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Saving regularly can help you feel more relaxed, calm and even improve your quality of sleep, according to new research from Bristol University.
The study, commissioned by the Building Societies Association and funded by Yorkshire Building Society, focused on nearly 27,000 adults between 2010 and 2022.
It showed that regular savers generally had a higher score for wellbeing, including feeling closer to others and more optimistic about the future, than those who don’t put any cash away - plus they get a better night’s sleep.
Sara Davies, Senior Research Fellow at the University of Bristol, who co-authored the report with Jamie Evans, told Saga Money News that just the act of saving regularly, rather than the amount, is what seems to have the greatest impact on wellbeing.
“One of the clear messages [from the study] was that you don’t need to have huge pots, but what’s beneficial is the act of putting money aside. Having even a small pot of money means you’re less likely to fall into debt, so some of the positive wellbeing comes from that,” she says.
Overall, 47% of non-savers were ‘mostly’ or ‘completely’ satisfied with their life, rising to 63% among those saving £300-£399 per month.
In terms of the types of accounts that made people feel happiest, 64% of Stocks and Shares ISA holders are satisfied with their life, compared to just 54% who keep their savings in a current account.
While there was a clear correlation between having more money in savings and overall wellbeing, the report also showed that those with £1,000 to £4,999 in savings said they were more satisfied with their life than those with £5,000 to £9,999.
The study did find a noticeable difference in happiness through saving depending on age, but this was likely down to differing financial stages in life.
It found: “[t]he gap in mental wellbeing between non-savers and regular savers, however, is considerably larger for under 35s and those aged 35-64 than it is for the 65 plus age group.
“This appears to be less about the impact of saving on wellbeing being higher for younger adults and more about the impact of not saving being lower for older adults.
“In other words, wellbeing in older age may be less about saving for the future and more about spending money to enjoy the present.”
However, Davies adds the findings are applicable to all, with the report showing saving regularly helps you feel more comfortable with your finances - whatever your age.
“Fundamentally, we found it’s about feeling in control of your money and part of that is putting savings aside. In a low-income household we might draw on savings more frequently, but generally I think having them helps people feel more settled and satisfied,” she adds.
The study showed financial security, and a feeling of wellbeing, also comes from managing what you have well, rather than the amount.
“We found that people in the lowest income group who save have the same life satisfaction as somebody with an income from the group above. You have to be realistic about what saving can do, but it’s that feeling of making the best of any amount you have,’ says Davies.
“You can do that through budgeting, looking at your money when it comes in and how much to put aside – but also when to draw on it.”
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According to research from the Money and Pensions Service in 2022, one in six people have no savings at all – and a quarter have less than £100 in reserve – so you’re not alone if you haven’t built up a nest egg.
One of the most effective things you can do is build a savings reserve fund for emergencies, which can help you financially prepare for the unexpected, whether that’s energy bills shooting up or a surprise need to buy a replacement appliance.
If you have money set aside, you’re less likely to experience financial problems or need to borrow at a high interest rate if your circumstances change.
But if you’ve got out of the habit of saving regularly – and have even a small amount you could put aside – it’s important to find a way to save that suits you.
The study from Bristol University showed that reminders and texts, savings schemes that make it easy to pay in (but hard to withdraw) and small financial incentives can encourage people to save – so it could be useful looking for savings accounts that offer these options.
"If you’re on a low income, you’re clearly going to find it harder to save. There’s a lot of technology that can help, such as auto round-ups, so when you spend you [save] small amounts," says Davies.
“Find what works for you. You could put aside money the moment your pension comes in, rather than spending it. But you don’t have to save vast amounts of money – £10 a month will build up over time.
“Look at your budget and your essential outgoings, then find out where you might have a bit more slack.
“Make savings part of your overall approach to money management, putting aside what you can, when you can.”
By now, you probably have a clear idea of your attitude to money, so it can be difficult to change, particularly if you think of yourself as a ‘spender’ or a ‘saver’.
But if you are a saver, how do you switch your behaviour if you need to start spending instead?
“If you’ve got into the habit of saving your whole life and then you come to retirement, it can be mentally hard to let go. That’s particularly relevant if you have less money,” says Davies.
“You might think: ‘What was the point of saving money if I have to use it to buy a new washing machine?’
“Don't feel guilty about drawing on your savings, that's what they’re there for – to make you feel happier and more secure. If you need the money for something, whether that’s so you don’t need to borrow or you want to go on holiday; that’s the whole purpose of saving.”
