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Saving money involves making smart decisions and sacrifices. Once you make the commitment to save, or to increase the amount you’re saving, it’s important to know strategies to make your money go further.

Belt-tightening is always a good way to save money, but you can only take it so far because when you’re raising a family, reasons to spend pop up like weeds. And they come in many varieties, such as car repairs, unreimbursed medical bills and unexpected household repairs, to name a few.

The personal savings rate, the amount of income left over after people spend money and pay their taxes, was at 6.5 percent for March 2019 according to the Bureau of Economic Analysis.

But the national savings rate isn’t as important as your personal savings rate. Sen. Elizabeth Warren, D-Mass., and daughter Amelia Warren Tyagi, co-authors of “All Your Worth: The Ultimate Lifetime Money Plan,” advocate this financial formula for success: Spend 50 percent of your paycheck on the “must-haves,” 30 percent on “wants” and use the remaining 20 percent to service debt and save money.

“We’ve grown so accustomed to spending money that it really is time to take a second look at our budgets and start pulling in the reins a little bit,” says certified financial planner Kelly Campbell, CEO at Campbell Wealth Management in Alexandria, Virginia. “What we’ll find out is that a lot of people are able to save a lot more money than they ever thought.”

So how do you squeeze more money out of an already squeezed family budget? It’s a matter of determination and discipline.

How to save for different goals

  1. Take advantage of automatic savings.
  2. Set up an emergency fund.
  3. Tackle high-interest debt first.
  4. Save for short-term goals.
  5. Save for midterm goals.
  6. Save for long-term goals.
  7. Use multiple savings accounts.

Take advantage of automatic savings

One of the best savings strategies is putting your savings on autopilot. It’s easy to spend money soon after it hits your checking account. Automating your savings will help you avoid that temptation altogether.

Two great ways to automate your savings are:

  • Set up a split deposit.
  • Have a recurring transfer from your checking account into a savings account.

Typically, you can choose to have either a percentage of your paycheck or a set amount direct-deposited into a savings account. With a recurring transfer, you can usually set an amount to be moved from your checking account into your savings account and then set the frequency of this transfer.

Set up an emergency fund

Most financial experts recommend that you set aside an emergency fund of three to six months’ worth of living expenses before you start saving for other goals.

While this money technically does not go toward any of your short-, medium- or long-term savings goals, it does act as a deterrent to tapping such important accounts as a 401(k) if you lose your job.

The money also helps prevent your family from getting into deep credit card debt.

If both spouses are working and jobs are secure, you could adjust how much you save for emergencies. But you’ll need to carefully assess your situation.

The amount you need to save “depends on how long you expect to be looking for work,” says certified financial planner Judith Ward, 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.”

Ward also suggests tracking family expenses by adopting a household budget for the best chance of success in meeting your savings goals.

Tackle high-interest debt first

It’s important to pay down high-interest debt as soon as possible because it compounds and grows when it isn’t paid. The interest you’re paying is money that you could be stashing away in your savings.

One of the most effective methods to pay off debt is paying off the highest-interest debt first, known as the avalanche method. Once you’ve zeroed out the balance on the highest APR account, move on to the account with the next highest APR – if applicable. This will save you from paying more interest in the long run.

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

Save for short-term goals

Once you have an emergency fund set up, consider setting up your priorities into three time frames or “savings buckets” — for short-, medium- and long-term goals.

Say you want to go on a family vacation in two years or buy a car next year. Both would be considered short-term goals, so investments kept in these buckets should be liquid, meaning you should have no trouble withdrawing the money when you need it.

At the same time, you may want to earn a little interest on your money.

Start by determining how much money you’ll need and divide by the amount of time you have until you need the money.

For example, if a car costs $10,000 and you want to purchase it one year from now using cash, you’ll need to save about $833 per month, not including taxes and registration fees.

Next, you’ll have to figure out how you’re going to fund this short-term savings bucket.

Keep in mind that with short-term goals, you don’t have the time to ride out market corrections. You don’t want to lose money, if at all possible.

Campbell says your best bet is to play it safe.

“I think the short-term investor — the one-year, two-year, three-year investor — has to be thinking the very short-term monies,” he says. “Savings accounts, CDs, money markets are going to be safe investments.”

