10 Simple Steps on How to Start Saving Money

9 min read
Older couple sitting at counter reviewing finances together

Creating the discipline necessary for saving money on a regular basis is one of the keys to establishing a solid financial future. Whether that means not letting late fees eat away at your bank account, or methodically setting aside a certain amount of money for your next great adventure, saving takes patience and practice. Thankfully, there are some simple ways that can help you take control of your personal finances and start saving money.

How to Start Saving Money in 10 Steps

If you’re ready to start making saving second-nature, check out these easy ways to watch your dollars add up and transform the way you think about saving money for both short-term and long-term goals.

1. Make your due dates work for you

Do you ever find that the timing of your bill due dates, whether it's for your cell phone bill, gym membership or rent, means every month is a juggling act? If too many bills come due all around the same time, occur randomly, or are too spread out, you’re putting yourself at risk of missing (or forgetting) a payment, or not having enough money in your account.

Solving for this is fairly simple: change your due dates so they work for you, not against you. Simply aligning your bill due dates with your paydays could help smooth your monthly cash flow, giving you some breathing room with your monthly budget. Many companies let you make changes to your payment dates on a recurring or a one-time basis. For instance, LendingClub allows you to change your monthly recurring payment by 15 days on either side of your original payment date without a late fee.

2. Set recurring calendar reminders

Life can get hectic and sometimes it’s easy to forget what bill is due on what day. Scrambling to pay a bill at the last minute or forgetting when a payment is due can result in late fees and penalties. So give your memory a rest and set a reminder on your phone or calendar app. Make it for a few days before you actually need to pay the bill to give your payment time to clear—even consider setting two alerts. If you ignore or miss the first one, the second alert will pop up before those late fees do. Now that’s peace of mind.

3. Automate your bill payments

Even better than bill calendar reminders, you can streamline your savings game by setting up monthly automatic payments straight from your checking account. It’s easy. Assuming you’ve aligned your bill due dates with your paydays (ensuring adequate money is available in your account), you can activate auto payments with your payees and never have to think about writing or mailing checks, or initiating manual fund transfers, ever again. For instance, through LendingClub, the option to set up the automatic payment feature is built right into the application process. Not only can automating your bill payments make life more hassle-free, you can say goodbye to late fees (for those bills you choose to automate), saving you money.

4. Put your money to work

Another pain-free way to start saving money is assigning specific goals or “jobs” for your money. Instead of lumping all your money together for “paying bills,” think of categories and aligning with the goals or purposes you have for your money.

  • The first category could be for Fundamentals: rent and utilities, groceries, and transportation.

  • Another second could be for Fun: entertainment, travel, dining out.

  • Then, assign a third category for Future: saving, investing, or emergency cash. This last category covers anything you’re saving up for in the future. Then consider setting up three separate accounts for each.

5. Automatically send a portion of your paycheck to savings

Does your employer support multiple direct deposits? Get ready to become a savings wizard by automatically sending a portion of your paycheck right into your savings account each time you get paid. When you don’t see the money in your checking account, you are less likely to pull it out of your ATM and spend it. And if you can’t do it through your work, setting up a recurring monthly money transfer through your bank is as easy as logging into your online account or visiting your local branch office.

6. After you pay off a recurring bill, put that "payment" into savings

Many of us have a budget item for a monthly car payment or student loan. If you have an ongoing bill that is coming to an end, you can save a bundle quickly by simply pretending you’re still paying that bill—but then paying into your savings account instead. Set up an automatic transfer to a new savings account for the same amount and on the same day. If you managed to pay it before, you can keep doing it. The big difference is, now you’re paying yourself. It’s amazing how much you can save with this one tip!

7. Dig into your employer's 401(k) plan benefits

Many employers not only offer 401(k) retirement savings plans (setting aside pre-tax dollars on your behalf), a good number also match a certain percentage of your own contribution. If your employer makes a matching contribution to its retirement plan, every dollar they add to your account is free money for you. Even if you can’t afford to make the maximum contribution to your employer’s 401(k) plan, try your best to contribute enough to to your retirement account and get as much as your company gives.

8. Ditch the bank account fees

Many banks still charge fees if your account balance dips below a certain minimum on any day of the month. But most financial institutions will waive that fee if you have direct deposits set up (e.g., your paycheck through your employer). If your employer does not offer direct deposit or you’re self-employed, research online banks that don’t charge any fees. If you have a mortgage or auto loan with a bank, that bank may also waive fees for certain types of accounts, or for having more than one account. The Consumer Finance Protection Bureau offers basic information that may help you evaluate a bank’s terms of service.

9. Work with a financial advisor

Many types of financial advisors can help you save money. A tax preparer can make sure you take all legitimate deductions and claim all the credits you’re due. Similarly, an investment advisor can help you identify your long-term financial goals and adopt the right age-appropriate strategies for reaching them, saving you a lot of time and money down the road.

10. Protect your credit

Your credit score determines what interest rates you can get on auto loans, mortgages, credit cards, personal loans, and even refinanced personal loans. By paying your bills on time, making early payments, keeping your debt-to-income ratio in a healthy range, and only taking out credit when you need it, can save hundreds or even thousands of dollars a year by qualifying for the best interest rates when you do need to borrow money next year or in the distant future.

