People who save money are better prepared for life’s uncertainties and better equipped to achieve the future they want. But many Americans find it hard to save. In this article, we tell you why you need to start saving, how much you should save, and what things you might want to save for. Then we give you some money-saving tips to help you save as much as possible. We also link you to other SuperMoney articles with even more ways to save money.
The thing about saving money is that it’s always a good idea. It helps you prepare for life’s uncertainties and can enable you to create the future you want. But if you haven’t started saving yet or don’t even know what goals to set, you’re not alone. Many Americans find it hard to save money.
A Federal Reserve survey found that 37% of respondents couldn’t cover an unexpected expense of $400 without selling something or borrowing money (source). And, though financial experts have long recommended saving up an emergency fund sufficient to cover at least three months of expenses, in case of job loss or other emergency, nearly half of U.S. adults haven’t. In fact, the most recently reported savings rate wasn’t even 5%. To be exact, average Americans saved only 3.5% of their disposable income in July 2023 (source).
Just here for some quick money-saving tips?
This article aims to be thorough, telling you not just how to save money, but why and how much you should save. If you’ve just come here looking for some quick money-saving tips, you may jump directly to 17 Ways, tips, and tricks to grow your savings without the preliminaries. A link after the tips will let you jump back to read what follows, if you decide you’re interested.
Saving money can be hard: a real-world illustration
In 2020 — when pandemic-driven restrictions on commerce and travel, stimulus checks, and enhanced unemployment all favored saving money — average Americans’ savings rate did jump, peaking at 33.8% in April. But it dropped rapidly after that, from 24.9% in May to 13.8% in December. Some notable spikes also showed up in 2021 (20% in January, 26.3% in March), as the concluding round of stimulus payments dropped.
Why was the effect so short-lived? Middle- and higher-income households, many of whose jobs permitted remote work throughout the restrictions, increased their savings substantially during the pandemic. Having no need for the stimulus payments to get by, many of these recipients deposited them in full into savings. Large but short-lived spikes in the savings rate were the result. Lower-income households that needed the stimulus to keep afloat continued struggling to get by, and may still be struggling to recover. Increasing their savings may never have entered their minds.
An expert’s perspective
Writing in October 2022, Jefferey Tucker, an economics columnist and president of the Brownstone Institute, confirmed the picture painted above then pointed out a new problem arising from pandemic-era policies. After describing the stimulus-driven fluctuations in the savings rate, Tucker highlighted a savings-relevant consequence many failed to foresee (source, paragraph break removed):
Despite the challenges, you can save
That inflation, of course, makes your existing savings worth less and makes it even harder to add to your savings. But you shouldn’t lose hope. Even now, discipline and planning can enable you to save for a better future. So, if you’re ready to beat the statistics and create a savings plan that works, we’ve got the tools and tips you need. Here are the key reasons saving matters, how much you should save, and how to get started.
A few good reasons to start saving money today
First, let’s take a look at why saving is so important.
If you don’t have any cash saved, you should start by building an emergency fund. More than one in three adult Americans has too little saved to cover an emergency expense of just $400. In 2022, the median unexpected medical expense was between $1,000 and $1,999 (source). Prior years’ medians have varied from this same range (source) to an average expense of nearly $3,000 (source). It’s a good idea to keep about $5,000 on hand for whatever need may arise.
To buy a house
Having the cash for a 20% down payment can save you a small fortune in interest payments and help you avoid paying for private mortgage insurance altogether. To illustrate, a 20% down payment on a $200K home could save you around $12,700 within the first five years of your mortgage (source).
To fund your retirement
Getting a jump-start on your retirement savings can help you to harness the power of compound interest.
For example, if you save $5K per year from age 25 to 35 (a total investment of $50K), you’ll already have $73,918 in your retirement account, assuming an annual return of 7%. If you make no further contributions after that, the same 7% return will give you $562,682 by the time you retire at 65. If, on the other hand, you start at age 35 and contribute $5K every year until you retire at 65 (a total investment of $150K), you’ll have almost $60K less ($505,365), assuming the same 7% annual return.
