How Money Management Can Make You Lead a Better Life

In 2007, two Australian researchers – Megan Oaten and Ken Cheng – designed an experiment. They signed up 29 people for a 4-month money management program. They set saving goals and asked participants to refrain from luxuries like movies and restaurant meals. Participants had to keep detailed logs of everything they bought. At first, it felt intrusive and annoying. But gradually, people worked up the discipline to jot down the details. The results were unexpected.

People’s finances improved as they progressed through this 4-month program. But surprisingly, this habit filtered into other aspects of their lives too. They smoked lesser cigarettes, consumed less alcohol and caffeine. On an average, they drank two less cups of coffee, two fewer beers and smokers reduced an average of fifteen cigarettes each day. Their junk food intake decreased too and productivity in what they did increased.

Oaten’s and Cheng’s finding in this experiment reinforced a conclusion they had drawn from a previous experiment: as people’s willpower strengthens in one part of life – the gym, saving money etc. – it spills over into what they eat and how hard they work. Once willpower becomes stronger, it touches everything.

Does it sound strange or familiar? The correlation between saving money and leading a better quality of life? Not just because you can buy more things, but because you get better at how you live. If it doesn’t add up, here are four ways to explain this correlation better:

Improved Willpower

When you develop the habit of managing money, research proves that you change how you think. You get better at regulating impulses and distracting yourself from temptations. Once your willpower gets into the groove, your brain becomes better at focusing on a goal. And better focus increases your chances of achieving your goal.

Better Lifestyle

Regulating impulses and handling money well leads to reduction of unwanted luxuries from life. You eat healthier and perform constructive activities, making better use of your time. Thus, you lead a better lifestyle than most of your peers.

Emotional Balance

Improved willpower and a better lifestyle have an unexpected effect on your emotions. Eating healthy results in a healthier body and mind. Research has also proven that people who spend more time pursuing constructive activities and exercise regularly (thus improving their willpower) are able to regulate their emotions better. They are calmer, not just in appearance, but also in managing their thoughts and actions.

Better Decisions

A consequence of emotional balance is the ability to take better decisions. Emotionally intelligent people let logic and reason dominate emotion, instead of vice versa. They can think clearly when others lose their minds and panic. They can take decisions which have positive long-term results, even at the expense of short-term pains. The ability to take better decisions eventually leads to a better quality of life.

These reasons show that managing money has unexpected effects on various parts of your life. Saving money makes you emotionally resilient, develops willpower, makes you live healthier and take better decisions.

So develop the habit of saving money, starting today. You can use apps to track your spending and cut down on unnecessary luxuries for a few months. Avoid outside food, movies and impulse shopping. Track how you spend your money and what you can do to improve it. I can assure you that the results will be far better than what is written in this post. Because I have tried it, and it’s worked wonders. And if it has worked brilliantly for me, it can definitely provide astounding results in your life.

Vishal is the founder of Aryatra, a venture to help individuals improve their productivity and live more fulfilled lives. He also is a digital marketing consultant helping businesses generate revenue from their online presence.