- To save money, evaluate your expenses and see if there are areas where you can limit spending.
- Consider whether your money is in the right place and review interest-earning bank account options.
- If you're saving for a specific purpose, set practical guidelines for goals.
Whether you're beginning to put away money for an emergency fund or ready to save for a 70/20/10 budget rule. With this strategy, you'll spend 70% of your income on essential and nonessential expenses, 20% on savings and investments, and 10% on debt payments or donations. Like the 50/30/20 rule, this is a flexible rule that doesn't require you to keep careful track of every expense. If you want to focus on debt repayment, or if donating part of your income each paycheck is important to you, this might be a good strategy for you.
If you've kept up with a consistent budget, check in on your progress. If something doesn't go to plan, you can always modify it. You'll also want to make adjustments if you recently air conditioner off or down at night, if the temperatures in your area permit it.
If you're interested in saving money long-term and don't mind spending some money, consider investing in energy-efficient appliances or solar panels.
Lowering transportation expenses
If your area offers public transit, using that might be less expensive than paying for the gas you would use to get somewhere — especially if your city's public transit system is robust enough to get rid of your car entirely. If your city is bikeable, replacing your car with a bike might provide similar savings.
While this option definitely isn't possible for everyone, being able to avoid car payments, expensive maintenance fees, and gas costs can save you a lot over time. Using public transit or biking might also help you avoid using ridesharing apps, which can get very expensive over time.
4. Smart financial habits
The benefits of an emergency fund
Having an emergency fund is vital for financial security. If you lose your job or have a Roth IRA can ensure that you have money to depend on later in life. Not only will you have the money you put into the Roth IRA, but you'll also have whatever money you made off of investing, too.
You can also use investing to pay for long-term financial goals, like buying a house. Just be aware that investing comes with risk, and it's possible that you'll lose money.
Compare Today's Rates
5. Making extra money
Side hustles
Finding ways to make money outside of your job can help make sure you always have some money coming in. There are several Certificates of deposit are great for saving for specific long-term goals, especially if you know how long you want to save for. They're also good for ensuring you keep a good interest rate for a long time. However, if interest rates rise after you open a CD, you might be stuck with a worse interest rate than you would have with a savings account.
Automated savings plans
Automating your savings can be a great way to ensure you're always making progress on your savings goals. Stanley recommends setting up an automatic transfer from your checking account to a high-yield savings account after each paycheck. That way, you won't forget and accidentally overspend money you were planning on saving.
By assessing your income and expenses, making and sticking to budget, and making use of different financial tools, you'll be able to save money and start building towards your financial goals. If you follow these tips, you can start saving for the future, even if you don't think you have much money to set aside.
Saving money tips FAQs
How much should I save each month?
The amount you should save will vary based on your income, expenses, and financial goals. One common budgeting strategy is the 50/30/20 rule, where 20% of your income goes to savings and debt repayment. This number can be adjusted to fit your needs; the goal is to start with a manageable amount and increase it when you can.
What's the best way to start saving if I'm living paycheck to paycheck?
Start by reviewing your expenses and identifying any nonessential items that can be reduced or eliminated, as even small cuts can add up over time. If you can, consider treating savings as a non-negotiable expense by automating a small money transfer to a savings account each payday.
How do I choose the right savings account?
Look for an account with a high interest rate, low fees, and good customer service. Online banks often offer higher interest rates than brick-and-mortar banks. Also consider whether you want your money to be easily accessible, or whether you want it to be a little harder to get access to.
Can investing be considered a form of saving?
Yes, investing can be a form of saving, especially concerning retirement plans or other long-term financial goals. Investing often earns you a higher return than a savings account, but comes with a higher risk.
How do I stay motivated to save money?
Making clear, specific financial goals can help you stay motivated to save money. Examples of clear goals are saving to buy a house, go on vacation, or build an emergency fund. Make sure to track your progress and celebrate milestones along the way.