As you can see, investing for retirement pays off, especially if you start investing early.
Not everyone gets the chance to travel and explore our beautiful planet, but just about everyone would love to. In fact, the U.S. Travel Association has quantified this. According to that organization’s The State of the Travel Industry (April 2023) report (source):
Most people want to take vacations and have specific destinations they hope to see. However, the average cost of a vacation for a family of four is $4,580, according to one widely cited estimate.
To prevent a growing pile of debt, it’s best to start a savings account so that you’ll have cash on hand to fund your travels. Also, it’s best to put off expensive travel until you’ve locked in your other budgeting objectives and are well on the way to achieving your savings goal. In the near term, you should prioritize saving money, investing, and building assets. Great travel memories, even ones worthy of Getty Images, aren’t worth an empty bank account and impoverished retirement.
For peace of mind
Living paycheck to paycheck is stressful. You never want to be down to your last dollar, hoping you don’t run out of gas or worried you won’t be able to afford grocery stores’ food prices. Having a cushion allows you to relax and stay out of survival mode. By making saving money a priority, you can relax a bit, knowing you’ll be able to handle the inevitable bumps in the road.
To fund your child’s education
Paying for a college education can cost $10,662 to $42,162 per year (source). While student loans are available, they can hinder students for several decades after graduation. If you save money for your children’s education, you can help them get the best start in life.
To pay for a wedding
Weddings can be costly. By saving up in advance, couples can avoid starting their new life together in debt.
How much should you save?
As noted above, nearly half of American adults don’t have enough saved to cover three months’ expenses. What’s worse is that three months is the low end of the recommended range. Most financial experts say that you should save an amount equal to from three to six months worth of your expenses (rent, school, credit cards, groceries, gas, etc.). For example, if you pay $3,000 per month for all of your expenses, you should have $9,000–$18,000 in savings.
If you can’t work for some reason, this will keep you afloat for a quarter to half of a year, after which time you’ll be back to work or have found a new source of income.
Additionally, you should have an emergency fund, a retirement plan, and goal-specific savings for things you want (down payment on a home, a vacation, etc.).
Action points for your savings plan
- Target at least $5K in savings for your basic emergency fund.
- Aim at enough savings to cover 3–6 months of your current living expenses.
- Plan large purchases and save for them: college, weddings, a home, travel.
- Pay down and pay off debt.
- Take advantage of every opportunities to spend less and save more. Consider every money-saving tip you hear, but don’t assume every tip is a good one.
17 ways, tips, and tricks to grow your savings
Saving money isn’t just about strategies. It’s about lifestyle. To consistently spend less and save more, you need to change your lifestyle.
A hermit’s austere lifestyle of self-denial could certainly save you money. Even the hipster lifestyle has its frugal aspects. But what if you want to save money without giving up all forms of entertainment or becoming a vegan hipster? Can you and your family spend less and save more with less radical changes? Are there some easier ways to save money?
Yes, you can. And yes, there are. Here are 17 cash-saving tips for making saving your lifestyle:
1. Get rid of credit card debt
The first step toward saving more is to owe less. It’s hard to save if just avoiding default means paying out a big chunk of your income every month. Our own U.S. government provides a great illustration of just how demanding debt payments can be. According to the U.S. National Debt Clock, as of September 2023, interest payments on the national debt are the fourth largest item in the U.S. budget at roughly $706 billion (source). And this is at rates lower than those you and your family will have to pay if you’ve borrowed money.
Now, opinions differ on the best way to reduce your debt. Two popular approaches are these:
Approach 1: Pay off small debts first
A newer approach encourages the “snowball” method. With this approach, you start by paying off your smallest debts, moving from smaller to larger until you finally get everything paid off. The advantage of this method is that it gives you the feeling that you’re making real progress because you’re actually getting some debts completely paid off early in the process. This feeling that you can pay off your debts can make a big difference.
