Benefits of saving money? Less stress and more freedom
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Saving money is one of the core tenets of smart personal finance. But, it can also be the hardest to follow. Changing your habits can be incredibly difficult, but it’s important to keep in mind that saving isn’t all about the money.
“Saving money can offer peace of mind, which has a ripple effect on your behavior,” says Melanie Lockert, author of Dear Debt and co-founder of the Lola Retreat, a personal finance retreat for women.
“When you save money, you are changing your behavior so that you're safeguarding your present and future,” says Lockert. “That money can be a security blanket, an open door to an opportunity, or an escape route from a bad situation.”
Here are some of the benefits that saving money can have on your physical and emotional state.
Financial stress can be all-consuming. Every trip out of the house or to the refrigerator can serve as a reminder that money is low. And beyond everyday inconveniences, it can have serious consequences, including depression, divorce, and suicide.
A recent Varo survey showed just how prevalent financial stress is for people in the 20s and 30s1. More than half of the survey participants said they stressed about their finances every day. Of those who experience regular financial pressure, 35% lose an hour or more of sleep over their finances every night.
Money doesn’t buy happiness, and developing a responsible savings habit won’t necessarily relieve all your financial concerns (sometimes, the numbers just don’t add up). But tracking your income and expenses can give you a keen sense of what you’re working with. Put into action, you can use this information to align your spending with your values and gain control of your money.
Over time, your savings efforts can also help you build up a cash reserve (i.e., emergency fund) and get you out of the paycheck-to-paycheck cycle. When you know a minor financial emergency won’t domino into a major disaster, some financial stress can start to fade.
The freedom to take risks
Lockert points to another benefit of saving money—it lets you think through tough situations and take risks when you want. “You'll have more room to make decisions with care and have the opportunity to have more choices because you have cash set aside to fall back on if you need it,” she says.
If you lose your job, you’ll have money to cover your bills and you can take the necessary time to find a new job and negotiate your pay. Otherwise, you may feel immense pressure to accept the first offer you receive, even if you know you could do better if you kept looking.
Or, what if you want to quit your job, travel the world, or stay at home with your child? Saving first can be helpful for doing any of the above without the burden of financial stress.
Many couples disagree about money, and if left unaddressed, fights pertaining to finances can be one of the factors that break couples up.
Tania Brown, a Certified Financial Planner® in Lawrenceville, GA shares how starting to save helped her and her husband turn things around. “Saving money united myself and my husband with a common goal, forcing both of us to sacrifice. We were going through a tough time, and it forced us to communicate and work as a team,” says Brown.
They were in over $100,000 in what she labeled “really stupid debt” before they started to work with a financial coach. They went through David Ramsey’s Financial Peace program, opened a new account for their savings, and started budgeting using the You Need a Budget (YNAB) app.
Brown says having a third-party create the plan and act as a coach and accountability partner helped them stay focused. “We also had to humble ourselves that what we were doing was not working, and to give this a try. We focused on our long-range goals, which helped us stay disciplined,” she says.
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A chance to practice self-control
Brown shares how developing a savings mindset also contributed to her and her husband’s progress with another goal—losing weight. Savings goals naturally align with healthier habits, as preparing food at home rather than eating out is often healthier and less expensive. But, Brown says she also noticed how the mindset shifts are related to each other.
“Focusing on long-term goals, making small changes, and accounting for everything easily translated into nutrition,” says Brown. Working on paying down debt and building their savings provided constant practice for choosing needs over wants, and self-control can be like a muscle. The more you practice and work it out, the stronger your self-control will grow over time.
Lasting and high-quality choices
You don’t need to be in the “1%” to realize that money begets money. There’s an undeniable cost of living paycheck to paycheck, as you often need to buy what’s affordable rather than what’s best.
But once you’ve accumulated savings, you can invest in higher-quality goods that last years and take advantage of saving by buying in bulk. That could mean buying a sofa or mattress that costs more but will last you 5 more years. Or, it could mean being able to afford to pay the annual cost of the gym membership up front—rather than going month to month, which usually costs more.
Lockert believes there’s another way that having savings can lead to saving even more. “You won't be as stressed, so may be able to avoid impulse purchases that make you feel better,” she says.
Where to start
To recap, saving can provide a number of benefits, both personal and financial. It can help you quit a job you don’t find fulfilling, reduce your stress, give you the freedom to take chances, improve your relationships, help you tackle other goals, and lead to more and more wealth over time.
So, what next? Start a budget, increase your savings rate, learn the psychology behind why it’s so easy to spend money, and take control of your money. The benefits may not take effect immediately, but the peace of mind that you’re saving money can eventually have a positive ripple effect on both your behavior and your life.
1 2019 survey for Varo conducted by Qualtrics of 1,100 U.S. millennials
Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.
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