The role of these elements of financial competence in fostering financial well‐being can be important. Ackerman and Paolucci (1983) examined both objective and subjective income adequacy, and their relationship to life quality measures from over 1,000 individuals in a study in the USA. While both objective and subjective income adequacy explained more of the variation in each of the three life quality measures used (satisfaction with family income, satisfaction with level of consumption and satisfaction with overall life quality), subjective income adequacy was found to be more important to individuals than objective adequacy. Given Bagwell’s (2000) observations that subjective perceptions of financial status may not correlate with objective indicators, financial competence may induce greater realism in individual perceptions. While definitions of financial well‐being are a useful starting point, the debate has moved on significantly since early work. Now that models of financial well‐being have been created, more attention should be given to how individual financial capability can be developed in practice.