Approach 2: Pay off high-interest debts first
An older approach urges you to focus on interest rates. Instead of focusing on the size of each debt and trying to pay off the smallest ones first, you max out how much you’re paying toward your highest-interest debt (like credit card debt), paying only minimums toward other debts until the high-interest one’s been paid. The advantage of this method is that it should minimize your total cost.
Either of these approaches could be a good way to get yourself ready to start saving money. Both could improve your credit score and steadily increase the cash you have available for other things.
By the way, if the money you owe includes student loans, here’s something to keep in mind: If you’re on an income-based repayment plan where your remaining balance after a set number of years of timely payments will be forgiven, you’ll want to take that into account when deciding which debts to pay off first.
2. Track your spending
The second step on the road to saving money is to become aware of your spending habits. You can do so by reviewing your banking statements, having a mobile app track you, or (if you’re old school) tracking your expenses manually.
Take note of where your money goes and separate the necessities from the optional expenses.
For example, if you have to pay a $700 car payment or lose your only transportation, that’s a necessity. On the other hand, if you buy a coffee from Starbucks every morning and eat lunch out a few times per week, those expenses are optional.
By becoming completely aware of what you spend, you can take control. Pay the necessities and decide how you can reduce your other spending to enable you to save more.
You should also keep track of how you spend. Do you use cash or credit cards? If you use credit cards, do you find yourself making purchases you probably wouldn’t make if you had to spend cash? Ballooning credit card debt and a plunging credit score can sometimes owe mainly to the fact that credit cards are just so easy to use. If unthinking credit card spending keeps busting your budget, you might be someone who just has to stop carrying the cards altogether.
3. Negotiate down your bills
Some bills are non-negotiable, but many have some wiggle room.
For example, when it comes to your electricity bill, contact your provider to determine if they offer any discounts or payment plans. Some will look at your bills from the past year and let you pay the average amount monthly, so you don’t have huge bills during summers or winters.
As well, government programs may be available to you depending on where you live and how much money you make per year.
Additionally, cable, phone, and Internet providers will often lower your bill or offer you a promotion to keep your business. You may also qualify for a discount based on your place of work or due to an association you are part of. It doesn’t hurt to call and ask.
Remember, the companies are competing against other providers for your business in most cases.
A variation on the theme of negotiating is using barter instead of money to acquire goods and services. This just means trading property you have but don’t want to keep or trading services you have the skills to perform for someone else’s goods or services. This traditional way of exchanging goods and services is older than currency and has never gone completely out of style. You can learn more about it, what it involves, and how to do it safely in our article about it.
5. Comparison shop
Another way to save money is to comparison shop. Look around for the items or services you want and compare offerings from multiple sellers or providers. This includes everything from your gas and groceries to your lawn service, manicures, auto loan, and credit cards. And if the items you’re looking for are the sort that might show up at thrift stores, make sure you check there too.
For groceries, consider utilizing coupon websites to save and opt for the store that can offer you the best value. If you’re prone to in-store impulse buying, try preparing a list in advance and sticking to it. If that doesn’t work, consider ordering online. More stores are offering this service all the time, and some even provide free delivery.
For your auto loan, check if your current lender offers you the best interest rate you can get. Shop around to see if refinancing could reduce your monthly car payment or the total you end up paying for your vehicle.
The same goes for student loans, home loans, credit cards, personal loans, etc. Many lenders are out there waiting to offer you a deal, but you will miss it if you don’t look. Read about how to refinance your loans here.
Comparison shopping takes a bit more time and effort but will result in significant savings.
6. Quit Smoking
Medical doctors and money managers agree: if you smoke, you need to quit. A pack-a-day cigarette habit, according to one estimate, can cost you nearly $200 per month (source). And the cost of cigarettes is only the beginning. Continuing to smoke will also mean spending more on healthcare, for example. That’s all money you could be using to pay down debt, depositing into your bank account, or investing.
