How to Start Saving Money: 8 Money Saving Tips (2024)

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Saved to My Priorities

Saving is easier when you have a plan—follow these steps to create one

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Sometimes the hardest thing about saving money is just getting started. This step-by-step guide can help you develop a simple and realistic strategy, so that you can save for all your short- and long-term goals.

1

Record your expenses

The first step to start saving money is figuring out how much you spend. Keep track of all your expenses—that means every coffee, household item and cash tip as well as regular monthly bills. Record your expenses however is easiest for you—a pencil and paper, a simple spreadsheet or a free online spending tracker or app. Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Use your credit card and bank statements to make sure you’ve included everything.

2

Include saving in your budget

Now that you know what you spend in a month, you can begin to create a budget. Your budget should show what your expenses are relative to your income, so that you can plan your spending and limit overspending. Be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Include a savings category in your budget and aim to save an amount that initially feels comfortable to you. Plan on eventually increasing your savings by up to 15 to 20 percent of your income.

3

Find ways to cut spending

If you can’t save as much as you’d like, it might be time to cut back on expenses. Identify nonessentials, such as entertainment and dining out, that you can spend less on. Look for ways to save on your fixed monthly expenses, such as your car insurance or cell phone plan, as well. Other ideas for trimming everyday expenses include:

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Search for free activities

Use resources, such as community event listings, to find free or low-cost entertainment.

Review recurring charges

Cancel subscriptions and memberships you don’t use—especially if they renew automatically.

Examine the cost of eating out vs. cooking at home

Plan to eat most of your meals at home, and research local restaurant deals for nights that you want to treat yourself.

Wait before you buy

When tempted by a nonessential purchase, wait a few days. You may realize the item was something you wanted rather than needed—and you can develop a plan to save for it.

4

Set savings goals

One of the best ways to save money is to set a goal. Start by thinking about what you might want to save for—both in the short term (one to three years) and the long term (four or more years). Then estimate how much money you’ll need and how long it might take you to save it.

Common short-term goals: Emergency fund (three to nine months of living expenses), vacation or down payment for a car

Common long-term goals: Down payment on a home or a remodeling project, your child’s education or retirement

How to Start Saving Money: 8 Money Saving Tips (19)

Quick tip

Set a small, achievable short-term goal for something that’s fun and goes beyond your monthly budget, such as a new smartphone or holiday gifts. Reaching smaller goals—and enjoying the reward you’ve saved for—can give you a psychological boost, making the payoff of saving more immediate and reinforces the habit.

  • How to Start Saving Money: 8 Money Saving Tips (20)

5

Determine your financial priorities

After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. For example, if you know you’re going to need to replace your car in the near future, you could start putting away money for one now. But be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Learning how to prioritize your savings goals can give you a clear idea of how to allocate your savings.

6

Pick the right tools

There are many savings and investment accounts suitable for short- and long-term goals. And you don’t have to pick just one. Look carefully at all the options and consider balance minimums, fees, interest rates, risk and how soon you’ll need the money so you can choose the mix that will help you best save for your goals.

  • How to Start Saving Money: 8 Money Saving Tips (21)

Short-term goals

If you’ll need the money soon or need to be able to access it quickly, consider using these FDIC-insured deposit accounts:

  • A savings account
  • A certificate of deposit (CD), which locks in your money for a fixed period of time at a rate that is typically higher than that of a savings account

Long-term goals

If you’re saving for retirement or your child’s education, consider:

  • FDIC-insured individual retirement accounts (IRAs) or 529 plans, which are tax-efficient savings accounts
  • Securities, such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer1

7

Make saving automatic

Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so that a portion of every paycheck goes directly into your savings account. The advantage: You don’t have to think about it, and you’re less likely to spend the money instead. Other easy savings tools include credit card rewards and spare change programs, which round up transactions to the nearest dollar and transfer the difference into a savings or investment account.

8

Watch your savings grow

Review your budget and check your progress every month. That will help you not only stick to your personal savings plan, but also identify and fix problems quickly. Understanding how to save money may even inspire you to find more ways to save and hit your goals faster.

  • How to Start Saving Money: 8 Money Saving Tips (23)

1 Remember that securities are not insured by the FDIC, are not deposits or other obligations of a bank and are not guaranteed by a bank. They are subject to investment risks, including the possible loss of your principal.

Disclaimer

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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How to Start Saving Money: 8 Money Saving Tips (2024)

FAQs

How do I start saving money tips? ›

Key Takeaways
  1. Trouble saving? Set one specific goal. ...
  2. Make savings automatic. Pay yourself first by making auto deposits into your savings account.
  3. Keep separate accounts. Open a savings account at a different bank if you think you'll be tempted to transfer savings into checking.

How to save $10,000 in 3 months? ›

Setting realistic savings goals is essential to ensure that you don't set yourself up for failure. One way to do this is by breaking down your target amount into smaller milestones. For example, if you aim to save $10,000 in three months, you can divide it into monthly targets of $3,333.

