RESEARCHERS HAVE spent decades probing the connection between money and happiness. For instance, a much-cited 2010 study by academics Daniel Kahneman and Angus Deaton found that folks tend to feel happier the more money they make—but only up to a point, which they estimated to be about $75,000 a year.
But using only income to measure the link between money and happiness is incomplete. Another study, entitled “How Your Bank Balance Buys Happiness,” analyzed the connection to people’s “cash on hand.” The researchers found that having more money in checking and savings accounts was associated with higher levels of life satisfaction. But similar to the income studies, so-called liquid wealth appeared to be subject to diminishing returns, with the impact on life satisfaction tapering off as folks have more.
Which brings me to tennis. We recently moved from Granada, Spain, to Alicante, which is about 220 miles to the east and right on the Mediterranean. Alicante has milder weather that’s conducive to outdoor sports all year round, so most apartment complexes have tennis courts. My husband Jim accused me of looking for our new apartment based on the condition of the tennis courts first and the apartment second. Yes, I love playing tennis.
I also have a fondness for tennis analogies. I think saving money is like playing good tennis defense, while making more money is like playing offense. There are plenty of YouTube videos of the best winning shots, but relatively few that focus on the defensive skill that’s needed to keep the ball in play. Playing defense isn’t flashy. Yet Novak Djokovic, arguably the world’s top player, is renowned for his defensive play and for his ability to turn defense into offense.
Along the same lines, making more money, moving up the corporate ladder and building your own business are all exciting. People love to talk about such successes and to show off what this money has bought them, whether it’s the new car or the bigger house. But they never pull out their latest portfolio statement and say, “Look at my balance.” There’s nothing showy about saving money. We often celebrate a pay raise, a promotion or a business success, but we seldom celebrate when we’ve maxed out our 401(k) plan or reached a financial milestone.
In tennis, playing defense is mostly about limiting your mistakes, while waiting for the opportunity to strike. In football, it’s said that “defense wins championships.” Isn’t it the same in life? Progress—and ultimate success—are typically achieved through hundreds of smart, boring, stay-the-course decisions, rather than through flashy gambles.
Indeed, for most people, financial success is more about limiting mistakes and less about striking it big. Limiting mistakes means minimizing expenses by investing in index funds, living within your means, making the most of your 401(k) and so on. Like the turtle, it’s slow and steady that wins the race.
I have always been a saver. When I earned a bonus or got a raise, I saved the extra money. Even when I didn’t earn much, I still saved. I saved no matter what my circumstances were.
In an earlier article, I wrote about the importance of financial literacy for women. It’s one way for women to level what’s otherwise an unequal playing field. Similarly, I’d argue that saving money is even more important for women than men. A 2018 survey found that, for 65% of women, financial anxiety is the No. 1 source of stress, while the No. 1 thing that makes women feel in charge of their future is “putting away money for financial goals.”
No matter how hard I worked, I had limited control over the salary increases or bonuses awarded by my supervisors. But saving money and seeing my nest egg grow helped offset that, giving me a sense of control not only over my finances, but also over my life. It gave me confidence in my future—and that, in turn, bolstered my happiness.
Jiab Wasserman’s previous articles include Riding It Out, Enforcing the Rule and When You’re No. 2. Jiab and her husband Jim, who also writes for HumbleDollar, currently live in Alicante, Spain. They blog about downshifting, personal finance and other aspects of retirement—as well as about their experience relocating to another country—at YourThirdLife.com.