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Financial Social Work

Rationale, contributing factors, mental health impact, socio-economic groups, social workers’ financial literacy, financial social work, practice approach

Three sections follow:

1. Background Material that provides the context for the topic

2. A suggested Practice Approach

3. A list of Supporting Material / References

Feedback welcome!

Background Material


Money skills are as fundamental to life as reading and, often through no fault of their own, many people find themselves in either permanent or temporary financial stress. Those most at risk of financial insecurity include the unemployed, lower-income households, renters, those in contact with criminal justice systems, ethnic and racial minorities, children and youth, older adults, and people living with disabilities (Guan et al., 2022; McHenry & Pacheco, 2021; Ryu & Fan, 2023; Sherraden et al., 2016). These groups are the people social workers come across in their everyday work. They are more likely to fall into debt, lack basic financial skills and are vulnerable to sudden economic shocks such as health emergencies.

Given financial insecurity is significantly associated with higher psychological distress, financial stress is a possible contributing factor to a range of health issues among these populations. Because social workers often deal with people from these groups on a daily basis, social workers are ideally placed to help people better manage their financial needs, be more financially secure and feel less mentally stressed and worried about financial matters. This approach will have a positive impact on both mental and physical health. Financial social work is therefore an effective complement to traditional welfare, providing welfare recipients (and other vulnerable people) with knowledge, skills and values needed to make sound financial decisions and eventually achieve financial security (Despard & Chowa, 2010; Engelbrecht, 2008; McHenry & Pacheco, 2021; Ryu & Fan, 2023).


When exploring financial security one meets the terms financial stress, financial literacy, financial capability and financial wellbeing; financial wellbeing is the ultimate aim. Financial wellbeing is when a person can:

  • Meet expenses and have some money left over: including having an adequate income to meet basic needs, pay off debts, and cover unexpected expenses.

  • Feel and act in control of one’s finances.

  • Feel financially secure: including not having to worry much about money and having a sense of satisfaction with one’s financial institution (Brown & Noone, 2021; CSI, 2021; Sherraden et al., 2016).

Financial wellbeing is a key determinant of overall wellbeing. A person’s financial position shapes everything the person can do. It impacts on a person’s accommodation, food, and activities both now and into the future (Brown & Noone, 2021).

Financial wellbeing is closely related to financial literacy and financial capability. Obtaining financial literacy education is the first step to becoming financially capable. Financial literacy entails having knowledge of personal finances, an understanding of debt, the ability to not overspend, investing in retirement, asset building, and the capability to develop and uphold a household budget. Financial capability allows individuals to incorporate financial literacy education to the appropriate financial circumstances which ultimately will result in financial well-being. It is not just individual functioning, but the opportunity to act in one’s economic self-interest, which is shaped by environmental conditions, such as incentives and opportunities to save (Despard & Chowa, 2010; Engelbrecht, 2008; McHenry & Pacheco, 2021).

When we lack control over our financial lives, it can cause stress and anxiety, undermine our sense of self, and can force us to make decisions that are harmful to our health and wellbeing. People can be forced to trade-off between the essentials, and it can also impact decisions we make about our physical health, like seeking medical care or using medication (Brown & Noone (2021). Naragon-Gainey (2023) suggests financial stress has two components:

  • objective financial difficulty, where people don’t have enough funds to cover necessary expenses or debts, and

  • subjective perceptions about current or future finances, leading to worry and distress.

However, someone can have trouble meeting their expenses, view this as acceptable, and not be overly worried. Alternatively, someone may be reasonably financially secure but still feel quite stressed about their finances.

Factors contributing to financial wellbeing

There are three key dimensions to the financial wellbeing environment.

  1. People Low household income is a driver of low financial wellbeing. Some groups of people are more likely to experience low financial wellbeing because of the difficulty of finding and remaining in employment. In Australia these include Aboriginal and Torres Strait Island peoples, single parent families, people with disabilities, the unemployed and the underemployed, women, those from low socioeconomic backgrounds, young people, and ethnic minorities—all these groups face specific challenges that can lead to them having lower levels of financial wellbeing. Furthermore, low financial wellbeing can drive disadvantage in other areas, e.g. anxiety and stress, chronic health conditions and adverse health outcomes overall.

  2. Policy Government policy plays a role as a key driver of financial wellbeing.

  3. Programs These can provide a crucial role in shaping financial wellbeing outcomes. To effectively improve financial wellbeing for the population, there needs to be a more thorough understanding of how programs fit together to reduce the barriers to financial wellbeing (Brown & Noone, 2021; Despard & Chowa, 2010; Naragon-Gainey, 2023).

