Saving isn’t always easy, but it pays off over time. It’s especially useful to have a solid savings foundation to serve as a buffer against a potential recession. Experts put the odds of a recession in 2023 at 64 percent.

“I think the important first step is to think about short-term cash needs,” says Tim Melia, CFP, MBA, founder of Embolden Financial Planning. “If a recession is coming, layoffs may follow (and already are for many), and that makes having an emergency fund very important.”

But how do you save more when money is tight? A majority of Americans say they’ve had to delay financial milestones because of economic conditions, a 2022 Bankrate survey found.

Furthermore, about half (49 percent) of Americans have either less savings or no savings compared to a year ago, according to Bankrate’s recent emergency savings report.

Key money-saving statistics

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  • Over a third (36 percent) of U.S. adults say they have more credit card debt than emergency savings.
  • If faced with an emergency, such as a sudden loss of income, 68 percent of people say they’d be worried they couldn’t cover one month of living expenses.
  • Lack of savings affects younger generations the most, with 85 percent of Generation Zers and 79 percent of millennials saying they’re worried about not having enough emergency savings.
  • The most common financial milestones consumers say they’ve delayed due to the state of the economy are home improvements and renovations (25 percent), buying or leasing a car (21 percent), buying a home (15 percent) and furthering education (10 percent).
  • While 83 percent of adults say they have at least one financial goal for 2023, the two most commonly cited goals are building an emergency fund (41 percent) and paying off credit card debt (31 percent).
  • A majority of adults (71 percent) say they either don’t have a financial strategy in place or need help with adjusting their strategy.

Sources: Bankrate, New York Life

1. Automate your savings

To better organize your savings goals, start by getting a clear picture of your financial situation. Automating your savings is also a smart way to increase your savings.

Putting your savings on autopilot is an easy way to separate savings from spending money. It’s tempting to spend money after it hits your checking account. Automating your savings helps you avoid that temptation.

Two ways to automate your savings are to split up your direct deposit and funnel part of it into a savings account and to set up a recurring transfer from your checking account into a savings account.

Typically, you can take either a percentage of your paycheck or a fixed amount and use direct deposit into a savings account. You can also set an amount to be moved from your checking account into your savings account and then set the frequency of the transfer.

2. Set up an emergency fund

Common advice for emergency funds is to save at least three to six months’ worth of living expenses before you start saving for other goals.

The emergency fund is separate from your other savings. It is a ready source of cash for unexpected expenses and a hedge against tapping a 401(k) or other long-term savings accounts.

With the unemployment rate predicted to rise to 4.6 percent as economic conditions tighten, a sufficiently padded emergency fund can keep you from having to use credit cards or payday loans to pay bills if you lose your job.

The amount to set aside “depends on how long you expect to be looking for work,” says Judith Ward, vice president and senior financial planner with T. Rowe Price in Owings Mills, Maryland. “Households with just one worker or folks who earn commission may want a little more just because of that uncertainty.”

3. Tackle high-interest debt first

Debt is a significant obstacle to reaching financial milestones for many Americans, with 46 percent of credit card holders carrying debt from month to month, according to a recent Bankrate survey. That’s up 7 percentage points from the previous year.

It’s crucial to tackle high-interest debt as quickly as possible, because the interest added each month to the balance is money you instead could be saving.

A popular savings strategy for paying off debt is to zero out the highest-interest debt first. Once you’ve cleared that balance, move on to the debt with the next highest APR. This strategy, called the avalanche method, reduces how much interest you pay over the long run.

If you have multiple high-interest debts, debt consolidation can make it easier to tackle those debts by streamlining them into a single debt.

Bankrate’s Credit Card Payoff Calculator can help you calculate how soon you can pay off a credit card.

4. Save for different goals

Once you have established an emergency fund, separate your next priorities into three savings buckets, which include short-, medium- and long-term goals.

These three different types of goals will each require a somewhat different approach. Still, it’s important to track all three and not sacrifice one type of goal for another. Consider using a savings goal calculator to help track your progress for each.

Save for short-term goals

While there’s no strict definition of what a short-term goal is, these goals generally are those you aim to achieve within a couple of years or less. They tend to be specific and have more clear deadlines.

Some examples of short-term goals include:

  • Car down payment
  • Vacation
  • Apartment rental deposit
  • Home improvements

Savings for short-term goals should be fairly easily accessible. High-yield savings accounts, money market accounts and shorter-term certificates of deposit (CDs) make for the best places to store short-term savings funds.

