How to save money: 10 easy tips

7 min read

Saving money doesn’t have to be so hard. It just takes practice.

Once you get into the habit of consistently putting money away, it’s possible to save enough cash for emergencies, retirement and other goals you’re hoping to reach. You can do it. All you need is a positive attitude and a winning strategy that’ll help you take your savings to the next level.

Ready to get started? Here are 10 savings tips you can use to boost your savings and transform your financial life.

Set goals

Saving money will be tough if you don’t know what you’re saving for.

Setting specific, realistic goals is important. Think about what you’re hoping to accomplish in the short-term and long-term. Where do you see yourself in five years? What are you hoping to achieve within the next 15 years?

Once you know why you’re setting aside part of your paycheck, deciding to save rather than spend your extra money should be easier. Examples of goals you could have include:

Make sure you have enough money set aside to meet your immediate and future needs and prioritize, deciding which goals need to be met before others. Putting your own financial needs first instead of paying most of your kid’s college costs, for example, is something worth considering.

“You know the old airplane analogy, right?” asks Michael Foguth, founder of Foguth Financial Group in Brighton, Michigan. “When the masks drop, what do they tell you to do? Save yourself first.”

“Put the mask on yourself and then your children. You know, my opinion is, it’s not going to help if your kids’ college is paid for but you’ve got to work until you’re 85,” he says.

Establish a realistic budget

Once you’ve set and prioritized your goals, a good next step is assessing your ability to achieve them based on how much money is flowing in and out of your account.

“I don’t know anybody who really likes to track their expenses, but it is such an important undertaking to help you understand what you could potentially save or what changes you need to make in your spending,” says George Barany, director of America Saves, a campaign under the Consumer Federation of America.

Keeping track of your checking account is easier than ever, thanks to the countless number of financial apps that have been created. Creating a framework could also be helpful so that you can decide how much money you can save.

One example is the 50/30/20 budgeting rule. Here’s how it breaks down:

  • 50 percent of income covers needs
  • 30 percent of income covers wants
  • 20 percent of income covers savings

Develop a spending plan and come up with a method that will help you keep tabs on how you’re using your hard-earned money. A simple change, like making your own coffee instead of buying it, could lead to other cost-cutting measures, like bringing your lunch to work or taking public transportation instead of driving.

Saving for the short-term

Short-term savings goals are what you’re trying to achieve within a short period of time, like within the next several months or the next year.

Examples of short-term goals include:

  • Saving for emergencies: Having at least three to six months worth of emergency savings is critical. Prepare for the unexpected by socking money away in a high-yield savings account.
  • Saving up for a major purchase: Planning to replace your refrigerator or get a new car? Save as much as you can and use the right rewards credit card when you’re ready to make the big purchase.
  • Saving for a vacation: Everyone deserves a break. Make sure you have enough money to enjoy your time away by cutting back on unnecessary expenses and putting the money for your trip in a separate account. If you can’t afford to go too far, a staycation is always an option.

Given the short time horizon, you’ll have to think carefully about where you’ll park your savings. Short-term savings can be kept in CDs, savings and money market accounts. You’ll have to decide which account is best based on several factors, including how accessible the funds will be when you need them.

Saving for the long-term

Long-term savings goals are what you’re trying to achieve in the distant future. Examples include:

  • Saving for a house: Ready to live the American dream? Start socking money away for your down payment, your monthly mortgage payments, property taxes and insurance premiums. If you’re still renting, consider finding a roommate in order to save money. Taking on a second job is another way to earn extra cash.
  • Saving for your child’s education: It’s never too early to start thinking about your son or daughter’s college career. Parents should consider saving money in a tax-advantaged account like a 529 plan.
  • Saving money for the future: Will you have enough money to survive your 60s, 70s and beyond? Create a budget for your future self and devise a plan for saving enough money to cover bills, medical expenses and travel costs in retirement.

Saving for the long-term also involves considering where to keep your funds. IRAs and 401(k)s are popular options. But they’re also tax-deferred accounts, meaning you’ll owe taxes in the future when you retire and start living off the money you socked away. That’s why some experts say there are better places for retirement savings.

“In my opinion, people should be paying the taxes today inside of Roth IRAs and Roth 401(k)s and then never paying the taxes the rest of their life,” Foguth says.

