Regular saving reduces financial anxiety, boosts life satisfaction: report

People who save regularly experience less financial anxiety and greater life satisfaction, according to a report from the University of Bristol.

The study shows that individuals who save more tend to score higher on mental wellbeing metrics, feel more satisfied with life, are more optimistic about the future, and enjoy better sleep.

"While the change in mental wellbeing due to starting or stopping saving is relatively small compared to major life events like job loss or moving house, the positive relationship between saving and wellbeing endures, even when controlling for other individual characteristics," the report highlights.

Regular saving significantly boosts wellbeing for lower-income individuals and working-age adults more than for older adults, it added.

Moreover, saving improves wellbeing by reducing the need to borrow money, alleviating financial stress, and providing a financial safety net for emergencies. It also promotes positive financial management behaviors that help achieve financial goals, according to the report.

These factors collectively build financial resilience and enhance overall life satisfaction.

Research identifies effective strategies to encourage saving. Features, tools, and incentives — both behavioral and financial — can motivate saving.

Based on the report, even small financial incentives can promote saving habits. Making it easier to deposit money and harder to withdraw it positively influences saving behavior.

Programs that deduct savings before money reaches the household budget, like payroll savings, are often more successful. Regular reminders and messages can increase engagement with saving.

Ensuring accounts are flexible and not restrictive about how savings are used is important. Emphasizing the habit of saving rather than the amount saved is crucial. Research indicates that saving even small amounts can lead to substantial benefits over time.