7. Spend less on groceries
Consumer spending on food rose 12.7% in 2022 (source). Meanwhile, the monthly food cost for each member of a family following one of the USDA’s food plans spans a broad range. At the low end, $155.50 reflects the cost for a one-year-old child on the low-cost plan. At the high end, $456.80 reflects the cost for an age 19–50 male on the liberal plan. If we take a “sample” family of four with a male and female adult in the 19–50 age range and two children, one 10 years old (either a boy or girl) and one 13 (boy), their monthly cost on the moderate-cost USDA plan would be $456.80 (adult male) plus $404.90 (adult female) plus $330.50 (10 year old) plus $371.50 (13 year old boy), or $1,563.70. (Source.) That’s $18,764.40 per year.
Clearly, spending on groceries can be a significant expense. How can you trim this? In addition to comparison shopping (number 5), one way to save money on groceries is to become more consciously aware of what you’re buying. If you’re serious about saving money, spontaneous snack purchases and other unplanned grocery spending need to stop. Even if precisely planning all your meals isn’t for you, you can at least make sure you only purchase groceries you’ve decided you need before going to the store (or visiting the store’s website). Stick to your list, and make sure you don’t add to it anything you already have in your pantry or freezer.
8. Eat less, and eat at home more
These are two of 20 money-saving life hacks you can read about in another SuperMoney article. When you eat out, make a point of mentally calculating roughly how much it would cost to prepare the same meal at home. If this doesn’t motivate you to eat at home more often, nothing will. If saving more money is a priority for you and your family, you’ll start eating out less and preparing more meals at home.
And while you’re at it, consider smaller portions or less frequent meals. Nearly three-quarters of Americans are overweight, according to the Centers for Disease Control and Prevention (source). Unless you and your family are all in the not-overweight minority, you can probably eat a bit less with no ill effects, improving your health as you save money. But be sure to discuss any dietary changes with your healthcare provider before proceeding!
9. When you cut the cord, don’t overcompensate with subscriptions to streaming services
Cable TV is a big expense that many people are wisely letting go to save money. Prudent savers are cutting the cord in greater numbers all the time. Not every cord cutter is a prudent saver, however. If you subscribe to just Netflix or Disney+ or one of the other streaming services, you’ll save money over cable. If you subscribe to every streaming service that has a show you like, on the other hand, you’re better off sticking with cable. Before you do anything, consider creating an entertainment budget to guide your choices. Budgeting the amount you’ll permit yourself to spend in advance should make it easier for you to resist the urge to get just one more subscription.
10. Don’t buy books or media if you don’t have to
The World Economic Forum sparked some controversy a while back with its claim that by 2030 “You’ll own nothing, and you’ll be happy.” Although some of us do need to own stuff to feel happy (hence the controversy), you should at least consider borrowing rather than buying some of the time. Public libraries lend out physical and electronic books, as well as other media, free of charge. Before visiting your favorite bookseller or e-book site, ask yourself if you really need to own the item you’re getting ready to purchase. If the answer’s no, see if you can borrow the item from the library. And if your library doesn’t have the item you’re looking for, be sure to ask about an interlibrary loan.
Newspapers and magazines can be a great way to stay informed, and that investment newsletter you subscribe to might really make you a better investor. But in this day of electronic media, it’s easier than ever to find yourself with multiple subscriptions you never or rarely use. (Electronic subscriptions don’t pile up around the house.) If you’re not reading a significant portion of every issue of a newspaper or magazine, cancel it.
12. Turn spending autopilot OFF
While you’re at it, make sure you’re not set up to automatically renew subscriptions to anything or to get any products shipped to you automatically. Essential to any effective money-saving strategy is conscious awareness of your spending. Automated spending, no matter what a convenience and time-saver it seems, works against this. Whenever you spend money, make sure you’re consciously choosing to do so. Automatic renewals and deliveries do the opposite.
13. Turn saving autopilot ON
At the same time you’re eliminating automatic spending, start making saving automatic. Take advantage of opportunities to make yourself save without having to think about it. If you get paid by direct deposit, you probably have the option to direct portions of that deposit directly into savings. Your bank may also offer automatic savings plans that will transfer a set amount to your savings or money market account from your checking account every month. Investment accounts typically offer similar options for making automatic monthly transfers from your bank account.