Brown and Noone (2021) expand on the above by listing the micro-, meso- and macro-level factors impacting on financial wellbeing. Their analysis is similar to that provided in the table below (CSE, 2021).

CSI (2021) summarises these relationships in the diagram below. They suggest that macro-level and meso-level factors, essentially outside the control of any one individual, influence the financial wellbeing of individuals at both the personal and group level. In other words, all three levels (not just the micro-level) impact on the money going into and coming out of the household, and this drives household financial wellbeing. This diagram illustrates the limited control that the groups, with whom social workers often support, have over their financial wellbeing. Furthermore, it brings into focus the role of social workers as advocates for the rights of people to have their basic needs met by the meso- and macro-levels of society.

Financial wellbeing and mental health

In 2022 Guan et al. reported findings of a systematic review examining the relationship between financial stress and depression:

  • Seven of eleven studies found a statistically significant association between low income and a higher risk of depressive symptoms for both high-income countries and low-and middle-income countries. The relationship occurred in younger adults, middle-aged adults, and older adults. However it was more pronounced among lower-income groups.

  • Two studies showed that having few or no assets was a significant predictor of depression.

  • Three studies suggested a low wealth rank (rather than absolute wealth) within a social group could result in depression among middle-aged and older adults.

  • There was a clear link between debt and depressive symptoms caused by a poor debt:asset or debt:income ratio, unsecured debt (e.g. consumer debt such as credit card debt), and short-term debt.

Other authors draw attention to the link between low financial wellbeing and overall mental health:

  • The financial capabilities or shortcomings of an individual affect interpersonal relationships, physical and mental health, and communities as a whole (Engelbrecht, 2008; McHenry & Pacheco, 2021).

  • Young adults, children, college students and older adults who experience adverse financial experiences can develop reduced mental health (Ryu & Fan, 2023).

  • Targeted interventions are required to break the cycle of financial stress and depression. For example, instead of a one-for-all intervention focusing on the general population, interventions targeted at lower socioeconomic groups might be more effective since the association between financial stress and depression is more pronounced in these groups (Guan et al., 2022).

Socio-economic characteristics and financial wellbeing

Ryu and Fan (2023) examined the impact of gender, marital status, education, employment status and home ownership on financial wellbeing. They found:

  • Women are more likely to experience financial worries and therefore are at higher risk of psychological distress, depression, anxiety and mood orders than men.

  • Marriage is correlated with financial wellbeing and beneficial mental health outcomes; conversely people separated, divorced, widowed or not married tend to have more financial worries.

  • Education can buffer the negative effects of financial worries and lower psychological distress.

  • Unemployment leading to financial worries has significantly adverse effects on mental health as it can result in unhealthy food choices and restricted access to health care.

  • Home ownership generally results in people earning a higher income and ability to access to healthcare corresponding to less financial worries.

Practice Approach

Many social workers lack financial literacy education and the confidence to provide financial literacy education to their clients. Typically they learn on the job and through continuing education (Gillen et al., 2012; McHenry & Pacheco, 2021; Sherraden et al., 2016). They do however possess skills that are useful in building financial capability, e.g. their ability to build trust with clients, use empathy and non-judgment, and problem solve by breaking down tasks into manageable actions—all these approaches can help clients improve their financial capability (Despard & Chowa, 2010).

Although extensively researched over the last twenty years, financial literacy is yet to make its way into mainstream social work curricula. It is crucial for low-income populations to obtain financial education since small financial mistakes can compromise the entire household’s finances. Additionally, financial issues are often the root source behind people seeking help of professionals through counselling, courts, shelters, and clinics giving professionals in these fields an opportunity to address personal finances with the clients (McHenry & Pacheco, 2021).

Financial social work practice takes place at both the micro-level (work with individuals, families, and small groups) and the meso- and macro-levels (work with organizations, communities, and policy). Micro-level practice assists individuals, families, and small groups to locate financial and in-kind benefits, solve financial problems and crises, improve household financial decision-making and financial management, and address financial issues in relationships. Employing a strengths-based perspective, social workers partner with clients to set goals, while building resilience and potential for improving financial wellbeing. It takes place in diverse settings and varies from one setting to another depending on the mission of the organisation and target population (Sherraden et al., 2016).

Social workers usually engage in financial social work while providing other social services including counselling, case management and providing therapy. While engaging in daily practice, social workers are ideally placed to engage in:

  • Financial education—increasing clients’ financial knowledge and skills in planning, managing financial risk, and saving and investing.

  • Financial coaching—helping people reach their short-term financial goals through goal-directed behaviour.

  • Financial therapy—integrating cognitive, emotional, behavioral, relational, and economic aspects that promote financial health (Sherraden et al., 2016).