How to quickly save $1,000 dollars? ›

Financial expert Dave Ramsey has a lot of ideas on the subject, and here are some of the most practical ways to save your first $1,000 quickly.
  1. Cancel Subscriptions. ...
  2. Bring Your Own Lunch. ...
  3. Avoid Coffee Out. ...
  4. Re-Sell Old Items. ...
  5. Shop at Cheaper Grocery Stores With Rewards Programs. ...
  6. Buy Generic. ...
  7. Join a Carpool.
Dec 28, 2023

What is the 30 30 30 rule for savings? ›

One of the most popular rules, the 30:30:30:10 rule, can be applied both in terms of income planning, as well as pension planning. The income planning version says that you put 30% of your income towards day-to-day expenses, 30% towards investments, 30% for retirement savings and 10% for emergency expenses.

What is the 30 day rule? ›

The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.

How do I start saving money when I have none? ›

Make a budget.
  1. Set a savings goal. ...
  2. Set up direct deposits to go into savings. ...
  3. Buy generic. ...
  4. Stay out of “that store.” ...
  5. Cancel some subscriptions and memberships. ...
  6. Join gas rewards programs. ...
  7. Meal plan. ...
  8. Use cash-back apps and coupons.
Jun 13, 2024

How can I save $5,000 in 100 days? ›

The 100-envelope challenge is pretty straightforward: You take 100 envelopes, number each of them and then save the corresponding dollar amount in each envelope. For instance, you put $1 in “Envelope 1,” $2 in “Envelope 2,” and so on. By the end of 100 days, you'll have saved $5,050.

How can I save $5000 fast? ›

Ways To Save $5,000 in a Year
  1. “Chunk” Your Savings. The first step to saving $5,000 in a year is to break down your savings goal into manageable portions. ...
  2. Automate Your Savings. ...
  3. Save in a High-Yield Saving Account. ...
  4. Track Your Cash Flow. ...
  5. Boost Your Earnings. ...
  6. Declutter for Cash. ...
  7. Evaluate Your Subscriptions. ...
  8. Challenge Yourself.
Aug 7, 2024

What happens if you save $100 dollars a month for 10 years? ›

(Enter "$100" in the "Contribution amount" field, then select "Monthly" for the "Contribution frequency" option.) You would end up with $32,023.26 after 10 years, compounded daily (assuming 365 days a year). The interest would be $10,023.26 on total deposits of $22,000.

What if I save $20 dollars a day? ›

Saving 20 dollars a day adds up to about $600 a month or $7,300 each year! Save $7300 for 20 years compounded at 5% and you'll have $253,450—over a quarter of a million dollars!

What is the 50 30 20 rule? ›

Key Takeaways. The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.

How to make $5,000 dollars fast legally? ›

11 Easy Ways to Make $5,000 Fast
  1. Sell Items You Already Have. The first step in making $5,000 fast is to leverage what you already have. ...
  2. Rent Out Space. ...
  3. Become a Rideshare Driver. ...
  4. Teach Online. ...
  5. Get a Car Wrap. ...
  6. Sell Stock Photos. ...
  7. Consider Freelancing. ...
  8. Flip items online.
Mar 21, 2024

How much should rent be of income? ›

Generally, experts recommend spending no more than 30% of monthly pre-tax income on housing. However, it's not always that simple. According to the U.S. Census Bureau, between 2017 and 2021, over 40% of renter households (19 million) spent more than 30% of their income on rent.

Why pay yourself first? ›

It means putting 20% of your income toward savings and 80% toward everything else. Paying yourself first can be effective because it ensures you save something every pay period, and it reduces the chance that you'll spend money you intended to save.

How to budget a paycheck? ›

The 50/30/20 approach can be a helpful way to get started with budgeting. It's a simple rule of thumb that suggests you put up to 50% of your after-tax income toward things you need, 30% toward things you want, and 20% toward savings.

What is the 40 30 20 10 saving rule? ›

The most common way to use the 40-30-20-10 rule is to assign 40% of your income — after taxes — to necessities such as food and housing, 30% to discretionary spending, 20% to savings or paying off debt and 10% to charitable giving or meeting financial goals.

What is the 7 rule for savings? ›

The seven percent savings rule provides a simple yet powerful guideline—save seven percent of your gross income before any taxes or other deductions come out of your paycheck. Saving at this level can help you make continuous progress towards your financial goals through the inevitable ups and downs of life.

How to save 20K in 2 years? ›

7 Fastest Ways To Save $20K, According to Experts
  1. Start With Your Goal. Jay Zigmont, Ph. ...
  2. Create a Budget and See What You Can Save. ...
  3. Open a Savings Account and Set Up Automatic Contributions. ...
  4. Find Ways To Cut Back. ...
  5. Sell Your Unwanted Stuff. ...
  6. Evaluate Your Insurance. ...
  7. Generate Additional Income.
Jul 23, 2024

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