Why It's Important to Start Saving Now

Setting aside savings every month can not only provide a cushion to fall back on when life takes a sudden left turn, it’s also incredibly comforting to know the money is there should you ever need it. Plus, having a money mindset that enables you to plan ahead for college expenses, medical care, and retirement savings means you can celebrate life’s milestones with less anxiety, guilt, or shame about the future.

1. Build a safety net

Setting yourself up with savings of at least a few thousand dollars means you’re more likely to be able to weather an unexpected veterinary bill, expensive car repair, or a few months without a paycheck. Most financial experts recommend keeping three to six months worth of expenses easily accessible. Starting and maintaining a regular savings habit can help you do this, and gives you more options when times are tough—like the choice to not have to go into debt. Without a financial safety net, many people turn to using high-interest credit cards and paying only the minimum amount due which is a difficult cycle to get out of if you’re not careful.

2. Grow your money over time

Thanks to compound interest, a penny saved is more than a penny earned. Money you put into an interest-earning savings account grows over time through compound interest. Start saving money now, and the money you save will go even further for you.

3. Reduce anxiety and stress

Having little or not enough money creates a lot of anxiety for most people. Always fearing that one small “extra” problem, like getting a flat tire, or needing to go to the doctor when you don’t have great insurance coverage, can knock some people off their financial tightrope. That anxiety also makes it harder to spend when spending money would normally make sense. For example, not taking that certification course that could mean a raise or promotion at work. Savings, even if only $500, can alleviate a lot of the stress and worry that comes with not knowing how you’re going to pay if something goes wrong.

4. Build your financial muscle

Maybe you’re doing pretty well right now, covering your expenses, holding no debt, and able to afford your wants as well as your needs. If so, that’s worth celebrating. Though, when times are good, it’s easy to let spending get out of hand and loosen up the reigns on your savings habits. So if you’ve got your finances under control right now, keep it going so that you don’t need to implement painful austerity when the economy tanks, or your personal situation changes. Continue living on less than you take home, as though you're living on one income. Keep saving for a rainy day. Don’t stop monitoring your expenses or searching out new ways to save. This way, when cycles change and you need to scale back, it won’t be as much of a blow to your current standard of living or habits.

Why Many Americans Aren't Saving

According to the Federal Reserve, 40 percent of Americans don’t have $400 saved to cover an emergency. Here are a few reasons why:

1. Living paycheck to paycheck

Many Americans hold jobs that pay just enough to cover bills like rent, food, and gas. After paying for living expenses, there’s not much (if anything) left over for saving anything, let alone for a rainy day. If you want to get off the treadmill and stop living paycheck to paycheck, your first priority is to find ways to bring in additional income. Building an emergency fund, even if you do it slowly, is especially important if there’s no wiggle room in your budget for the unexpected.

2. Too much debt

If your take-home pay leaves you little to no disposable income because most of it is going to creditors—you probably have more debt than you can handle. And saving anything will be next to impossible. Student loans, auto loans, department store credit cards and medical debt can quickly consume any disposable income. Make a plan to pay down overwhelming debt as quickly as possible, starting with high interest rate debt first. You might be able to consolidate high-interest credit card debt, medical bills, or loan balances with a personal loan. Or look into refinancing your auto loan to see about securing a lower interest rate (saving you money), or adjusting the length of your term (lowering your monthly payment).

3. Spending more than earning

Living above your means is a surefire way to eliminate your savings and leave you scraping by from one paycheck to the next. To avoid this trap, create a budget that includes paying yourself first. Cover your needs, including living expenses, debt payments, and retirement savings. Build your emergency fund. Allocate some money for your wants so you don’t feel deprived—but stick to your budget! It's also important to save money for the holidays to avoid overspending or spending with no plan.

4. Lack of financial planning

Many people live without a financial plan. They don’t know how much of their income should be set aside for saving or spending (no budget). They have no clue at what age they want to retire, or how much they will need. They’re not sure how they’ll ever get enough for a down payment on a home, invest for the future, maintain a sustainable standard of living, or make any financial moves at all.

Paralyzed by the fear of making the wrong decision, some people end up taking no action whatsoever. Instead of this, grab a blank sheet of paper and a Sharpie, and create a one-page financial plan with milestones for what you want to achieve and when. Just this one step can relieve the guilt and stress, making many day-to-day financial decisions that much easier.

How To Start Saving Money FAQ

1. What is the trick to saving money?

The biggest trick to saving money is to create a budget and stick to it. Setting up recurring calendar reminders, as well as automating your bill payments can help you manage monthly costs and better understand where your money is going.

2. How much should you save every month?

Everyone's financial situation is different and any amount saved is helpful. However you should strive to save about 20% of your total income each month.

The Bottom Line

Your financial future is up to you—and having a disciplined mindset for saving is your first step. Just remember that getting started is the hardest part. Whatever your situation is today, it can be better tomorrow. Just stay the course, take one step at a time, and don’t ever give up. Even if you’re only able to put just a few of these tips into action, every step you take (no matter how small) is a step in the right direction. And if you think a personal loan could help you pay down debt so you can start saving again, check your rate today with no impact to your credit score.

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