14. Think globally, vacation locally
It may be true that “travel broadens the mind,” but it also thins the pocketbook. Traveling to far-off, exotic places may fulfill many dreams and figure in many bucket lists, but it can also be a savings killer. Before spending your entire travel budget for several years on a single trip, consider exploring what your local area has to offer. You may find that the classic “staycation” offers you and your family members more enjoyment and satisfaction than expected. At the same time, it helps you keep on track to meet your savings goals.
15. The employer match of zero is zero
If you work for an employer with a 401(k) retirement plan that offers employer matching of a percentage of your contributions, you should participate. Employer matching means free money, and better ways to build wealth aren’t common. Whatever your goal for retirement, 401(k) employer matching is something you should take advantage of if you can.
16. Increase your income
Lastly, earning more money can help you to save more.
Think about the ways you can maximize your income at your current job. Is there a promotion you can work toward that pays better? Could you work overtime? Pick up hours? Seek additional training to increase your commissions?
If your income is maxed out at your current job, could you pick up a side gig in your spare time? Many opportunities exist, from becoming an Uber or Lyft driver to teaching English online or writing web copy for businesses. Browse around to see if anything suits your skill set.
17. Keep looking for more ways to save
These tips are just a sampling. There are as many ways to save money as to spend it. Maybe you’ll cut energy costs by purchasing a more efficient water heater. Or save on your cell phone plan by getting one less line. Or reduce your utility bills with better insulation and more efficient light bulbs. Ways to save money and better ways to budget may be too numerous to count, and even small changes can make a big difference.
Saving tips by interval: daily, monthly, yearly
Here’s a breakdown of some of the ways to save we’ve just reviewed, along with some new ones, categorized by how often you can typically take advantage of them. Some of these could be done at more than one interval, such as both daily and monthly, so don’t assume a tip listed under one interval couldn’t fit just as well into another. More than likely, reviewing this list will make you think of other ways to save not even listed.
|Save money daily||Save money monthly||Save money yearly|
|Skip the coffee shop & make coffee at home||Pay more than your credit card minimum||Take advantage of employer 401(k) matching|
|Take your lunch to work||Pay your credit card in full if you can||Quit smoking|
|Track your spending||Review your spending for ways to save||Don’t buy books & media you can borrow|
|Make breakfasts & dinners at home||Negotiate down your monthly bills||Open an IRA if eligible & max-out contributions|
|Skip a meal now & then||Stop little-used subscriptions||If you get a tax refund, deposit it in savings or invest it|
|Disable phone notifications to avoid impulse buying||Automate savings/investing deposits from your paycheck||Replace your vacation with a staycation|
|Make & follow a budget||Review & improve your budget regularly||Keep learning about personal finance & investing with SuperMoney|
|Barter instead of buy||Use apps & coupons to save on groceries||Keep that old car running just one more year|
|Comparison shop||Limit your streaming subscriptions||Consider tax prep to avoid overpaying|
Make your savings a priority
Once you start saving, you’ll face a new question. Where do you keep the money so that you get the most out of it while still enjoying the security of FDIC insurance of your deposits?
These accounts don’t usually require a high minimum deposit. You can open one even if you don’t have much cash to deposit.
Banking establishments also often make it difficult to withdraw or transfer money out of the account frequently. Most don’t provide you with a debit card or check-writing abilities, so you can only get money in person or by requesting an electronic transfer.
The average savings account annual percentage yield (APY) is 0.45% as of September 2023 (source). However, many online institutions offer interest rates that are around 10 times higher. Choosing the one with the best APY can mean earning significantly more, so be sure to comparison shop.
Money market account
Another option is a money market account. Like a savings account, it is designed to be a place where you deposit money and leave it to grow over time. However, money market accounts often come with a debit card, and they typically require higher minimum deposits.
While subject to the same limit as savings accounts, withdrawing and transferring money at ATMs is not restricted. This grants you easier access to your money than most savings accounts.
