When setting new savings goals for 2023 or simply wondering how to begin saving for the first time, it can be difficult to know where to start.

If you’re nervous about how much money you have saved so far, you aren’t alone — 23 percent of Americans have no emergency savings. However, it’s never too late to get more strategic about how to boost the money you’re able to set aside. Many economists predict a recession in 2023, and you may be interested in doubling down on saving. Setting aside money for your emergency fund, paying down debt to avoid excess funds going toward high interest rates or saving for retirement could help build your savings portfolio. Here’s how to prioritize different savings goals for the year ahead.

Key Bankrate insights on how Americans save

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  • 37% of households earning less than $50,000 annually have no emergency savings, as of June 2022.
  • 40% of millennials (26-41) have at least three months’ expenses saved, as of June 2022.
  • 62% of baby boomers (58-76) have at least three months’ expenses saved, as of June 2022.
  • 71% of households earning $100,000 annually or more have savings to cover three months’ expenses, as of June 2022.
  • 56% of Americans can’t cover an unplanned $1,000 expense (such as a car repair or emergency room bill) using their savings.
  • 53% of Americans have more emergency savings than credit card debt.
  • 50% of Americans prioritize boosting emergency savings over paying down debt.
  • 34% of American households have less emergency savings now than they did before the coronavirus outbreak.
  • 35% of working Americans feel “significantly behind” on their retirement savings.
  • 54% of working adults who contributed the same or less to their retirement savings than last year (2021) say the lack of increase is due to inflation and higher costs of living.
  • 53% of U.S. adults delayed a major financial milestone due to the state of the economy.

1. Start with saving as a habit

If you have to rank a top priority, it should be establishing a habit that will serve you well for your entire life: knowing how to save money. It’s crucial to automate this process as much as possible to avoid the potential for spending any of the cash. You won’t miss what you don’t see. Set up a direct deposit from your paycheck into a dedicated savings account for emergencies and unplanned expenses.

The emergency fund plays a critical role in establishing a healthy personal financial ecosystem. By regularly feeding this stockpile of savings, you’ll have a bigger cushion to absorb an unplanned expense that might otherwise add to your credit card debt.

For example, if you need to make a $2,000 car repair tomorrow to make sure you can commute to work, the ability to pull from your emergency savings fund is crucial. It means you can avoid putting that $2,000 expense on a credit card with a record-high 19 percent interest rate — or more.

Rising interest rates offer a great incentive to get that savings going now. Online savings accounts have returns that haven’t been seen in nearly 15 years — and they are still rising. Also, if you’re at all concerned about the economic uncertainty that may lie ahead, knowing you have some money tucked away in savings (and that you’re adding to it regularly) may help you sleep better at night.

2. Don’t miss any retirement savings perks

As you’re saving for what you don’t want to happen, you should also be setting aside money for what you do want to see on the horizon: the freedom to enjoy your time after your working years are in the rearview mirror. If your employer offers a 401(k) or other tax-advantaged retirement plan, take advantage of this via payroll deduction, and be sure to ask about matching opportunities. At the very least, contribute as much as you can to max out this benefit because it’s something everyone should love: free money.

If you don’t have an employer-sponsored retirement plan — or if you have the ability to save even more — set up automatic transfers from your checking account to an IRA to score some tax benefits from the government for your responsible retirement planning.

3. Aim to save 10-15 percent of your monthly income

Between your emergency savings and your retirement stash, you should aim to save between 10 and 15 percent of your monthly income.

Hitting that mark will be tough until you’ve slashed your high-cost debt to zero, but here’s the simple advice to remember from day one: Don’t put off saving until you pay off your debt entirely. Any delay means you will miss out on valuable compounding growth. And if you delay once, you’re likely to delay again and again. So put something away now — every dollar counts — and regularly revisit your budget to determine if you can save even more. Successful saving is all about the habit — and you want to establish this habit today!

4. Develop a game plan for beating debt

A saving strategy can be a set-it-and-forget-it routine, but tackling your debts will require more energy and attention.