Additional money-saving tips

Download money saving apps

Advanced technology has made saving money a lot easier than it was in the past. At your fingertips are dozens of apps you could use to boost your savings.

If you’re looking for ways to automate your savings, try using apps like Digit that save money for you so you don’t have to think about it. Other options include savings and budgeting apps like Clarity Money.

Automate your savings

One of the easiest ways to meet your short- and long-term goals is to make saving money something that happens automatically.

Set up direct deposit so that a portion of every paycheck automatically goes into a savings account for your emergency savings, says Greg McBride, CFA, Bankrate’s chief financial analyst. If you haven’t signed up for your 401(k) or another employer-sponsored retirement plan, change that so you’re making contributions and saving for retirement every time you get paid.

Once you’re informed on the right savings strategy for your goals, take action. Bankrate provides an extensive list of the best savings accounts and rates, along with the pros and cons of each in order for you to make a safe and sound financial decision.

Consider a savings account with a bonus

Some banks will pay you just for opening a savings account. You’ll have to follow the rules and meet certain requirements — like having a specific number of debit card transactions or making a direct deposit. But with some of the best bank account bonuses, it’s possible to walk away with hundreds of dollars in free cash.

But don’t be fooled. Just because a bank is offering to give you $300 doesn’t mean you’re getting a good deal. Often, the banks offering bonuses pay savers a low rate. If you’re planning to open a savings account, proceed with caution.

“You’re kind of getting that bonus, but you’re sacrificing the long-term return,” says Deacon Hayes, personal finance expert and founder of Well Kept Wallet. “So you just want to weigh those options.”

Consider joining a rewards program

Participating in a rewards program could be another strategy you implement to increase the amount of money you’re saving. For example, if you have a cash-back credit card that allows you to earn rewards every time you swipe or dip your card, you could rack up quite a bit of credits over time that can save you money and reduce the amount you owe.

Of course, you’ll have to be careful. Programs are typically structured so that you earn money by spending rather than saving.

“Any reward that causes one to spend more than would be considered normal consumption is antithetical,” says Scott Cole, founder and president of ColeFP and Wealth Management. “Rewards programs on credit cards could lead to debt accumulation.”

Use excess cash wisely

Just got a raise or a bonus? Don’t spend it all in one place. While it’s nice to have extra money in the bank, you don’t want to go overboard and overspend.

If you have more money at your disposal, put it to good use. “Make a list of what your priorities are and attack the list and do the highest priority things first,” says Mary McDougall, CFP, wealth management adviser with Merrill Lynch Wealth Management.

Use the extra money in the bank to make additional loan payments. That way, you can potentially bump up your credit score and qualify for better interest rates (which will save you more money in the long run).

Bottom line: Use a cash windfall responsibly. And if you wish you had more money to save, start freelancing or find a side job.

Unsubscribe from marketing emails

If you’re trying to save money, another easy step you can take is going through your inbox and unsubscribing from emails that may tempt you to overspend. Until you gain more self-control, reminders about the next 50 percent off sale or a new buy one, get one free deal won’t be helpful.

There’s nothing wrong with using coupons and taking advantage of special discounts. But constant reminders about promotional events may not leave you with much money in your account. Do yourself a favor and get going on the kind of spring cleaning that will help you rein in your spending and concentrate on saving.

Follow the 24-hour rule

We can all probably admit that we’ve made impulsive purchases in the past. Even when we show up to the store with a shopping list in hand, it may be tempting to splurge on a new designer bag or the latest gadget.

Abiding by the 24-hour rule can prevent you from wasting money and feeling buyer’s regret days later. Particularly when you’re thinking about making a big purchase — like investing in a new laptop or a flat-screen TV — it’s best to leave the store and wait a day before buying the item. For the next 24 hours, think carefully about whether the purchase you’re considering makes sense and whether it fits into your budget or not.

Don’t be afraid to negotiate

As you’re trying to get better about saving money, there’s one mantra that can potentially work in your favor: Ask and you shall receive.

Charged a bank fee you’d rather not pay? Ask the bank if it can waive it for you. While this won’t work in every scenario, it may be something you can try about once a year.

If you have a good financial track record and are a loyal customer, see if you can talk other financial providers — like your credit card company — into lowering your interest rate. Being polite and being prepared can pay off immensely when you’re looking for a fast way to save more money.

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