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Is Your Piggy Bank a Source of Happiness?

If saving money is hard for you, consider this surprising benefit.

Image by Ken Teegardin, wikipedia/CC2.0
Source: Image by Ken Teegardin, wikipedia/CC2.0

When does spending money make you happier and when does spending money just not “pay off” in a happiness boost? My last blog post revealed a simple secret: Those who express their true identity when they make purchases are happier.

But even as I wrote it, I wondered whether some people would be even happier if they had stashed away more money in savings or retirement rather than spending it. I found myself searching for the answer, and here’s what I discovered.

Part of the answer came from a recent survey by Ally Bank—not necessarily an objective resource, I know. Whether their survey was up to the standards of social science research is an open question. Still, the results were thought-provoking.

Survey results: Savings and happiness. In the Ally report, which was a survey of 1,025 US adults over age 25, there was a definite correlation between savings and happiness. In fact, the more interviewees had in savings, the happier they were. The statistics were:

  • No savings—29% said they were happy
  • Less than $20,000 saved — 34% said they were happy
  • Between $20,000-$100,000 — 42% said they were happy
  • More than $100,000 — 57% said they were happy

These results are particularly remarkable because earning more, as opposed to saving more, does not necessarily correlate with happiness. Earning about $50,000 per year, most studies say, is enough to give people the basic necessities they need to be happy. Small increases in income after that lead to small boosts in happiness, but a household income of more than $75,000 provides little to no effect on a person’s happiness quotient. (I'm sure we'd all like to test this out for ourselves!) Contrast that to the savings statistics, which rise dramatically with more savings.

In a blog post, Ally Bank asserted that “Happiness continues to grow as savings accumulate. In other words, a big savings account may contribute to happiness more than a big paycheck.”

The "Why" of Savings Happiness. Why did stashing money into a savings account make people happier? Study participants gave the following reasons: better able to face the unknown (90%); peace of mind (90%); pride (87%); an overall sense of well-being (84%); independence (82%). An “overall sense of well-being”—that’s one definition of happiness for you.

To their credit, the Ally Bank researchers noted that having savings was not the only ingredient in the happiness cake. Ranking higher than savings as a happiness contributor was—and I think you can guess this—good relationships with family and friends. About 90% of those surveyed could agree on that. Still, the role that saving might play in happiness is intriguing.

If Ally’s results hold up in larger surveys, many Americans are going to be extremely unhappy. I say this because:

  • About half of Americans don’t have 3 months of living expenses in an emergency fund. The recommended amount is usually 6-8 months.
  • Most Americans have saved only an average of $3,000 for retirement.

Why don’t people save? Well, many people are scrambling just to make ends meet. It’s hard to save if you don’t earn much. But apart from that, you might not save for the future because it’s hard for you to time-travel to your “future self.” Numerous studies show that by helping people imagine what their “future self” might look like and need, they are more willing to save more and make healthier choices. (Sadly, many young people in difficult personal and financial situations suffer from a kind of “economic despair” that makes them feel hopeless about their future. Read more about that here.) Automatic deposits into your savings account can also enable you to save more without even thinking about it.

Obviously, some kind of balance is required between sensible spending and sensible saving. Still, surveys like this suggest that we could well ask ourselves, “Would I be happier if I spent less and put more money in savings?” The data suggest that saving is an investment that will pay off—both financially and emotionally.

© Meg Selig

If you liked this blog post, check out 3 Questions You Have to Ask Yourself Before Buying Anything and Would Changing a Harmful Habit Make You Happier?


Emergency fund. Sullivan, B. "Is Saving the Key to Happiness?"

Ally Bank survey. "New Ally Bank Survey Links Money to Happiness"

Economic despair. From Porter, E., "One Key to Success: A Belief in a Future"

Future self. Nice summary of this research in Tugend, Alina, "Bad Habits? My Future Self Will Deal With That"

Income and happiness. Kavoussi, B. “Money Improves Quality of Life, Up to a Certain Point

$3000 for retirement. National Institute on Retirement Security.