There is no one-size-fits-all approach to getting out of debt, but start by making a list of your debts, how much you owe on each, the monthly payment, the interest rate and who you owe the money to. Having done that, there are two methods of attacking your debt — both rooted in winter weather analogies.

  • The avalanche method: From a purely financial perspective, you will minimize the finance charges by starting with the debt that has the highest interest rate. Dedicate as much money as possible toward it while making the minimum payment on all others until it’s paid off. Then, proceed to the next-highest interest rate. You’re working your way down the interest rate mountain from top to bottom, much like the avalanche.
  • The snowball method: Instead of focusing on the interest rate attached to it, the snowball method focuses on the balance. You’ll start by committing as much money as you can toward the smallest balance you’re carrying while making the minimum payment on your other debts. When the first balance hits zero, move on to the next-smallest balance. The amount you’re contributing toward one debt will snowball as you pay off each balance. Plus, the morale boost you can get from seeing each balance at zero can help inspire you to continue rolling that snowball.

Remember that all debts are not created equal

As you work to free yourself from debt, it’s important to recognize that some types of debt don’t need to be anywhere near the top of your priority list. If you’re paying off a 30-year mortgage with a 3 percent interest rate, there’s no rush. Sure, it might feel good to see your principal get smaller, but with inflation running higher than that low mortgage rate, you’re paying it back with ever-cheaper dollars. Plus, you’re getting a return on that debt by building equity in your home.

Don’t let today’s mistakes be tomorrow’s regrets

Juggling saving for multiple reasons and reducing your debts might feel daunting right now, but doing the work will put you in a position for less stress in the long term. Just ask others who have been in your shoes: Nearly 40 percent of respondents in Bankrate’s Financial Security Poll cited failing to save enough — either for emergencies or retirement — as their biggest financial regret.

Learn more:

  • The study on emergency savings balances was conducted by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Data collection was conducted from June 3 – June 5, 2022, among a sample of 1,025 respondents. The survey was conducted via web (n=995) and telephone (n=30) and administered in English (n=1,000) and Spanish (n=25). The margin of error for total respondents is +/-3.4 percentage points at the 95% confidence level. All SSRS Opinion Panel Omnibus data are weighted to represent the target population of U.S. adults ages 18 or older. Data collection for surveys fielded prior to 2022 were conducted entirely via RDD telephone.

    The study on ability to cover an unplanned expense was conducted for Bankrate via telephone by SSRS on its Omnibus survey platform. The SSRS Omnibus is a national, weekly, dual-frame bilingual telephone survey. Interviews were conducted from Jan. 4-9, 2022, among a sample of 1,004 respondents in English (973) and Spanish (31). Telephone interviews were conducted by landline (203) and cellphone (801, including 603 without a landline phone). The margin of error for total respondents is plus or minus 3.41% at the 95% confidence level. All SSRS Omnibus data are weighted to represent the target population.

    The study on emergency savings compared to credit card debt was conducted for Bankrate via telephone by SSRS on its Forsta Plus (formerly known as Confirmit) platform. The SSRS Omnibus is a national, weekly, dual-frame bilingual telephone survey. Interviews were conducted from January 18 – January 24, 2022 among a sample of 1,002 respondents in English (963) and Spanish (39). Telephone interviews were conducted by landline (217) and cell phone (785, including 602 without a landline phone). The margin of error for total respondents is +/-3.49% at the 95% confidence level. All SSRS Omnibus data are weighted to represent the target population.

    Bankrate.com commissioned YouGov Plc to conduct the survey on retirement savings. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,312 adults, of whom 1,247 are working full-time, part time, or temporarily unemployed and 643 who are contributing either about the same or less to their retirement savings compared to last year. Fieldwork was undertaken between September 21-23, 2022. The survey was carried out online and meets rigorous quality standards. It employed a nonprobability-based sample using quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

    Bankrate.com commissioned YouGov Plc to conduct the survey on delaying financial milestones due to the economy. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,442 adults. Fieldwork was undertaken between October 19-21, 2022. The survey was carried out online and meets rigorous quality standards. It employed a nonprobability-based sample using quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.