Can money buy you happiness? Most of us like to believe that money can’t buy you happiness. Well, it may be true to some extent, but saving money can certainly make you happier than you currently are.
“The art is not in making money, but in keeping it.”
Money is controversial, to say the least. Some say money is the root of all evil. But we all know we need money to live & survive. So what matters more? Making money or saving it?
Does it make sense to save money?
“The safe way to double your money is to fold it over once and put it in your pocket.” – Kin Hubbard
When you barely earn enough money to pay your bills, how can you even think about saving? I know it may sound ridiculous to some, especially if you have $10 left in your hand at the end of the month. Why should you even bother to save?
Well, for starters, it will make you less stressed about your financial situation. And we all need to start somewhere, even if it is not the most comfortable thing to do. If you keep at it, over time you will be able to save a hefty amount and your financial condition will improve. Saving money will give you mental peace. It will give you confidence. It will give you options and opportunities. The more you save, the better it will get for you. Saving is worth all the effort.
We all want to live a comfortable life and be able to face various financial challenges of life with ease. This is where the savings come in. Of course, it’s fun to spend money on the things we need and desire, but having a healthy bank account is even more fun. Have you ever wondered why your parents always pushed you to save money? There’s a good reason for that.
And now even science has found a really good reason for you to save: Happiness. Saving money gives you peace of mind, reduces stress, and makes you happier in life.
Money can’t buy happiness, but savings can
“It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy.” – George Lorimer
Yes, money can buy you temporary happiness. And yes, true happiness comes from achieving your dreams and from creating better relationships & experiences. However, studies have found that savings can help you feel happier and more content. While debt leads to higher levels of anxiety and depression.
According to a recent study by Ally Bank, saving money has a positive impact on your sense of comfort, safety, security, and well-being. The study surveyed around 1,025 adults in the US and found that you’re more likely to be happy if you save more. In fact, saving more money makes us happier than earning more money.
Take a look at what the Ally Bank survey found:
- Over 38% respondents with a savings account claimed to feel very or extremely happy.
- Only 29% of people without a savings account reported they were very happy.
Among the people with savings account who reported to be extremely happy:
- 57% respondents have saved more than $100,000
- 42% respondents have saved between $20,000 to $100,000
- 34% respondents have saved less than $20,000
- 29% respondents have no savings at all
This data clearly goes to show that the more savings you have, the happier you feel. A whopping 15% rise in the amount of respondents feeling happy with saving over $100,000 clearly proves this fact. Moreover, more than 84% of the respondents surveyed claimed that saving money boosted their confidence and an overall sense of well-being. Having a significant sum of money in their savings account makes them feel happier than exercising, having job satisfaction, or eating enjoyable and healthy food.
Savings: The path to freedom and peace
“A simple fact that is hard to learn is that the time to save money is when you have some.” – Joe Moore
The study found that saving money had a stronger impact on feelings of happiness than earning a big salary, as the effect of income on our feelings of happiness becomes invalid at around $50,000. However, there is no plateau on the impact of savings on happiness mentioned in the research. This is because savings make you independent, worry less, be proud of yourself and experience peace of mind.
The surveyed savers told the researchers that hoarding money made them feel proud and more confident as they are better prepared to face the uncertainties of life. The less you are afraid of being financially broke, the more freedom you will have to choose a lifestyle that makes you and your family happy. However, the survey also found that having deep and meaningful relationships with family and friends is a stronger influence on our happiness than savings.
Debt vs savings
“Saving must become a priority, not just a thought. Pay yourself first.” – Dave Ramsey
Another study that surveyed about 3,751 American adults between the ages of 30 to 80, discovered that both reducing debt and building up investments (or savings) over time substantially contribute to our feelings of financial satisfaction and overall well-being. Upon closer inspection, two researchers from Texas found that increasing assets was a much bigger contributor to happiness than paying off debts.
However, the researchers weren’t sure why saving money was a bigger and more substantial factor than paying a debt. But they believe the personality of an individual may be a factor as depressed and joyless people are more likely to run into debt.
The psychological impact of saving money
“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” – T.T. Munger
When you save adequate money to face uncertainties of the future, you will experience a sense of financial freedom like no other. Here’s how saving money influences your mental health and makes you happier.
1. Peace of mind
Have you ever laid awake in the middle of the night thinking about how you could afford something your partner needs after paying the bills? Most of us know that feeling. When money is tight, we wonder how we are going to pay rent, how we would take care of our family if we became unemployed and how we can pay for our child’s education. But most of all, we worry about how we will survive after we retire.
Saving money allows us to deal with all of these worries and provides us a financial base on which we can rely. When you have enough bank balance to pay your rent and bills, to take care of your family, and pay for your children’s education for a few months even when you lose your job, your stress level would diminish significantly. You will enjoy peace of mind and financial freedom and be able to use your energy for more productive thoughts and activities that you will enjoy.
2. Better relationships
No. I am not saying that your relationships depend on how much money you make or save. But having peace of mind regarding your finances can lead to better and healthier relationships. Monetary issues and financial stress often lead to different household problems, breakups, divorces, and even domestic violence incidents.
Financial instability can create cracks even in the most loving and caring relationships. Saving money allows you to avoid the pitfalls of financial stress and focus on building a happier, healthier, and more stable relationship with your partner and your family.
3. Avoid debt stress
With debt, stress comes free. What do you do when your creditors call for payment? Well, you certainly don’t feel happy about it. Do you? Most of us get overwhelmed with anxiety and worry when we fall behind on our payments. We keep wondering how we can get back on the financial track.
