Whether you’re beginning to put away money for an emergency fund or ready to save for a down payment on a mortgage, reviewing your savings habits can be integral to maintaining your financial goals.
If you’re unsure of how to save money fast or have struggled to save in the past, here are eight tips from financial experts that you can use.
1. Track and evaluate your spending
To start saving money, you first have to look at where your money is going.
“Oftentimes, people find it difficult to save because they try to do that after they take care of a lot of spending — after they pay their mortgage, rent, car payment, their groceries, etc. They find that they may have nothing left. I always suggest tracking your spending because that helps you identify money that can be saved,” says Patrina Dixon, CFEI and owner of P. Dixon Consulting, LLC.
You can track your monthly expenses on a budgeting app, a personal finance software program, or a notebook. Some expenses will be necessary to cover every month, like rent or utility bills; these are considered essential expenses. Non-essential expenses are things you don’t necessarily need to pay every month and are dependent on your wants, like entertainment and eating out.
Evaluate your spending to see if there are any specific categories where you can make some monthly adjustments. You also might consider learning about the 50/30/20 budget rule or the 70/20/10 budget rule.
2. Plan out shopping trips
If you’re looking for ways to curb your spending on groceries, Dixon suggests planning out shopping trips beforehand to make you get everything you need all at once. It could also be helpful with saving gas if you would normally make frequent grocery trips or don’t live near grocery stores.
3. Look for ways to enjoy small pleasures but at a reduced rate
Reducing non-essential expenses doesn’t necessarily mean you have to eliminate things that bring you joy. Instead, Dixon recommends reducing how frequently you’re making that particular purchase.
For example, let’s say you are a gourmet coffee aficionado. If you buy gourmet coffee from a cafe every day, you could alternatively go once or twice a week and contribute more to your savings.
4. Review different savings account options
High-yield savings accounts, money market accounts, and CDs are all interest-earning bank accounts that can help grow your money.
High-yield savings accounts are similar to regular savings accounts that you’d find at brick-and-mortar banks, but they offer more competitive interest rates. Money market accounts are distinct from high-yield savings accounts and CDs because they usually come with the option of paper checks, ATM cards, or debit cards. With a CD, you’ll lock in money for a specific term and earn a fixed interest rate. The best savings account option for you will likely depend on when you’ll need to access your money.
Scott Stanley, CFP and founder of Pharos Wealth, recommends setting up an automatic transfer from your checking account to a high-yield savings account after each paycheck. That way, you’ll be setting aside some money efficiently.
5. Make sure your checking account is being utilized correctly
The purpose of a checking account is to manage daily expenses.
“The majority of your direct deposits may go into there so that you can pay your car payment, rent, mortgage, whatever the various bills that you need to pay,” explains Dixon.
You’ll want to keep your short-term savings for specific goals and emergency funds in a separate account. Stanley also points out that you’ll like likely get a higher interest rate with a high-yield savings account than a checking account.
6. Set practical guidelines for specific goals
Maybe you want to save for a particular financial goal, like a vacation or new car.
To help make your goal more tangible, Stanley says you can estimate expenses for your goal and set a timeframe. Then, you can review your budget and see how much you can set aside each month to make the goal more tangible.
If you realize that your goal may be challenging to save for, you might consider resetting your expectations by extending your timeline or selecting something with a more practical cost.
7. Consider having a separate account for a specific goal
If you would like to track your progress toward a specific financial goal, you might like a savings account with budgeting tools. Some high-yield savings accounts let you label and track progress for goals. Another option is to open a secondary savings account to track your progress.
8. Routinely review your budget
If you’ve kept up with a consistent budget, check in on your progress. If something doesn’t go to plan, you can always modify it. You’ll also want to make adjustments if you recently received a raise or bonus.
