16 Simple Ways to Save Money

Whether you’re building up your emergency fund or establishing a nest egg for your children, growing your savings account is often key to meeting your financial goals. However, getting started isn’t always easy.

Even if you’ve been trying to save money for a long time, not being sure how to fall into a healthy new pattern could be getting in your way.

We’ve broken down money-saving tips into two sections: tools and strategies for money management, and ideas for cutting your spending.

Tips for better money management

Stick to a budget

A solid budget is often key to managing your money. Create a budget that includes your monthly income, necessary expenses and savings goals. Make sure your budget reflects set costs like rent, and costs that can go up or down, like utilities or food. Once you have your expenses laid out in front of you, it may be easier to determine the minimum amount you can put toward your savings every month — and where to cut spending so you can save more.

You can also use a budget calculator to help you create a budget that you can realistically stick to. Try to commit to depositing at least a set amount like $100 into your savings account each month, the same way you pay your rent or other bills regularly. Regular monthly deposits, even small ones, help your savings grow steadily.

Focus on your goals

If you try to save money without knowing exactly what you’re saving for, it’s easy to get off track. So take a few minutes to map out your financial priorities based on your goals. You may have short-term, medium-term and long-term savings goals, like a vacation, car or new home.

As you build your savings plan, you can break those goals down into achievable objectives based on your income and expenses. Example goals might look like saving $10,000 a year or putting aside $75 a week —whatever works for you. Goal-based savings plans may be easier to stick to than open-ended ones, because the end goal could motivate you to stick with your plan.

Open a high-interest savings account

A savings account that earns interest allows your savings to grow over time. Interest is the money a bank pays you for holding your funds. You generally earn interest based on a percentage of the balance in your savings account. Interest usually compounds, meaning your interest earnings also accumulate interest – win-win. Over time, this could add up.¹

However, for your savings to grow, they have to remain in your account. To prevent yourself from dipping into your savings, you may want to set up your savings account at a bank different from your primary checking account so it’s not as easy to access the funds. You can also avoid getting a debit card for your savings account.

Automate your savings

Saving money is typically easier when you don’t have to think too hard about it or take extra steps to make it happen. If your employer offers direct deposit, you could route a portion of every paycheck into your savings account. If not, you may be able to initiate automatic transfers through your bank’s website or mobile app.

Calculate how much money from each paycheck you can afford to put in your savings. Whether that’s $30 or $300, watching your savings grow over time without having to take action each month is a great motivator.

Put surprise cash into your savings account

When you receive money unexpectedly—like a tax refund, work bonus or birthday gift—you may feel tempted to splurge. However, those funds could go further if you put them in your savings account.

If you want to treat yourself, consider spending only a portion of the money — half or even a quarter — and saving the rest. That way, you can enjoy a nice dinner today and make more progress toward your savings goal. Your future self will thank you.

Pay down debts

While it may seem strange to spend money to increase your savings, high-interest debt could be costing you hundreds of dollars a month. When it comes to credit cards and loans, interest is the price you pay for borrowing money, expressed as a percentage of your balance.

Like interest on savings accounts, interest on debt can compound, so it’s essential to incorporate debt repayment into your budget. While you should try not to abandon your savings goals completely, you may want to prioritize debt repayment to save on interest. Consider strategies like the debt avalanche method, which begins with paying down your highest interest debt, or the snowball method, which begins with paying down your lowest balance.

Invest your savings

While a savings account is a great way to start growing your money, investing some of it could help you work toward long-term savings goals like retirement. If your employer offers a 401K retirement account, that could be a good place to start.

Several types of investing could help you work toward long-term savings goals besides retirement, but it’s important to choose carefully. When choosing investment options, consider how much risk you’re willing to take. While stocks—portions of ownership in a company—can offer the potential for high reward, they can also carry high risk. But stocks aren’t the only option. Bonds, mutual funds, and certificates of deposit (CDs) are also worth considering, and each comes with its own level of risk. For example, bonds are usually less risky than stocks, while mutual funds spread out your investment to help reduce risk.

While you might think investing is only for people with a lot of financial know-how, you don’t have to be an expert to get started. If you’re young or a beginner, you may want a little guidance before you jump in.

Some people choose to use a robo-advisor, a digital tool that uses algorithms to help you find investment options.² You could also open a brokerage account with a brokerage firm or speak with a financial advisor for personalized advice. No matter which route you choose, it’s important to understand the risks involved in each investment so you can make the best decisions for your goals.

Use “round-up” features for card purchases

Even small amounts of money can make a big difference to your savings. Some mobile apps and online banking services can help you save a little money with each purchase by automatically rounding up the amount of the transaction to the nearest dollar and moving the difference into your savings account. So, if you buy a sandwich for $6.50, the transaction will round up to $7.00, with $0.50 automatically going into your savings. While that may seem like pocket change, it's fun and motivating to see it add up over time.

Look for banks that offer sign-up bonuses

Some banks offer new customers hundreds of dollars as incentives to open new savings accounts with them. That money can act as the ideal foundation for your savings. However, you should always do your research to make sure you understand all the fees and features before you open a bank account.

Ways to save money by spending less

Practice the 30-Day Savings Rule

If you struggle with overspending or impulse purchases, you may want to consider the 30-Day Savings Rule. According to the Rule, you should wait 30 days before buying something that piques your interest. Often, after the initial excitement over a potential purchase fade, you may find that you don’t really need the item after all. If you still want the item after 30 days, that’s likely a good sign that it’s worthwhile to you. Otherwise, you could put the money you would have spent on the purchase in your savings account.³

Look for “Buy Nothing” groups

By turning to your community, you may find that you could curb your spending without missing out on the things you want or need. “Buy Nothing” groups are online networks of neighbors sharing items they no longer need or requesting items they want—all with no money exchanged. You may be able to find a local Buy Nothing group on social media, especially if you live in a city.

Cut back on food costs

On average, Americans spend $166 per person dining out each month.⁴ While there’s nothing wrong with enjoying a meal at a restaurant or some takeout every once in a while, the cost of dining out regularly could add up quickly. If you’re dining out three times a week, try cutting back to once a week. You’d be surprised by how much a small change could save you in the long run. Besides, there are plenty of ways to cook on a budget — and maybe you’ll even discover your inner chef.

Say “see you later” to sneaky subscriptions

It’s easy to lose track of all the subscriptions you’re paying for each month. Streaming services, fitness apps, meal kits can add up fast. If you’re not using them regularly, they might be draining your wallet without you even realizing it. To take control of your spending, think about using a subscription tracking service like Rocket Money, Trim by OneMain, or Subby.⁵ These apps connect to the accounts you use to pay your expenses, show you all your active subscriptions in one place, and even help you cancel the ones you no longer need. Cutting out just a few unused services could free up extra cash each month to put toward savings.

Sources:

1. https://www.fdic.gov/consumer-resource-center/chapter-5-compound-interest
   
2. https://www.nerdwallet.com/article/investing/what-is-a-robo-advisor
   
3. https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/how-the-30-day-savings-rule-can-help-you-stop-overspending
   
4. https://www.escoffier.edu/blog/world-food-drink/consumer-dining-trend-statistics/
   
5. https://www.bankrate.com/personal-finance/best-apps-to-manage-subscriptions/#trim

This article has been updated since 2021. Melina Duffett and Kim Gallagher contributed to this article.