This study meticulously explores the intricate relationship between water, sanitation and hygiene (WASH) facilities and economic well‐being in Punjab, employing a comprehensive approach that utilizes Multiple Indicator Cluster Surveys (MICS) data. Existing research lacks comprehensive multilevel and spatial analyses of the effect of WASH facilities on economic well‐being. Addressing a gap in existing research, this study employs both linear and multilevel regression models to analyse household and district‐level factors. The study finds significant associations between improved sanitation, hygiene practices and economic well‐being. A 1% increase in WASH facilities is associated with approximately a 0.52% increase in economic well‐being. Moreover, the enduring influence of parental education and the socio‐economic dynamics within households play pivotal roles. At the district level, factors such as healthcare institutions, a lower multidimensional poverty index and enhanced access to water and sanitation infrastructure emerge as crucial contributors to economic well‐being. The spatial analysis, utilizing Moran's I, further enriches the geographical understanding of these intricate connections. The results suggest a positive spatial correlation of WASH facilities within Punjab. This study attempts to unravel this complex relationship of WASH facilities with economic well‐being, which is very important for further understanding the broader dimensions of socio‐economic factors forming these dynamics. The insights gleaned from this research hold pivotal implications for policymaking, guiding interventions toward inclusive and sustainable socio‐economic well‐being.