Financial counsellors, case management and therapists use a variety of therapeutic approaches, including acceptance and commitment therapy (ACT), cognitive behavioral therapy, experiential therapy, motivational interviewing, narrative therapy, psychodynamic therapy, and solution-focused interventions. A distinguishing feature of financial social work is use of the person-in-environment framework, which underscores the importance of taking into the account—and often directly intervening in—clients’ social, political, economic, and physical environment (Sherraden et al., 2016).

Macro-level financial social workers intervene at organizational, community, and policy levels to improve financial wellbeing for financially vulnerable groups. Macro-level intervention methods include organizational management, planning, community organizing, policy and program design, advocacy, lobbying, and coalition building (Sherraden et al., 2016).

Suggestions to reduce financial stress and improve financial wellbeing

While people can’t change the broader financial landscape or some aspects of their financial situation, there are some simple ways to help reduce financial stress and its impacts.

  1. Take small steps Identify areas where improvement can be made and act on some of them, even if they are small steps, e.g. create and follow a budget, cut some extra costs, apply for available financial assistance, get quotes for more affordable utilities or insurance, or contemplate a career change.

  2. Don’t be too hard personally One’s financial state does not reflect value as a person, and over-identifying with financial status can lead to further stress. Financial difficulties are the result of many factors, only some of which are under one’s control. Finances do not define the person.

  3. Focus on self-care It’s draining dealing with ongoing financial stress. So focus on self-care and coping strategies that have helped with past stressors, e.g. taking some time out to relax, deep breathing or meditation, talking with others, regular exercise, and doing some things for fun.

  4. Ask for help Help may take the form of financial advice or assistance to reduce financial difficulties. When feeling persistently down, anxious, or hopeless, reach out to friends or family or seek professional help.

Money Smart ( offers tips, tools and guidance to help people take control of money and build a better life (Naragon-Gainey, 2023).

Taking these general ideas further, Colasimone and Jones (2023) suggest the following:

  • Food: shop online to avoid temptation presented by shopping in store; make a shopping list and stick to it; plan meals; buy generic; eat less meat; quit takeaways.

  • Utilities and insurance: compare providers and move companies if a better deal is available elsewhere.

  • Fuel: use apps that list cheap prices in an area; buy on the ‘cheap’ days.

  • Mortgage: get a broker to find a better loan.

  • Manage cashflow: set up a bills account, a savings account and a set amount to spend each fortnight; use debit cards, not credit cards; evaluate streaming services and discontinue where possible; exercise at home, not the gym; delete apps on the phone that tempt purchasing; eliminate bad habits (e.g. smoking, lotteries, drinking, gambling).

  • Get more money: ask for a pay rise;

  • DIY—do it yourself when possible.

  • Declutter: Sell things around the home that are not needed.

  • Freeze spending: Don’t buy any non-essential items for a week or month to eliminate ‘want-itis’.

References / Supporting Material

(available on request)

Brown, J.T., & Noone, J. (.2021). Amplify insights: Financial wellbeing. Centre for Social Impact, UNSW Sydney.

Colasimone, D., & Jones, C. (2023, June 20). As the cost-of-living crisis squeezes more Australians we got one family to test out some tips for saving money. ABC News.

CSI: Centre for Social Impact. (2021). Amplify insights: Financial wellbeing.

Despard, M. R., & Chowa, G. A. (2010). Social workers’ interest in building individuals’ financial capabilities. Journal of Financial Therapy, 1 (1) 23-41.

Engelbrecht, L. (2008). The scope of financial literacy education: A poverty alleviation tool in social work? Social Work/Maatskaplike Werk, 44(3), 252-262.

Gillen, M., & Loeffler, D. N. (2012). Financial literacy and social work students: Knowledge is power. Journal of Financial Therapy, 3 (2) 28-38.

Guan, N., Guariglia, A,. Moore, P., Xu, F., Al-Janabi, H. (2022) Financial stress and depression in adults: A systematic review. PLoS ONE 17(2): e0264041. pone.0264041

McHenry, T., & Pacheco, B. (2021). The need for financial literacy in social work education: A descriptive study. Electronic Theses, Projects, and Dissertations. 1250.

Naragon-Gainey, K. (2023). How financial stress can affect your mental health and 5 things that can help.

Ryu, S., & Fan, L. (2023). The relationship between financial worries and psychological distress among U.S. adults. Journal of Family and Economic Issues, 44, 16-33.

Sherraden, M. S., Frey, J. J., & Birkenmaier, J. (2016). Financial social work. In J. J. Xiao (Ed.), Handbook of consumer finance research (2nd ed.) (pp. 115-127). Springer. doi: 10.1007/978-3-319-28887-1_10


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