To save money, you should review your spending and see if there are areas you can cut back on spending.
Make sure your money is in the right place and see if you have an interest-bearing bank account.
If you’re saving for a specific purpose, you should set practical guidelines for your goals.
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Whether you’re starting to save money for an emergency or you’re saving for a mortgage down payment, reviewing your saving habits can be an essential factor in reaching your financial goals.
If you don’t know how to save money fast or have had trouble saving in the past, here are eight tips from financial experts that you can apply.
1. Keep track of your expenses
To start saving money, you first need to look at where your money is going.
“People often have a hard time saving because they only start saving after they’ve done a lot of expenses — after they’ve paid for their mortgage, rent, car, groceries, and so on. They then realize that they may not have anything left. I always suggest that you keep track of your spending because it will help you find money to save,” says Patrina Dixon, board-certified financial advisor and owner of P. Dixon Consulting, LLC.
You can keep track of your monthly expenses using a budgeting app, personal finance software program, or notebook. Some expenses need to be made every month, such as rent or utility bills; these are considered essential expenses. Non-essential expenses are things that you don’t necessarily have to pay every month and that depend on your desires, such as entertainment and dining out.
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Review your spend to see if there are specific categories you can adjust monthly. You could also familiarize yourself with the 50/30/20 budget rule or the 70/20/10 budget rule.
2. Plan your shopping trips
If you’re looking for ways to cut back on your grocery expenses, Dixon suggests planning your purchases ahead of time so you can get everything you need at once. This can also be useful for saving gas if you usually shop frequently or don’t live near supermarkets.
3. Looks for ways to enjoy small pleasures, but at a reduced price
Reducing non-essential expenses doesn’t necessarily mean giving up things that bring you joy. Instead, Dixon recommends reducing the frequency of each purchase.
For example, let’s say you are a gourmet coffee lover. Alternatively, if you buy coffee at a coffee shop every day, you could go there once or twice a week and add more to your savings.
4. Explores different savings account options
High-interest savings accounts, money market accounts, and savings bonds are all interest-bearing bank accounts that you can use to save and grow your money.
High-interest savings accounts are similar to the regular savings accounts you find at traditional banks, but offer more competitive interest rates. Call money accounts differ from high-yield savings accounts and savings bonds because they usually offer the ability to use ATM cards or debit cards. With a savings bond, you commit your money to a specific term and receive a fixed interest rate. Which savings account is best for you probably depends on when you need to access your money.
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Scott Stanley, a certified financial advisor and founder of Pharos Wealth, recommends setting up an automatic transfer from your checking account to a savings account after each paycheck. In this way you can save money without much effort.
5. Make sure you’re using your checking account properly
The purpose of a checking account is to manage day-to-day expenses.
“Most of your direct deposits can go into this account so you can pay your car, your rent, your mortgage, and the various bills,” explains Dixon.
Keep short-term savings for specific goals and emergency funds in a separate account. Stanley also points out that you’ll likely get a higher interest rate with a high-yield savings account than with a checking account.
6. Establishes practical rules for specific goals
Maybe you want to save for a specific financing goal, like a vacation or a new car.
According to Stanley, to make your goal more tangible, you can estimate the expenses for your goal and set a time frame. Then you can review your budget and see how much you can set aside each month to make the goal more achievable.
If you’ve found it difficult to save for your goal, you can lower your expectations by increasing the time frame or choosing something with a more realistic cost.
7. Consider a separate account for a specific goal
If you want to track your progress toward a specific goal, a savings account with financial planning tools is for you. Some high-yield savings accounts allow you to label your goals and track progress. Another option is to open a second savings account to track your progress.
8. Check your budget regularly
Once you’ve stuck to a consistent budget, you should review your progress. If something doesn’t go according to plan, you can change it at any time. You should also make adjustments if you recently received a raise or bonus.
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