1. Have a Goal
You’re much more likely to change your spending habits if you’re saving with something specific in mind. It could be something as large as a two-week vacation or a down payment on a house—in which case, you can also mentally prepare for what will be more of a savings marathon. If your focus is on (relatively) smaller items like a new laptop or winter coat, consider it more of a sprint—and once you achieve it, you should add something else, big or small, to your wishlist.
2. Track Non-Essential Spending
Regardless of how big your target figure is, you need to see where all of your dollars are going before you can figure out how much you’ll be able to put away. To do this, on the first day of next month, look at what you spent the previous month, putting essentials and non-essentials into different buckets. Essentials are relatively fixed costs (rent, student loans, car payments, groceries), while non-essentials are where you have some wiggle room—think takeout, concert tickets, those afternoon matcha lattes.
Consider what you could forego and commit to socking that money away. For example, can you skip takeout twice a week and cook at home instead? What about dining out? If you’re spending $300 a month on dinners, figure out a way to shave $100. That could mean meeting friends out for drinks instead or steering your crowd to less-expensive restaurants.
As for the actual figure you should be saving, 10% to 20% of your income each month is a good benchmark. You might also adopt the 50-30-20 rule, which calls for 50% of your take-home to go toward essentials; 30% toward non-essentials; and 20% toward savings.
If the thought of closely tracking spending seems too overwhelming, there are a number of apps that will do it for you by linking directly to your credit cards and bank accounts. Depending on the app you choose, you’ll be alerted when you’re in jeopardy of overspending.
3. Get Rid of High-Interest Debt
There’s no one-size-fits-all solution when it comes to high-interest debt, which is most commonly associated with credit card bills. Assuming you have a little money squirreled away in an emergency fund, high-interest debt is the first thing you should tackle before meeting long-term savings goals. On the other hand, if you have no emergency fund to speak of, start there before paying off high-interest debt (a good target is to have at least three months of living expenses saved up).
The benefits of eliminating high-interest debt are twofold: The faster you pay it down, the less it’ll cost you in finance charges. Plus, once the debt is paid off, you can put the amount you were paying each month into savings instead. The best part is you won’t feel the pinch since you’re already accustomed to putting away that money.
4. Make It Automatic
Every month, schedule a recurring amount of money to be transferred regularly from your checking account to a linked savings account. This tactic relieves you of having to remember to make a deposit and reduces the risk of you spending the money before it’s saved. Even better: If you can, arrange to have part of your paycheck directly deposited into a savings account so that it never hits your checking account at all. And if you have access to an employer-sponsored retirement plan, make automatic contributions to that as well.
5. Stick to the 24-Hour Rule
We’d be willing to bet that you buy more things online than at a store—which means you also know how tempting and easy it is to constantly visit your favorite online shop to see the latest inventory. (In fact, that “what’s new” section was put there with people like you in mind.) And even if you’re not actively shopping, it’s hard to think about your budget when a cute pair of shoes follows you around Instagram, practically begging to be bought.
The solution to avoiding impulse buys? Impose a 24-hour limit on hitting the “buy” button after placing items in your cart. Chances are good that by the next day, you’ll decide you don’t need them after all.
6. Don’t Spend “Found Money”
Whether you’re lucky enough to have grandparents who gift you $100 for your birthday or typically receive an annual tax refund, it’s best to put this money toward your savings goals rather than spending it. After all, it wasn’t there before, so you’ll never miss it. This applies to raises, too. Rather than spending more, put the difference into savings (though feel free to buy yourself a small celebratory gift!).
7. Consider Accounts With Tax Benefits
If your goals don’t require needing cash in the next one to three years, look into accounts that offer tax advantages. For longer-term goals like college and retirement, funding accounts like a 529 education plan, Roth IRA, or health savings account will give you tax savings and allow your money to grow over time through investments. (Note that before opening any new accounts, it’s always good to consult with your tax advisor.)
For example, if you choose to invest in a Roth IRA, your contributions are not tax-deductible. However, they grow tax-free and can be withdrawn without being taxed after age 59 and a half. If you’re early in your career, this could be a smart way to save since you’ll likely be in a higher tax bracket when you’re ready to make your withdrawals.
Saving for your child’s future college costs? If you contribute to a 529 plan, account earnings are not subject to federal tax and typically not taxed by the state if spent on educational expenses such as tuition, fees, books, and room and board. (And depending on your state, you may be able to claim a deduction or credit on your state taxes for your contribution, too.)
8. Don’t Go It Alone
Saving money isn’t always easy—if it were, there wouldn’t be so many articles written about it!—but if you know a friend, family member, or co-worker who is also trying to save, pairing up may help motivate you to stick to your plan. You can share progress, commiserate over hurdles, and have someone to lean on for support.