The majority of Americans share the goal of saving more money. In fact, a February 2023 Morning Consult survey found that budgeting, creating an emergency fund, and controlling spending were the top three financial goals of respondents.
Yet, in a recent survey, nearly one-third of respondents said they have less than $100 in their savings accounts.
Saving can be challenging, but by making small changes to your spending and savings habits, you’ll likely find that you can start on the path to achieving your goals.
Set some purchasing rules.
When it comes to shopping, if you don’t have a plan, you can quickly find yourself spending more than you should. And all that unplanned spending can quickly add up and cause you to lose track of your financial goals. As an alternative, set some purchasing rules that apply every single time you want to make a purchase.
Here are some ideas from Scott Nelson, financial services expert and CEO of MoneyNerd Ltd.:
Wait a week and see if you still want it.
Every time you buy something, you have to sell something.
Check charity shops first.
Make your own if you can.
Borrow from someone else.
Wait until it goes on sale.
Start with small savings goals.
While you might not think that putting a little money aside in your savings each month will make a difference, it can.
Remove the emotion from saving.
Nothing makes saving less appealing for some people than thinking about having to save. “For me, successful saving must be rinsed of any drop of emotion,” said Michael D. Brown, financial coach and director of Fresh Results Institute.
“There are very few things in life as volatile, spontaneous, and inherently unreliable as human sentiment or emotion. Therefore, you should never save when you feel like saving,” Brown said.
To counteract having to think about saving, Brown recommends automating it: “There are a number of automatic saving tools you can deploy for this. Most of these tools work as round-up apps. They help you save otherwise dispensable change, rounding up the amounts you spend every day buying or paying for stuff,” Brown said.
Find Out Where Your Money Is Going Besides Bills
If you know you should be able to save but you run out of money every month, it’s time to find out where that money is going.
“Spend a week to a month logging everything you spend,” said Tara A. Goodfellow, managing director of Athena Educational Consultants, Inc. “Many times it’s become a habit, and we don’t even realise the actual expenditure. You might be amazed at what you actually spend on takeout each week. Or how those quick trips multiple times a week to the grocery store add up?”
Monitor your bank accounts.
After you’ve spent time discovering how much you’re spending, don’t just forget about it. Keep tabs on your bank account. Otherwise, your newfound knowledge is worthless, and you could quickly end up in financial hot water.
Review your budget.
Experts recommends reviewing your budget to see where you can cut expenses, especially subscriptions that you can reduce or cancel altogether.
“You don’t have to stop or cancel everything,” Goodfellow said. “Spend time researching less expensive options that still fit within your budget. Think about selling items as well [or] picking up a part-time or remote job if funds are tight.”
Make reviewing your budget a habit to help you stay on track with your savings goals. You can review it monthly or a little less often—whatever works for you.
Start reading a personal finance book.
Maybe you don’t read because you think you don’t have time. But what if you set the bar low and committed to reading just one chapter a month? You may find that you want to carve out even more time to read once you see how much a good personal finance book can help you stay on track with your savings goals.
Start contributing to a 401(k) plan.
Although the thought of putting money into a retirement account may be low on your list of priorities if retirement is decades away, it’s never too early to start making a habit of saving.
“You can get started with 1% effort, or $1 out of every $100 you make,” said Charles H. Thomas III, CFP and founder of Intrepid Eagle Finance. “Sign up for the retirement plan at work and elect for 1% to come out of your paycheck.”
According to Thomas, some retirement plans will let you “auto-escalate” your contributions each year, so the amount you save increases without action from you. But getting started is the most important thing, Thomas said, and “1% is an amount that you’ll barely (or won’t) notice.”
Shift your mindset regarding money.
Examine the way you think about money when considering a purchase, recommends Anthony Serrano, CFP from BML Wealth Management. Once you do, it may become much easier to save.
“Instead of thinking an item is only $50, think about how many hours you would have to work to get that item. Would you go to work for a couple of hours for the lamp you’re about to purchase? Getting back on track to saving is all about having a plan and the discipline to execute that plan,” Serrano said.
Actually Save the Money You End Up Not Spending
Saving money by using coupons or discount shopping apps like Rakuten or Honey is all well and good, but don’t stop there.
“Really save what you save through all the apps, coupons, and rebates you use,” recommends debt and consumer finance expert Tanya Peterson. “Today, the amount of these savings is often displayed on receipts. Take a look after you shop. Then move the amount you saved into a savings account.”