A number of studies* have found that when people have a positive view of their savings, they have more confidence and feel more secure. They also sleep better and feel less stressed.
“Control over one’s finances leads to peace of mind, resulting in a sense of stability and control,” says Dr. Oren Amitay, a Toronto-based psychologist. The thinking then becomes “‘I can take care of my parents; I can leave money to my children,’” he says.
“Looking at the good things in your own life – be it a secure job, a loving family, or a comfortable home – can make you focus on what really matters to you,” he says, “rather than spending money on things that won’t make you happy in the long run, be it a state-of-the-art sound system or a new boat.”
There’s no magic savings number, but people do start feeling better** when they feel they have at least some financial cushion, such as a sizeable rainy-day fund. “Having adequate savings can lead to adequate mental health,” says Dr. Amitay.
Similarly, Dr. Barbara O’Neill, an environmental and biological sciences professor at Rutgers University, says that failing to save enough can cause people to scramble to pay for unexpected life events, and lead to issues like insomnia, anxiety and depression.
The key to saving more money and feeling happier starts with taking a hard look at your financial picture – and you need to stop comparing yourself to others. “If you want a better sense of well-being, don’t compare yourself to those around you,” says Dr. Amitay. “People who are trying to ‘keep up with the Joneses’ are never going to have peace of mind.”
Instead, acting like you’re a planner can be beneficial. “People who are planners are more successful in their savings,” says Dr. O’Neill. “They feel better about their finances.” She says that planning behavior gives people a sense of control – and control over finances elicits feelings of security. Dr. O’Neill suggests setting a specific savings goals. Start with a 30-day savings challenge, which involves setting a goal such as an emergency fund.
Once that goal is established, O’Neill says to automate savings through payroll deductions, which allows for a relatively painless way of increasing your savings. There are also sophisticated apps and tools, such as ESPlanner, that can help track spending. “People respond to real-time tracking of their spending,” she says, adding that seeing what you spend makes it tangible – and encourages you to spend less and save more.
Ultimately, “being happy with how much money you’re saving comes down to your mindset,” says Dr. Amitay. He suggests not thinking about savings as a future goal, but rather as a present one. If you do take a “savings now” approach in 2018, you’ll not only see your bank balances rise more, but your levels of satisfaction and happiness*** will climb, too.