All this stress leads to a number of physical health issues like insomnia, lack of concentration, loss of appetite, sudden weight loss or gain, etc. Medically known as debt stress syndrome, this phenomenon can make you feel increasingly depressed and severely affect your physical and mental health.
When you have adequate savings, you can avoid falling into debt or at least manage to take care of your family while you pay off your debts. But debts can be a barrier to building up your savings account. However, you can still manage to save money and make debt payments simultaneously with proper financial planning.
Why you should start saving immediately
“A budget is telling your money where to go instead of wondering where it went.” – John C. Maxwell
Still wondering why you save money and how it can bring some much-needed happiness to your life? Savings is the perfect shield that protects you from devastating financial downfall. Saving is a money management skill that you master through commitment, compromise, and patience.
Here’s how saving money consistently can lead to happier and better financial life for you:
1. Save to pay off debts
Savings allow you to pay off debts in a much easier way. With a healthy savings account, you can easily make additional debt payments and get out of your debts in a shorter period of time.
2. Save for retirement
With adequate savings, you can build a secure and happy retirement life. During your retirement days, you need to have a sustainable pool of money that will meet all your daily needs and help you live a long healthy life.
3. Save for emergency fund
Savings allow you to face future uncertainties confidently. None of us can predict how life may unfold in the future and what financial and medical emergencies we might face. It is only with your emergency savings fund and your insurance you can prepare yourself to face the worst-case scenarios.
4. Save for unavoidable expenses
Save money for a sinking fund that will allow you to make big expenditures in the future without affecting your current lifestyle. When you have a separate fund for dealing with certain large expenses like, paying yearly taxes, home improvement, repairing your car, kitchen remodeling, purchasing necessary possessions, and other known expenses, you will not feel the pinch in your bank account. This will help you avoid using your credit card and fall into another debt trap.
5. Save for college education
Education is expensive. The cost of pursuing a college degree, whether from a private institute or a public one, is rising every year. Saving money for your own college degree will empower you to pursue a college degree and cover your living expenses without falling into student debt or getting broke.
You can also plan for the future and start saving for your child’s college education so that when the time comes, you will be fully prepared to support your child’s education. Whether you want to go back to school or send your child to an Ivy League college, it all starts with saving money.
There are innumerable other reasons for you to start saving immediately and start experience the happiness it brings with itself.
How you can save money and be happy
“Spend not where you may save; spare not where you must spend.” – John Ray
Spending money is fun and saving is hard work. But saving money doesn’t need to be a challenging task. You shouldn’t be required to make drastic lifestyle changes or make huge compromises to save money if you want to make it a lifetime habit.
Here are a few ways that can help you to get started with saving money.
1. Create a plan and follow it through
First of all, make a financial plan that allows you to fit savings into your money management and monthly spending schedule. This will depend on your income, your monthly living expenses as well as expenditures you can do without. Map out each expense that occurs in any given month and decides on an amount that you can comfortably set aside for your savings account. It doesn’t have to be a big sum of money. It can be a small fraction of your income.
The important thing is to start building the habit of saving money. Once you are comfortable with the habit of saving money, you can easily increase the amount based on your financial condition. Hence, it is important to make a financial plan and evaluate your monthly expenses.
2. Set a financial goal
What do you want to save for? Is it for renovating your home? Buying a new car? Your child’s education? Or an emergency fund perhaps? Setting up a goal will help you with your financial planning and motivate you to save consistently over time.
Make sure your goal is a top priority so that you don’t indulge in making unnecessary purchases. Keep reminding yourself how much this goal means to you so that you can save up faster and avoid the temptation to waste money.
3. Track your spending
Track everything you spend your money on. Even the smallest purchases and expenditures matter. Throughout the month, we make several forgettable small expenses. As a result, it may seem that money just tends to disappear despite your best efforts.
Write down everything you spend your money on and don’t skip even the smallest details. This will allow you to track where and how much you are spending and help you understand which expenses are unnecessary and can be cut down.
4. Make arrangements with your bank
Talk with an executive or manager at your bank and do whatever you need to so that a fraction of your income is directly transferred to your savings account. There are systems that banks utilize to make it happen automatically.
As you will transfer only a fraction of your paycheck to your savings account, you will not need to take it out. A separate savings account can be of great help for saving money, especially in case of emergencies. So if you don’t have one already, make it happen immediately.
5. Use a good credit card
If you need to use credit to make your purchases, then choose a card that offers you enough rewards for every purchase you make. A credit card that offers points and rewards for spending can help you in making purchases through discounts, cashback, and travel rewards. So make sure you get the right credit card for you and take advantage of their reward system.
6. Live a life of comfort, not luxury
Making small changes to your current lifestyle is crucial for saving money. There are certain luxurious expenses that you can easily live without. However, if you cut out most of the things that help you and your family enjoy life and make you happy, then you won’t be able to save in the long term.
Calmly figure out what expenses you can cut out and what things you need to feel happy about.
There is a thin line between what you need to be happy and what you want. Make sure you realize that. Moreover, if you spend only on the necessities and make a drastic lifestyle change, then sooner or later you will get frustrated and cave in, which will lead to an unnecessary impulsive purchase. So make sure you find the right balance between keeping yourself and your family happy and maintaining your savings account.
A life of financial freedom is a life of happiness
“Balancing your money is the key to having enough.” – Elizabeth Warren
Saving money makes a lot of sense for a lot of reasons. What doesn’t make sense is making a big unnecessary purchase that can land you in crippling debt. But savings doesn’t need to be a struggle for you. Savings should make you feel happy about it. That’s the whole point.
Saving money properly gives you more options and peace of mind without altering your life too much. When you find the right balance between your living expenses and saving money, you will start reaping the benefits.