One of the best ways to take charge of your finances in today?s uncertain economy is to have a healthy savings account. Nobody wants to feel the stress of knowing that they are only a pay cheque or two away from financial disaster because they lack money to fall back on when ?stuff happens.?
Specific examples include job loss, disability, a car breakdown, a sick child or pet, and other types of financial emergencies. Saving provides a financial ?backstop? for life?s uncertainties and increases feelings of security and peace of mind. Once an adequate emergency fund is established, savings can also provide the ?seed money? for higher-yielding investments such as stocks, bonds, and mutual funds.
There is also evidence from a recent study by the Northwestern Mutual Insurance Company that savings is linked to increased happiness. Actually, what the study found was that people who are ?planners? and do future-oriented things such as setting goals and taking steps (such as saving money) to achieve those goals feel happier, and better about their lives, than those who don?t make plans.
On a related note, there is a strong relationship between having spending and saving plans and maintaining emergency funds. Particularly for low-income individuals, those with a spending plan with goals were far more likely to have saved money for emergencies than were those without a plan.
Economists and psychologists attribute findings like this to the sense of control that people have when they plan ahead and know what they need to do to get from where they are now to where they want to be.
It is well established by research that people who feel a sense of control over life events are often happier, cope better, and are more resilient in times of stress than others. Conversely, people are especially unhappy in situations where they perceive themselves to have a lack of control. It is, therefore, no surprise that commuting ranks high on the list of things that make people most unhappy. Commuters never know from day to day what traffic gridlock, accidents, and weather-related hassles they?ll encounter.