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 become 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 debt. But they believe 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 on. 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 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.