Savings, not income, is the key to happiness
The claim comes from a report by the Centre for Economics and Business Research (Cebr), commissioned by Barclays, titled ‘Living Lagom – challenging perceptions of wealth’.
It found one in three people (33 per cent) believe they would be happier if they earned more money. However, it also found that boosting the amount of money you save each month has a bigger impact on life satisfaction than an increase in income, and a greater impact than being happily married.
According to Cebr, if a person saved an additional 10 per cent of their monthly pay cheque, the likelihood of them reporting a high life satisfaction score increases. In the long term, those who consistently have a savings account are more than six per cent more likely to have a higher life satisfaction score.
The study also found that the average Brit thinks you need more than £1m to be ‘wealthy’. Yet the majority of people (54 per cent) who have achieved this level of personal wealth would not give themselves this title.
Barclays is using the report to challenge the UK’s perception of wealth. It’s encouraging Brits to adopt a more “Swedish” approach to money. Sweden is one of the world’s happiest countries, with Swedes practiced in the art of ‘lagom’, which means ‘just the right amount’.
Dirk Klee, CEO of savings, investments and wealth management at Barclays, said: “It’s easy to underestimate the benefits of saving or investing a regular amount each month. No matter what the amount, it will build to give you that peace of mind that you have something set aside for a rainy day, and move you closer to your goals.”
Linnea Dunne, author and lagom expert, said: “Lagom isn’t about extremes, it is about ‘just enough’ – and I believe applying the principles of lagom to all areas of your life can be hugely beneficial for your overall wellbeing and happiness. It is certainly clear from the new report from Barclays that, when it comes to our finances, living a little more lagom can genuinely improve our overall life satisfaction.”
The report says taking a new approach to looking at wealth, focusing on achievable goals and balance rather than a particular figure, could help to improve happiness and life satisfaction.
It found that individuals who felt they were ‘living comfortably’ or ‘doing alright’ financially – regardless of income – were 11 per cent more likely to be mostly or completely satisfied with their life.
This approach to wealth is already more common than you might think, as analysis of different age groups shows that perceptions have already started to change and younger generations are learning that there is more to a rich existence than simply money. Those aged 18 to 34 set their definition of ‘wealth’ at £383,375 – significantly lower than the average £1m – and one in 10 would say they are wealthy.