5 ways saving money can boost your mental health

February 23, 2021

By Claire Hegstrom

5 ways saving money can boost your mental health

Two women smile at each other while in their kitchen. One is holding a cup of coffee, while the other has her laptop open in front of her.

Often, when we think of setting aside a portion of our paycheck every month, we correlate our savings habits with lofty goals like buying a house, having adequate funds for retirement, or sending the kids to college without debt. But what if saving money every month added more immediate benefits to your life? In a recent study by the American Psychological Association, “72% of Americans said they felt stressed about money, and 22% said they felt ‘extreme’ stress over their finances.”

If you’ve ever tucked away what looked like a bill without opening it, or avoided a phone call from an unknown number, you’re not alone. Unavoidable emergencies will never completely disappear, but having the funds saved for these occurrences can save you from debt, and boost your mental health in a variety of ways! Let’s take a look at some of the ways saving money every month could boost your emotional well-being.

Managing your money helps your mental well-being because it:

1. Reduces your stress.

2. Aids in building honest relationships.

3. Gives you confidence.

4. Builds optimism.

5. Puts you in control.

Reduce your stress by setting a little money aside every month

The stress of your car giving up on you without the money in the bank for a new down payment  can cause lasting anxiety for years to come, every time you hop into your car. But a broken down ride is just one of the financial emergencies people experience every day. In a recent study by CNBC, a reported 59% of Americans would not be able to cover a $1,000 emergency.

Constantly worrying about the “what ifs” takes a serious toll on your mental health, and money stress has even been linked to depression. Setting aside a little money every month can be the easiest way to protect your mental health.

One of the best ways to lighten the load on your shoulders and reduce daily stress is to open an emergency savings account and regularly contribute to it. If you’ve never had a savings account, start small with an automated $50 contribution per paycheck! You can set this up through your employer, or by setting an automatic recurring transfer from your checking account every pay day. Automating savings is the important step, because you won’t miss the money if you never see it!

Having money saved helps build relationships

It’s no shock that one of the most commonly kept secrets between partners is money. In fact, as many as 41% of adults admit to hiding accounts, debts or spending habits from their spouse. Many of our deepest hopes and dreams are dependent on the funds saved to get us there: Having children, owning a vacation home, going back to school. Committing to a savings goal can connect partners to a common goal, and open the lines of communication to share financial fears, aspirations and everything in between.

Talking openly about savings goals, debts and everyday spending can be one of the most beneficial steps to connecting with your partner. If money has been a sore subject in the past, try starting with some conversation starters that get you both openly communicating about where your financial personalities stem from.

Managing money gives you extra confidence

There’s a reason you’ve seen an uptick of social media posts with couples holding signs reading, “Paid off $75K of debt in 9 months!” It feels great to accomplish any goal, especially money goals because it gives you freedom from financial stresses!

While saving money always requires a little sacrifice and hard work, it’s quite an empowering feeling to know that you’ve accomplished what you set your mind to. Write down your savings goals, create a plan to get there, and share it with your closest friends and family—or even the world wide web—so you can celebrate when you’ve met each specific saving milestone.

Some ideas for SMART (specific, measurable, achievable, relevant and timely) goals include:

1. Build a $1,000 emergency fund in ten months.

2. Pay off $3,000 in credit card debt by the new year.

3. Increase credit score by 40 points over two years.

Another benefit to building a budget and saving money is that you now know exactly what you need to make your dreams happen. Having a clear vision can help give you the confidence to ask for a raise, talk to your boss about a promotion or even negotiate a better salary offer at a new job.

Saving money gives you an optimistic outlook

Does saving money make you happier? While happiness is subjective, think about it this way: It can be difficult to look forward to each day if you feel like you’re living an endless loop of working and living paycheck to paycheck. Saving even $20 every paycheck can help alleviate fears about the future, and give more meaning behind the money you’re working so hard to make.

survey by PWC found that people who have built up their emergency fund are less stressed about finances. Picture the ability to dream about the next car you’ll get, rather than constantly worrying about when your current ride finally gives out. Looking forward to something positive your savings can afford, rather than worrying if you’ll be able to pay the bills in an emergency can be a game changer for your everyday mood.

Flexible savings puts you in control of your life

Perhaps one of the greatest gifts regularly saving can offer is the ability to take risks and feel free to live the life you’ve envisioned for yourself. If you’ve always been interested in moving across the country, a healthy savings account can provide the funds to make the move when a job offer finally comes through!

Additionally, savings funds can offer a world of opportunity for you when you least expect it. When your friends decide on a last-minute trip across the country, you can confidently join them knowing that you have the money to afford the extra expenses, without racking up high-interest credit card debt.

Looking for inspiration on how to start saving? Check out these blog posts:

Claire Hegstrom is an advocate of the credit union movement through and through. Passionate about financial education, she approaches money conversations from a candid and inclusive space focused on growth and awareness. As our credit union founding father, Ed Filene, once said, “Progress is the constant replacing of the best there is with something still better.” Claire hopes reading Money Mentor will help transform your life from the best to even better.

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