Suppose you decide to keep your $10,000 in a high-yield savings account that yields 2 percent annual percentage yield (APY). You would have about $10,200 at the end of the year.

That would give you an extra $200 that you could apply toward registration fees and taxes, or you could reinvest the money and start another short-term bucket.

A couple of things to note about CDs: Your money will be tied up for a period of time, and if you withdraw your money early, you’ll likely incur a penalty that will eat into your interest earnings. No-penalty CDs are an exception, though they generally have a penalties for withdrawals in the first week or so after opening the account. For instance, if you withdrew your total balance within six days after funding your new

PurePoint Financial no-penalty CD, you’d incur a penalty of 181 days of simple interest. A withdrawal during the first six calendar days after opening a six-month, no-penalty CD at Investors eAccess would cost seven days of simple interest.

Save for midterm goals

It’s relatively easy to save money for things like a new phone, clothes or TV. But as price tags rise and time horizons push further into the future, it becomes harder to keep financial goals in perspective.

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

The concept is the same as with short-term goals, but you’ll need the discipline to stick with it longer and may need to invest those buckets differently.

If you’re saving for your child’s college education, consider using a 529 savings plan as the vehicle of choice. These savings plans work much like a 401(k) or IRA where your contributions are invested in mutual funds and other investments.

“There are fees and costs associated with each plan, but I think, hands down, a 529 is the best account to use for saving for college,” Ward says.

Weddings are another large midterm savings goal. If you’re the lucky one who will pay for it, expect the possibility of spending a lot of money.

The average cost of a wedding is about $33,931, according to The Knot’s 2018 Real Weddings Study. Of course, a more frugal wedding can be a joyful event as well, but it’s smart to plan for it nevertheless.

Money market funds, money market accounts, CDs and savings accounts are all good vehicles in which to park cash for a wedding.

If you’re going to fund this savings bucket with a CD, time the maturity date as close to the wedding date as possible. This will prevent you from getting hit with early withdrawal penalties.

With midterm savings buckets, avoid exposure to too much risk. The goal is still to preserve or increase capital.

“I don’t think you want to put that (midterm bucket money) in stock,” says Henry K. “Bud” Hebeler, a financial planning expert.

“If you choose stocks, that should be a very small part of it because that’s really a gamble. You’re pitting yourself against a whole bunch of professionals, and most people don’t do very well at that.”

Save for long-term goals

A retirement account is perhaps the one savings bucket where the time horizon is long enough that you can usually ride out market gyrations.

That all depends, of course, on how long you’ve been investing, how close to retirement you are and what sort of lifestyle you expect in retirement.

Most experts say the only way long-term investors can achieve a comfortable retirement is to invest a certain percentage of their long-term savings bucket in equities.

“For retirement, you still need to believe in the stock market because you’re not going to make enough to outpace inflation otherwise,” Campbell says.

“We’ve gone through some very tough times in the market before, but the market will recover as it has after every other downturn we’ve ever had.”

An easy way to fund your retirement account is by participating in your employer’s retirement plan, which is typically a 401(k), 403(b) or 457 plan, depending on if you work for a private employer, a nonprofit or the government, respectively. Generally, your taxable income will be reduced by the amount you save.  (If your employer doesn’t offer a plan, then look into opening an IRA.)

Hebeler says families should try to save at least 10 percent of their gross income for retirement, if possible, and adults who are single should save even more.

When you’re young, you can allocate a larger percentage of your bucket toward equities of various sizes and types — large, small, domestic and foreign stocks. But as retirement age approaches, you’ll need to do some tweaking and reduce the percentage of equities in your retirement fund to reduce risk.

“You can tweak them by adding a bond fund or other funds,” Hebeler says.

Use multiple savings accounts

Using more than one savings account is a great way to earmark your money for different financial goals. This can help you make sure that money meant for one savings goal isn’t being used on another.

For instance, if your savings is lumped into one savings account, money meant for emergency savings could accidentally be used for a vacation if it’s all viewed as total savings.

Multiple savings accounts can also help you easily see how you’re progressing toward a savings goal. For example, if you have $20,000 saved in one savings account, it may be difficult to visualize that you have $5,000 saved for an emergency fund and $15,000 saved for a home purchase. And because many banks offer savings accounts that feature the same 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.

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