How to start saving money

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There’s no question that saving money can be hard. But every dollar you can stash away is well worth it.

Only 40 percent of Americans have more than $1,000 in the bank to cover an unexpected expense. Still, saving is important because without an emergency fund you’ll be forced to use credit cards that charge high interest rates to pay for unexpected expenses like a car repair or emergency room visit.

The good news? There are a number of ways to start saving money and you can get started today. Every little bit that you can set aside helps. Every deposit, no matter the size, will get you closer to your goal, whether you’re trying to build an emergency fund or save for a fun weekend getaway or a new couch for your living room.

1. Open a savings account

The first step on most people’s saving journey should be opening a savings account. Savings accounts keep your money safe and can help you earn interest on the amount that you deposit.

Almost every bank and credit union offer savings accounts. If you already have a checking account, you can ask your bank to see if it offers a savings account that works for you. Keep an eye out for things like monthly maintenance fees, which can eat into your balance over time. And if you don’t have a lot of spare cash, seek out a savings account that requires a low—or zero—minimum opening deposit.

If you don’t mind going outside your current bank, an online savings account can be a great choice, too. Online banks rarely charge monthly account fees and tend to pay much higher interest rates than brick-and-mortar banks. This can help accelerate your savings growth.

2. Keep your savings out of sight and out of mind

One advantage of using a different bank for your savings is that it keeps your money out of sight, and out of mind. If you build up a good balance in your savings account, it can be tempting to splurge on something fun and exciting, which leaves you back where you started with little to no savings. So, it might be better not to have your savings account at your nearby regular bank.

Putting your savings on autopilot is another smart move. Set up automatic transfers to make saving even easier. If you set up an automatic transfer to move $1, $5, or $10 a week or month from your checking account to your savings account, you don’t even have to think about setting aside extra cash or going to the bank to move some of your money into savings.

Savings apps like Dobot and Digit are a great way to automate your savings. They let you set specific goals, make automatic transfers from your checking account to your savings account regularly, and track your progress.

3. Small steps are still progress

Building up your savings is a process. You can’t expect to start saving today and to have a full bank account the next week. If you have unrealistic expectations for your progress, it’s easy to get demoralized.

Remember that small steps are progress and take time to celebrate the small victories. If you’re saving $10 every week and can save $20 one week, celebrate your extra savings. And if you’re taking part in a saving challenge, like the popular 52-Week Money Challenge, celebrate your success each week.

One piece of advice: If you miss your savings target, don’t beat yourself up about it. Just make sure you try your best to reach your goal. It’s important that you don’t get discouraged and keep trying to save.

4. Make saving a priority

If you want to build up your savings, it’s important that saving becomes a priority for you, says Akeiva Thomas, CFP, a wealth planning associate at Ballentine Partners.  “Set yourself up for success by truly prioritizing and committing to your savings goal,” she says.

However, “prioritizing is easier said than done,” Thomas adds. “In many cases, it requires going against the herd and actively dismantling the mindsets, habits and patterns that can block your progress.”

If you’re used to spending every dollar you have, it can take time before you can adapt your thinking and change your behavior to make saving some of your money a habit.

5. Take advantage of windfalls to grow your savings

One important part of savings is taking advantage of windfalls. You might inherit money, win a raffle or lottery scratch-off, get a $20 bill as a gift, or get some other kind of windfall when you least expect to. It can be tempting to spend your newfound money on something fun to reward yourself.

While it’s important to treat yourself once in a while, a windfall can accelerate your savings far beyond what you can save with your normal budget. If you really feel tempted to spend some of your windfall, consider splitting it 50/50 between spending and saving, or preferably devote 75 percent of your windfall to your savings account.

The more you can set aside, the faster you’ll be able to accumulate a sizable balance in your savings account.

6. Get a side hustle

Side hustles, or some kind of part-time gig, are incredibly popular these days with people who want to earn some extra money. Almost half of Americans say they earn extra money on the side. Even if it only pays a little bit, a side hustle can help you build up an emergency fund or help you save toward a goal or a rare splurge.

Side hustles don’t have to be all about drudgery, either. You can find one that you enjoy. If you’re earning enough from your regular job to make ends meet, every dollar you earn from your side hustle can go into savings, with the rare splurge on something fun. If you like sports, consider refereeing for your local soccer or baseball league. If you’re a crafter, you can sell the things you make on Etsy. Animal lovers can walk dogs or pet sit for people going on vacation. Writers can start a blog or sell ebooks.

Whatever it is that you want to do in your spare time, there’s a good chance you can turn it into a fun side hustle that lets you bring in some extra money that you can save. Just make sure you keep some of your time for relaxing. Burning yourself out isn’t a good thing and it can make it very tempting to spend money to alleviate the burnout.

Bottom line

Saving is hard but important. Even if your budget is stretched thin every dollar that you can spare can help you build an emergency fund or save for a special purchase.

Opening a savings account is a great start, but you have to take the time to set money aside. Automatic transfers and keeping your savings out of sight and out of mind can make it easier. There’s no better time to start than now. So, set a saving goal for yourself and try your best to reach it.

Featured image by etonastenka of Shutterstock.

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