How to Get into the Habit of Saving More Money

Making a focused effort is key if saving doesn't come naturally

Woman working at kitchen table with laptop and calculator
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Most people want to save more money, but without a solid plan and good habits, it’s easy to fall short of your financial goals. Life interferes, money slips through the cracks, and before you know it, the end of the month has arrived and you’re no closer to saving than when you started.

Here’s how to go about establishing habits of saving more money so that it becomes second nature. By focusing on small wins, making automatic deposits, and resisting the temptation to “borrow” from yourself, you can get on the path to financial stability.

Celebrate Even the Small Savings

When you’re just starting out with saving, it’s easy to discount your efforts. Even if you’re only able to set aside $5, focus on the fact that you’re saving something. Not many people start their financial journey with thousands of dollars in the bank, and $5 is more than $0.

Give yourself permission to start slow. If you save $5 every week, you’ll have $260 at the end of the year. As long as you’re moving in the right direction, you’re focused on what really matters: establishing the habit of saving.

Once you gain momentum, you can take a look at your budget and figure out saving opportunities that you may not immediately recognize.

If you’re not sure where to start, or how much you should be putting into your savings account, here’s a good method: ​start by saving 1 percent of your monthly income and increasing that by 1 percent each month. So if you earn $3,000 per month, save $30 the first month, save $60 the second month, save $90 the third month, and so on.

Set Up Automatic Transfers

Setting up automatic transfers from your checking account to your savings account can get you started saving money without thinking about it. This assumes you have a budget in place and know your expenses and your savings goals.

If your checking and savings accounts are at the same bank, this will be easier to configure. You simply open the number of savings accounts you need for your different goals, and then set up automatic monthly (or weekly) transfers from your checking to your savings.

Using the same bank for checking and savings also may allow you to divide your direct deposited paycheck. You can direct most of your paycheck to your checking account and deposit a percentage or a set dollar amount into your savings. You’re much less likely to miss that amount if it comes right from your paycheck.

If your checking account is at a different bank, then you might need to confirm the account as an external account. It’s not that much of a hassle, and the wait is worth it. Sometimes having separate banks for each account is a good thing, because the more steps you have to take to access your savings account, the less tempted you’ll be to raid it in a moment of weakness.

Savings Account Tips and Tricks

For some people, the best way to save is to have short- and long-term goals. Ideally, you’ll have three months’ salary set aside for emergency purchases. “Emergency” means fixing your hot water heater when it suddenly dies, not splurging on that new set of golf clubs.

Resist the temptation to dip into your emergency fund, and treat your savings accounts as off-limits. Yes, you can have more than one savings account, and it’s a great idea to do so. You can budget part of your income into short-term savings for specific goals like a vacation, and long-term savings for big-picture items like a down payment on a new home.

Be disciplined about not making withdrawals unless it’s a life-or-death situation. Some banks apply penalty fees if you go over a certain number of withdrawals from a savings account in a given time period, a good disincentive to withdraw funds.

While some savings accounts come with debit cards for easy withdrawals, this is exactly the kind of thing you should avoid. Either decline the card, keep it in a place where it’s not readily available, or cut it up. You want to make it harder, not easier, to make withdrawals from your savings.

Question All of Your Purchases

Another great money-saving habit is to start questioning all of your purchases. Make sure your purchases are in line with what you want in life. Do you want packages of Oreos more than a vacation? No? Then it might be time to cut back on the junk food in favor of saving money on your grocery bill—money that can be transferred toward your vacation fund.

The point is to stop buying things thoughtlessly. Ask yourself if your spending is bringing you any happiness or bringing you closer to your goals. If it’s not a necessity (like food, water, and shelter), and it’s not making you any happier or helping you, cut it.

How do you determine what you should and shouldn't buy? Here are a few hacks:

  • Determine how many hours of work it will take you to afford something. Example: you earn $25 an hour, and you want to buy a $200 purse. Is that purse worth eight hours of your life—one full day of work?
  • Set a monetary threshold for purchases after which you need 24 hours to think about it. Example: If something costs more than $50, you need a day to think about it. After 24 hours, you might find you don’t really need that purse as much as you thought.
  • A quick gut-check can help you avoid buyer’s remorse, too. Example: Ask yourself if you want the $200 purse more than your biggest savings goal. If not, walk away.

    Again, the goal is simple: become a mindful consumer instead of a mindless one, and you’ll likely discover saving is easier than you thought.

    Budget for Your Savings

    One common reason so many people make it to the end of the month and wonder where all their money went is that they don’t account for any extra expenditures.

    Don’t make this mistake. Instead, take a look at your expenses and see if you’re spending more or less than your projected amount. You should be keeping track of how much you think you’ll spend during the month, and how much is actually spent. The difference should go into savings.

    If your budget says you should have money left over, and the problem is that you’re spending it before it can be saved, this method will help. Estimate your savings, and work that into your automatic transfers.

    Another budgeting approach is to work backward. Start with your salary, and subtract all your expenses from it. Is anything left? If there is, direct the remainder so that it’s not spent during the month.

    Try the Anti-Budget

    Not all strategies work for everyone, of course; not everyone is a natural saver, and not everyone loves budgets or spreadsheets.

    If you know you'll get bored or tired of meticulously tracking your expenditures, there’s another method you might want to try, known as the anti-budget. You simply pull your savings from the top and spend the rest. There are no budget categories to keep track of.

    All you need to know is how much you can afford to save each month. And obviously, you shouldn’t try to save so much that your checking account is $0 before you can pay the bills.

    Once you have that number (a good rule of thumb is to save 20 percent of your income, but again, feel free to start small), set up an automatic transfer at the beginning of the month so that your savings are put aside first.

    Keep Your Goals Realistic

    Saving money often means making sacrifices, and it can wear you down after a while. If your self-imposed restrictions on spending are too draconian, you may be setting yourself up for failure. It’s like going on a really strict diet; if you deny yourself for too long, you may snap and undo all your good work.

    So set up an occasional reward for yourself. For instance, if you have a long-term goal of saving $10,000, and that means giving up that daily latte and your monthly happy hour with friends, set mini-goals along the way. Once you hit $2,000, reward yourself with a latte, or visit happy hour for the first round of drinks.

    There’s no reason saving money has to be a completely miserable experience, and by giving yourself small rewards, you’ll reinforce the idea that you’re doing something that will, quite literally, pay off in the end.