How To Save Money

17 Ways, Tips, and Tricks to Grow your Savings

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.

Key topics

  • 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 below. Find more in our related articles.
  • Explore the SuperMoney site to learn more about saving and investing.

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 survey performed by the Federal Reserve found that 44% of respondents couldn’t cover an unexpected expense of $400 without selling something or borrowing money. Further, average Americans saved only 7.6% of their disposable income in 2019.

Even in 2020—when pandemic-driven limits on commerce and travel, stimulus checks, and enhanced unemployment all favored saving money—average Americans still saved only 13.7% of their income. This is in part because the demographics hardest hit by the pandemic had similar expenses and lower incomes. Most of the reduction in spending comes from middle and high-income households, who have increased their savings substantially during the pandemic. This explains the dramatic growth in average savings in 2020 and 2021, even though many households are struggling to get by, never mind increase their savings.

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.

Save money

Emergencies happen

If you don’t have any cash saved, you should start by building an emergency fund. Only one in two adult Americans have enough saved to cover an emergency expense of just $400. In 2019, the median unexpected medical expense was between $1,000 and $1,999 (Federal Reserve). In prior years, median expenses in this range equated to an average expense of nearly $3,000 (Federal Reserve). 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 (CFPB).

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 will have $602,070 by the time you hit 65 (assuming an annual return of 7%). Start at age 35 and contribute $5k every year until you retire at 65 (a total investment of $150k), and you’ll have about $60k less ($540,741). Investing for retirement pays off, especially if you start investing early.

To travel

Not everyone gets the chance to travel and explore our beautiful planet, but just about everyone would love to. 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. To prevent a growing pile of debt, it’s best to start a savings account, so you 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 $10,000 to $35,000 per year. 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.

After reading all this, you may be thinking, “I know saving money would help, but I just can’t right now. I can barely make ends meet without saving.” Not to worry. Below, we’ll cover how much you should save and how to do so even when it’s difficult.

How much should you save?

Most financial experts say that you should save an amount equal 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 $18,000 in savings.

If you can’t work for some reason, this will keep you afloat for 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 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 opportunity to spend less and save more. Consider every money-saving tip you hear, but don’t assume every tip is a good one.

Go beyond strategies to save money: make saving your lifestyle

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. 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. Debt Clock, as of April 2021, interest payments on the national debt are the fourth largest item in the U.S. budget at roughly $400 billion. And this is at rates much lower than any lender will ever offer to you and your family.

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.

Further, 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.

4. Barter

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.

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. 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

An average American family of four spends over $900 per month on groceries (USDA). In addition to comparison shopping, 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 CDC. 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.

11. Unsubscribe

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 skillset.

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.

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?

Savings account

Most people open a savings account with their standard checking account. It allows you to put away money that you want to save and offers a modest interest yield.

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.

A federal regulation limits the number of outgoing transfers to six per billing period. This can help you save money because it makes it more difficult to access your money regularly.

The average savings account annual percentage yield (APY) is 0.06% (FDIC, as of April 2021). 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 (when savings accounts earned 0.09%, money market accounts were averaging 0.15%). Their current APY, however, is 0.06%, the same as savings accounts (FDIC, as of April 2021). These are just the averages, however. If you shop around, you might find a money market account with a higher APY than your savings account options.

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.