How To Save Money

With some planning and dedication, you can save money for necessary upcoming purchases and fulfilling big dreams. 

The strategies you use to save money will depend on your overall financial situation. If you're living paycheck to paycheck, you will have more difficulty finding spare cash to set aside.

For example, if most of your income goes to necessities like your rent, electric bill and cellphone plan, it makes sense that meeting a savings goal can be a struggle.

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 even routinely saving daily through debit card round-ups can help you reach your savings goals.

Focus First on Your Emergency Fund

U.S. emergency funds are dwindling after reaching pandemic highs, according to recent research. Consider a target goal such as three, six or 12 months of living expenses to work toward. This cash cushion may bolster you whether you lose your job or need to cover an emergency expense.  

Create Savings Goals

Creating a savings goal could 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 may lead to spending more than you intended. Impulse buys at grocery stores may seem small, but they can add up over time. 

Buying lunch daily at work is another significant expense that could be put toward savings, or you might also start online shopping when you feel lonely or late at night.

Think about ways to interrupt these spending habits. 

Cancel Subscriptions

When reviewing your month's 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 bigger cost. 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 start it up again if you find you really miss it.

Plan Your Important Purchases

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

However, your list of "what is important" is as unique as your interests. What one person considers unnecessary items, another person may feel gives life more meaning. Monthly e-book purchases might seem frivolous to some, but maybe you feel like buying books enriches your life.

Other spending may save you time, not money — a precious resource for many. For example, maybe you hire a weekly or monthly gardener who keeps your yard tidy 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 might also be able to 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 Save Money: Next Steps

Consider Credit Use and Seek Better Rates

Debt eats 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. You might cancel unused subscriptions or reduce utility bills through aggressive 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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