debts
   C. Creating a plan for your money (budget)
   Answer: C

4. Why is it important to save money?
   A. To impress others
   B. To reduce stress about unexpected expenses
   C. So you don’t have to budget
   Answer: B

References

Below are the sources and contributions used to create this lesson:

1. Canadian Mental Health Association (2023). Information on financial stress and mental health. Retrieved from cmha.ca.

2. Government of Canada – Financial Consumer Agency (2023). Tips for financial well-being. Retrieved from canada.ca.

3. ChatGPT (2025). Lesson creator and content developer for financial literacy and mental health topics. Provided research-based lesson content to support student learning.