Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. This step-by-step guide to money-saving habits can help you develop a realistic savings plan.
1. Recording your expenses:
2. Make List of Budget
Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. Find more information about creating a budget.
3, Plan Your Money saving
Now that you’ve made a budget, create a savings category within it. Try to put away 10–15 percent of your income as savings. If your expenses are so high that you can’t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out. We’ve put together ideas for saving money every day as well as cutting back on your fixed monthly expenses.
Tip: Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.
4. Always Title What you are saving for
One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—anything from a down payment for a house to a vacation—then figure out how long it might take you to save for it. If you need help figuring out a time frame, try Bank of America’s savings goal calculator.
Here are some examples of short- and long-term goals:
Short-term (1–3 years)
Emergency fund (3–9 months of living expenses, just in case)
Vacation Down payment for a car Long-term (4+ years)
Retirement
Your child’s education
Down payment on a home or a remodeling project
If you’re saving for retirement or your child’s education, consider putting that money into an investment account such as an IRA or a 529 plan.
While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance.
5. Set Priority
After your expenses and income, your goals are likely to have the biggest impact on how you save money. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Prioritizing goals can give you a clear idea of where to start saving. For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one.
6. Use the right Tools
If you’re saving for short-term goals, consider using these FDIC-insured deposit accounts: Savings account Certificate of deposit (CD), which locks in your money at a specific interest rate for a specific period of time For long-term goals consider: FDIC-insured individual retirement accounts (IRAs), which are tax-efficient savings accounts Securities such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer. Remember that securities, such as stocks and mutual funds, are not insured by the FDIC, are not deposits or other obligations of a bank and are not guaranteed by a bank, and are subject to investment risks, including the possible loss of principal investment.
7. Monitor your Savings
Check your progress every month. Not only will this help you stick to your personal savings plan but it also helps you identify and fix problems quickly. These simple ways to save money may even inspire you to save more and hit your goals faster.
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