Historically, money market accounts have had higher APYs than savings accounts. Though this was briefly not the case when all rates were very low, the historical norm has been reestablished. As of September 2023, the average Money Market APY is 0.65%, beating the savings account average (source). These are just the averages, however. As with savings accounts, it pays to shop around for the best rates.
Certificates of Deposit
A third option is certificates of deposit (CDs). CDs are also designed for you to deposit money and leave it to grow. However, CDs require that you deposit a certain amount and leave the money in the account for a specific amount of time (one month to five years).
The interest you will earn is a fixed interest rate determined by how long you leave the money in the account. The longer you leave the money in the account, the better your rate and the more you will earn.
The drawback with this option for some will be that you can’t access the money without paying an early withdrawal penalty. That can be an advantage, however, since it encourages you to leave the money to grow.
These three options can help you save and earn at the same time. The right fit for you will depend on the amount you want to deposit and the level of accessibility you want.
Save money and safeguard your future
Saving money can help you to gain financial security and peace of mind. It enables you to rest assured that you can stand on your own two feet when unexpected expenses pop up. Further, you can plan to obtain the future you desire. That can involve a new car, homeownership, a comfortable retirement, or a college education for your son or daughter.
Learn more tips and tricks below and browse our collection of money-saving tools.
- Set your savings goals: How much do you need to save?
- Reduce or eliminate debt: What savings opportunities are you missing because of debt?
- Choose your savings vehicle: Money Market account? Savings? Certificates of Deposit (CD)?
- Adopt a savings-centered lifestyle: Review our tips above. Find more in our related articles. Think up new ways to save on your own.
- Explore the SuperMoney site to learn more about saving and investing.
View Article Sources
- 8 Prediction for the World in 2030 (Video) — World Economics Forum on X
- Economic News Release: Consumer Expenditures — 2022 — Bureau of Labor Statistics
- Economic Well-Being of U.S. Households in 2022 (May 2023) — Federal Reserve Board of Governors
- How To Decide How Much To Spend on Your Down Payment — Consumer Financial Protection Bureau
- How To Reduce Your Debt — Consumer Financial Protection Bureau
- Interest Calculator — Calculator.net
- Money Market National Deposit Rates (MMNDR) — Federal Reserve Bank of St. Louis
- National Deposit Rates: 12-Month CD (NDR12MCD) — Federal Reserve Bank of St. Louis
- National Deposit Rates: Interest Checking (ICNDR) — Federal Reserve Bank of St. Louis
- National Deposit Rates: Savings (SNDR) — Federal Reserve Bank of St. Louis
- National Rates and Rate Caps — Federal Deposit Insurance Corporation
- Obesity and Overweight — Centers for Disease Control and Prevention
- Official USDA Food Plans: Cost of Food at Home at Three Levels, U.S. Average, August 2023 — U.S. Department of Agriculture
- Personal Saving (PMSAVE) — Federal Reserve Bank of St. Louis
- Personal Saving Rate — Bureau of Economic Analysis
- Personal Saving Rate (PSAVERT) — Federal Reserve Bank of St. Louis
- Report on the Economic Well-Being of U.S. Households in 2015 (May 2016) — Federal Reserve Board of Governors
- Report on the Economic Well-Being of U.S. Households in 2019, Featuring Supplemental Data from April 2020 (May 2020) — Federal Reserve Board of Governors
- See the Average College Tuition in 2023–2024 — U.S. News & World Report
- The Economic Disaster of the Pandemic Response — Brownstone Institute
- The State of the Travel Industry (April 2023) — U.S. Travel Association
- Tobacco: What Is It Costing You? — Internet Archive
During our most recent update of this post, we found that this American Cancer Society document would not load from the original URL, though browsers did find a document and attempt to load it. We’ve therefore linked to an archived copy.
- U.S. National Debt Clock — USDebtClock.org
- What Is Intermittent Fasting? Does It Have Health Benefits? — Mayo Clinic
In addition to these external sources, readers may find multiple links to helpful SuperMoney pages in the article above.
Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.