How To Save Money

Takeaways: Start a Savings Habit and Set Attainable Goals

Start Saving Money Today: Set Your Goals

Creating a savings habit is a key step to saving money. This habit doesn't rely on the amount of money you save but on the repeated action of saving.

Research shows that routine and automated saving can help you reach your savings goals.

Focus First on Your Emergency Fund

Having an emergency fund helps prevent an unexpected expense from becoming a hardship. Consider a target goal such as three or six months of living expenses. This cash cushion could bolster you whether you lose your job or need to cover a costly car repair.

If a three-month goal seems overwhelming, start with a micro-goal and build on it. Even $100 can help prevent you from adding to your debt. 

Create Savings Goals

A savings goal can help you avoid overspending on instant gratification and motivate you to save more money. Savings goals could include the following:

• Down payment on a new car or home.
• Planned home costs, such as remodeling the bathroom.
• College tuition for your children.
• A wedding and honeymoon.
• Travel.
• Jewelry or other special items.
• A party or hosting an event.
• Child's birth and first-year baby costs.
• Holiday gifts.
• Extra cash for any reason.

Look for Unconscious Spending Habits

Grocery shopping without a list is one example of an unconscious spending habit that can lead to spending more than you intended. Impulse buys at grocery stores seem small, but add up over time.

Buying lunch daily at work is another significant expense that could be put toward savings.

Think about ways to interrupt these unconscious spending habits.

Cancel Subscriptions

When reviewing your monthly costs, consider how much some expenses add up over the year.

For example, a monthly streaming subscription at $20 doesn't sound too bad. If you multiply that amount by 12 months, $240 annually starts to sound like a larger amount. Over five years, that streaming subscription adds up to $1,200.

If the subscription is worth the expense, it's a keeper. But if it's unused and you haven't considered it for a few months, cut the cord. You can always sign up again if you find you really miss a program.

Plan Your Important Purchases

The impulse to spend vs. save is widespread, as many people prioritize the present over the future. This tendency for impulsive shopping can be reduced by slowing down, comparing prices and considering what's important to you.

However, your list of "what is important" is as unique as your interests. What one person considers an unnecessary item, might be deeply meaningful to another person. Monthly e-book purchases might seem frivolous to some, but maybe buying books enriches your life.

Other spending may save you time, not money — a precious resource for many. For example, if you hire a weekly or monthly gardener who tidies your yard and is more efficient than you would be at the task.

Make a Weekly Shopping List

A shopping list can help you spend less at the grocery store — but you could apply the same approach to other spending goals.

For example, you might make a shopping list of purchases you want to make next month, whether cosmetics, a new lunchbox for your child or a donation to an organization.

Planned purchases give you time to save, compare prices and seek discounts, potentially helping you avoid paying full price for your shopping list items.

How To Build Your Savings Account

To increase the amount you save monthly, try these approaches.

Set Up Automatic Transfers

Automatic transfers move money from your checking account to a savings account. You can schedule transfers (such as every week), every paycheck (splitting your direct deposit) or use a round-up feature.

How To Save Money: Next Steps

Consider Credit Use and Seek Better Rates

Debt can eat away at your savings when you're paying interest on credit card or loan balances. With higher interest rates, credit card debt can make saving particularly hard.

If you can't pay off your balance entirely each month, try to avoid using credit or shop around for a lower interest rate.

Finding a lower interest rate for your current credit products (mortgage, credit card, personal loan) can be another money-saving step.

Try to use the difference between your previous interest rate and your new, lower rate to pay down debt and stash away savings — even if it's just a few dollars per month.

Investigate Workplace Options

Your employer may offer a retirement plan allowing you to save pre-tax dollars (and pay less in taxes) or even match your savings. 

Compare investment products available through your employer, including via 401(k) contributions and health savings accounts (HSAs). 

Negotiate Bills 

Negotiating a payment plan with utility companies may allow you to "smooth" your monthly expenses. This approach helps reduce big bills in winter and produces more predictable spending. 

Saving Money FAQs

How Do I Save Money Fast?

The best way to save money is to do so slowly, over time. If you need to save money fast, get a clear idea of expenses you can cut from your budget.  Look for free activities to replace any that cost money. 

Review options (such as low-interest personal loans) with a financial professional if you need money for an urgent expense and can't save money in time. If you must repay a debt, it may be possible to negotiate your bill. 

How Do I Save $1,000 a Month?

Saving $1,000 a month could be a significant challenge, especially if you haven't already established a saving habit. First, start small and with what you can afford, whether $10 or $100 per month. 

Build a savings habit using automation, such as a weekly transfer from your checking account. 

As a next step, see if you can earn extra cash or cut expenses by reducing purchases and spending. For example, you might reduce utility bills through aggressive energy conservation.

Is a Bank Account or Credit Union Account Best for Saving Money?

On average, credit union interest savings account rates are higher than bank interest rates, although this can depend on the account type and institution. For example, CDs and Money Market Accounts might have better rates at many credit unions. 

Online-only banks and credit unions tend to offer higher savings interest rates, although they may not provide as many services as brick-and-mortar institutions.

Compare rates alongside savings account policies. In general, look for a savings account that doesn't eat into your savings with fees.

The Big Picture

To save money, create a budget to track your spending and balance your expenses. Focus on reducing the cost of unnecessary purchases and prioritizing essential ones. 

Use an account — whether a savings account, money market account or CD — to set aside savings automatically, ensuring consistent progress. 

Plan each purchase thoughtfully, avoiding impulse buys. Small changes can make a big difference even if they don't add up quickly. 

Look for deals and smarter ways to save money, like buying in bulk or using discounts. For more tips, research savings strategies or consult credible sources to refine your habits further.

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