Best accounts for short-term savings goals
High-yield savings account Earns a better yield than most savings accounts, interest earned can go toward expenses or be reinvested in another savings fund
Money market account Allows for limited transactions each month like a savings account, but with the added benefit of having a debit card or check-writing privileges, making it easier to transact
Certificate of deposit Comes with a specific term (e.g. one year), during which money earns interest but cannot be withdrawn without incurring a penalty fee

Save for medium-range goals

If your dream is to save for a down payment on a home, your child’s college education or your child’s wedding, you’ll need to go beyond belt-tightening and set up midterm savings buckets.

Midterm savings goals tend to take a few years to achieve, though usually not more than about five years. They may be more expensive than short-term goals.

Examples of medium-range goals include:

  • Weddings
  • Down payment for a house
  • Pursuing higher education
  • A child’s college fund
  • Starting a business
  • Paying off a debt

For these goals, you’ll want an account with some liquidity, though the money doesn’t need to be as immediately accessible as with short-term goals. You may also want to take different strategies with the account, such as setting up savings buckets within a single account or laddering CDs.

Best accounts for mid-term savings goals
High-yield savings account Earns a better yield than most savings accounts, interest earned can go toward expenses or be reinvested in another savings fund
Money market account Allows for limited transactions each month like a savings account, but with the added benefit of having a debit card or check-writing privileges, making it easier to transact
Certificate of deposit Comes with a specific term (e.g. five years), during which money earns interest but cannot be withdrawn without incurring a penalty fee. For midterm goals, laddering CDs may also help with paying for something like a down payment on a house.

Save for long-term goals

Long-term goals typically aren’t achieved for at least five years. Retirement is usually the biggest long-term goal for savers. Retirement is perhaps the one savings goal where the time horizon is long enough that you can usually ride out market volatility that’s common when investing in stocks and bonds.

Another long-term savings goal might be paying off a large debt, such as a mortgage. These debts require consistent financial planning over time, and their longer time horizon also means that the way you save for them may change over time as you go through personal life changes. For example, if you get a higher-paying job, you can contribute more to paying off a debt.

Saving for the longer-term often requires looking beyond standard banking products, such as savings deposit accounts and CDs, to earn higher rates of return on your savings.

Best accounts for long-term savings goals
401(k) An employer-sponsored retirement account. Employees contribute a certain amount of their paycheck toward the retirement account, and employers typically match contributions up to a specific percent. Your taxable income is also reduced by the amount you put in the 401(k).
IRA Traditional or Roth IRAs are alternatives to an employer-sponsored retirement plan. While with traditional IRAs you pay taxes upon withdrawal, with a Roth IRA you pay taxes upfront and avoid them later when you need to withdraw the funds.
High-yield savings account While it’s best to keep a retirement fund in a retirement account, you can still save for other long-term goals in a high-yield savings account, which is especially useful for something like paying down debt, since you can easily make withdrawals each month to make regular payments.

5. Use multiple savings accounts

Having more than one savings account is another way to earmark your money for different financial goals. Having multiple savings accounts can help ensure that money meant for one savings goal isn’t being used for another.

If all of your savings are in one account, for example, money meant for your emergency fund might accidentally be used for a vacation.

Having multiple savings accounts also gives you a clearer picture of how you’re progressing toward your different savings goals. If you have $20,000 saved and it’s all in one account, it may be harder to track that you have $5,000 saved for an emergency fund and $15,000 for a home purchase.

And because many banks offer savings accounts that feature the same interest rate, no matter how low your balance, you don’t need to put all your savings in the same account to get the highest yield.

Additional ways to save money

Mobile banking apps have made it easier than ever to manage your finances on the go and keep track of your savings. Many of these apps offer automated savings features, virtual savings envelopes and unique budgeting tools to help you stay on top of your spending.

If you have debt, you may be wondering whether it’s better to pay it off or focus on saving. While there’s no one-size-fits-all answer, there are a few things to consider. High-interest debt, such as credit card debt, can quickly spiral out of control if left unchecked. In these cases, it may make sense to prioritize paying off the debt.

However, if your debt has a lower interest rate, it may be beneficial to balance debt payments with saving for your future, and even make debt payoff a part of your savings plan.

Take some time to research options to help you meet savings goals. That might include reevaluating your budget and finding areas where you can cut back on expenses, or looking into building your investment portfolio.

Finally, you can make saving money more enjoyable by turning it into a game or challenge. For example, the 52-week savings challenge is a popular savings strategy that encourages consumers to save a small amount of money each week for a year, increasing the amount you save gradually over the year. By making saving into a fun challenge, you can stay motivated about making progress toward your financial goals.

As you develop your savings strategies, you can take control of your finances and build a secure future for yourself and your family. Saving money doesn’t necessarily have to be complicated or stressful. With the right strategies and by consistently checking up on your finances, anyone can become a successful saver.

— Bankrate’s Matthew Goldberg contributed to a previous version of this article.