How to Start Your Savings Journey: Spend Less, Save More, and Live Better

Saving money is one of the most important financial habits to get into, but it can feel impossible when you don’t know where to start. The key to how to save money is to manage your spending and develop a savings habit that supports your long term goals. Whether you want to build an emergency fund, save for a big purchase or just live a more financially safe life, you can start today with simple steps.

In this guide, we’ll show you how to start your savings journey by spending less, saving more, and ultimately living better.

Why Saving is Important

Before we get to the how, we need to understand the why. Knowing the benefits of saving will keep you motivated. Saving is more than just a bigger bank account, it’s financial freedom and less stress in your life.

Emergency Fund

One of the main reasons to start saving is to have a safety net. Emergencies are unexpected and having a financial buffer will prevent stress in tough times. For example, if medical emergency happens, having an emergency fund means you won’t have to use credit cards or loans. If you save $50 a week you’ll have $2,600 in a year which can cover many emergencies without disrupting your daily finances.

Achieving Financial Goals

Saving money allows you to work towards your life goals. Whether it’s buying a home, taking a dream holiday or retiring early, savings give you the financial flexibility to achieve these milestones. Without savings, big purchases or investments seem out of reach.

Financial Freedom

When you have savings you are less dependent on external help, such as loans or payday loans. You can make financial decisions on your own terms, debt free and not having to borrow from others.

Imagine being able to quit a job you hate without worrying about how you’ll pay your bills. Financial freedom means you can make life choices based on what you want not what you need.

Step 1: Get to Know Your Spending

The first step to saving money is to know where your money is going. If you don’t have a clue where your money is going, you can’t save effectively. Many people are shocked by how much they spend on little things—like daily coffee or impulse buys—without even realizing it.

How to Get to Know Your Spending:

Tracking your spending means documenting every single dollar you spend. This might seem boring at first but it’s a vital part of finding where you can cut back.

• Budgeting Apps: Free apps like Mint or YNAB (You Need a Budget) will track and categorize your spending for you, so you can see where your money is going.
• Manual Tracking: Some people prefer to write down each transaction in a spreadsheet. The advantage of this method is that it makes you aware of every single penny you spend.
• Categorize Your Spending: Break your spending into categories like housing, food, transportation and entertainment.

Step 2: Set Clear, Specific Savings Goals

Saving money is easier when you have specific goals. For example, “I want to save more” don’t give you a target to work towards. Instead, your goals should be measurable and time-bound, so you can track progress and stay motivated.

How to Set Effective Savings Goals:

• Be Specific: A specific goal might be “I want to save $3,000 for a new laptop in the next 12 months.” This gives you a target and a deadline.
• Break It Down: Big goals can feel overwhelming. Break them into smaller pieces. For example, if you need to save $3,000 in 12 months, that’s $250 per month, or about $58 per week. Now it seems doable.
• Prioritize Your Goals: You have more than one financial goal—retirement, emergency fund, travel, and home down payment. Prioritize based on urgency and importance. For example, building an emergency fund might take priority over saving for a vacation.

Step 3: Create a Real Budget

A budget is the base of your savings plan. It helps you direct your income towards necessary expenses and leave room for savings. Further, it gives you control over your money and makes sure you’re spending on what matters most.

Popular Budgeting Methods:

• 50/30/20 Rule: The 50/30/20 rule is a well known budgeting rule where 50% of your income goes to needs (housing, groceries, utilities), 30% to wants (dining out, entertainment) and 20% to savings and debt. This simple rule helps you manage your spending while still saving.
• Zero-Based Budgeting: In this method, every dollar of your income has a job, whether it’s for bills, savings or entertainment. This method makes sure you’re using every dollar intentionally, with no “leftover” money that can disappear due to impulse spending.
• Pay Yourself First: This method prioritizes savings by automatically transferring a percentage of your income into your savings account before you spend anything else.

Step 4: Cut Back on Unnecessary Spending

Unnecessary expenses add up fast. Cutting back in areas where you’re overspending can free up more money for savings. The trick is to find savings opportunities that don’t feel like sacrifices. You want to reduce costs without sacrificing your quality of life.

Where to Cut Back:

• Subscriptions: People forget about subscription services they no longer use. Review your credit card statements and cancel any unnecessary or unused subscriptions.
• Dining Out: Restaurant meals and take-out can suck your wallet dry. Cooking at home is not only cheaper but healthier.
• Impulse Buys: Don’t buy things on a whim. Implement a 24 hour rule—if you see something you want to buy, wait 24 hours before buying. This will prevent impulsive spending.

Step 5: Automate Your Savings

One of the easiest ways to save consistently is to automate it. Automating your savings means you don’t have to think about it—money is set aside before you even know it.

How to Automate Savings:

• Auto Transfers: Set up an auto transfer from your checking to your savings account every payday. So you don’t even see the money.
• Round-Up Apps: Apps like Acorns or Qapital round up your purchases to the nearest dollar and put the change into a savings or investment account.

Step 6: Increase Your Income

While cutting expenses is important, there’s only so much you can cut. Increasing your income can speed up your savings and give you more financial flexibility.

How to Boost Your Income:

• Freelancing or Side Jobs: Upwork or Fiverr have freelance opportunities in writing, design and other fields. These gigs can be extra income outside your regular job.
• Sell Unwanted Items: Sell items you no longer use on eBay, Facebook Marketplace or Craigslist and get some extra cash.
• Ask for a Raise: If you’re killing it at your current job, it’s time to ask for a raise. Prepare a case for why you deserve a raise and this extra income can go towards savings.

Step 7: Review and Adjust Regularly

As life changes so do your finances. Periodically reviewing and adjusting your savings plan is key to staying on track. This could mean increasing your savings goals as your income grows or adjusting your budget to fit new expenses.

Reviewing Your Progress:

• Monthly Check-ins: At the end of each month compare your actual spending and saving to your budgeted amounts. Are you on track? If not, why? Identify the problem areas and make changes.
• Celebrate Milestones: When you hit big savings milestones reward yourself in a way that doesn’t derail your progress.
• Adjust as Needed: As your financial situation changes—whether you get a raise, new expenses or hit a savings goal—adjust your budget and goals accordingly.

Now go save! 😊

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Recommended Articles

This article has been a guide to how to start your savings journey. You may also have a look at the following articles for gaining further knowledge in saving money.

• • How to Save Money: 8 Simple and Proven Ways That Work
  • 10 Everyday Items You Should Stop Buying to Save Big Money!
  • 8 Simple Ways to Cut Your Expenses by 30%