Saving: it’s how you prepare for retirement, take your dream vacation, or have enough cash on hand to fix your AC when it goes out in the middle of the summer. But saving is a challenge for lots of people. Part of the issue for many people is that they haven’t found any good money saving strategies that work for them.
Saving money is something everyone should do, but the way we go about saving can be different for everyone. There’s no one-size-fits-all strategy – personal finance is, well… personal.
To help you find something that works, I have 15 money saving strategies to tell you about, with advice on how to effectively use them to save.
15 Money-Saving Strategies That Will Teach You How to Save Money
1. Pay yourself first
Paying yourself first is when you regularly put money in savings before you pay any other bill or do any kind of spending. You are prioritizing saving over everything else.
You can do this by taking advantage of direct deposit and splitting your paycheck so some money goes in your savings account and some into your checking account. Or you can set up automatic transfers from one account to another. Either way, the goal is to save first.
This is one of the money saving strategies used by people who have been able to successfully save a lot of money. Several advantages make paying yourself first a powerful savings technique:
- You build good savings habits. A lot of people approach saving as what’s left over after you’ve allocated money for the rest of your expenses… if this is you, you know how hard it can be to have anything left to save. But paying yourself first creates a habit where you budget for savings, instead of leaving it as an afterthought.
- You’re prioritizing yourself. To really save money, you need to teach yourself that you are the priority – not your mortgage, electric bill, dinner out, car payment, etc. You obviously need money for those things, but you and your financial future are priority #1.
- You’re better prepared for emergencies. If you had an emergency expense, like if your AC went out, how would you pay for it? If your answer involves relying on a credit card or borrowing from your retirement savings, then you’re not well prepared. Paying yourself first prevents debt and protects your future savings.
2. Keep impulse spending in check with the 30-day rule
Impulse spending is tough. I mean, just the other day I was this close to dropping $400 on a new golf club because I was convinced it would make me hit the ball better.
But then I remembered the 30-day rule. The idea is that you give yourself 30 days to think about a purchase before making it. Here’s how it works:
- See something awesome that you want right now
- Stop yourself from buying it and walk away (this is the hardest part!)
- Make a note of what you wanted to buy, how much it costs, and set a 30-day reminder on your phone or calendar
- After the 30 days is up, make the purchase if you still want it and can afford it
The magic of the 30-day rule is delayed gratification. And this is one of the most effective money saving strategies because putting time between yourself and that purchase teaches you how to manage your desire to find immediate satisfaction with your future needs.
During the 30 days, you can shop around for a better price, see if there’s a better product, or realize you already own something similar. You’re not denying yourself anything, but you might realize that you can put your money to better use.
3. Use the 24-hour rule
The 30-day rule might sound like a long time to wait, but 24 hours is often enough to curb impulse spending. Seriously, once you put something down and leave the store, you’ve managed to make it through the hardest part.
One of the most fun parts of being an adult is being able to buy what you want when you want it, but self-control is what helps you save money.
4. Save your windfalls
If you want to learn how to save a lot of money fast, start banking your windfalls. Windfalls are large, unexpected chunks of money. It could be a bonus from work, getting more back on your taxes than you expect, birthday money, inheritance, etc.
It can be tempting to splurge on yourself, and it’s okay to do a little of that, but banking the majority of a windfall is an effective strategy for saving money.
5. Have an emergency fund
An emergency fund is a pot of money you set aside to cover sudden and unexpected expenses. It can be used if your roof starts leaking, the sewer backs up, financing a major car repair, paying for a sudden medical expense, and more.
Your emergency fund will also protect you if you have your hours cut or lose your job.
So what makes this one of the best money saving strategies?
Think about how you might finance one of the above scenarios without an emergency fund. You might have to put it on a credit card or take money out of your retirement account.
Relying on a credit card means debt, and paying back your debt makes it harder to save in the future.
Pulling money from your retirement savings negates a lot of the hard work you’ve already done. More importantly, it will take more money to make up the difference, due to compound interest.
Being prepared for emergencies protects your current finances and future savings.
If you don’t have an emergency fund yet, the rule of thumb is to have 3-6 months worth of expenses set aside. Self-employed people should have more like 6-12 months saved. And if you have high-interest rate debt, you can start saving $500-$1,000, then attack your debt and get back to saving. Even a small emergency fund is better than none.
6. Stick to your budget
Budgeting is going to be on everyone’s list of money saving strategies, but the important part is sticking to a budget. Okay, that’s also the hard part.
The reason budgeting is so effective is because it gives you a plan for how you spend and save your money. You account for fixed and variable expenses, give yourself some money to have fun with, and set money aside for your future goals.
The planning part is easy, but sticking your budget takes things like:
- Giving yourself a realistic “fun money” allowance
- Making a meal plan and grocery list
- Checking your calendar to plan for birthdays, holidays, and other events that could lead to more spending
- Talking about money with your spouse or partner
- Setting up spending alerts
- Delete apps that make it easy to shop online or pay with your phone
- Using a cash budget
- Learning to say “no” to your family and friends
Read about those tips in and more in Start Sticking to a Budget | 29 Tips for Smarter Spending and More Savings.
7. Automate your savings
One of the easiest ways to save money is to automate the process as much as possible. You can (and should) do this when you pay yourself first, but you can also use savings apps to automate the process in other ways.
- Set savings triggers. Qapital is an automated savings app that lets you set different ITTT (if this, then this) triggers that put money in savings when you complete an action. For example, you can set a trigger to transfer $5 in savings every time you update your Facebook status.
- Save with a partner. The Twine app was created to help you save money with a partner. You can both set different deposit amounts and check your progress together.
- Let an app analyze your spending and save the perfect amount. Digit uses algorithms to learn how much you can save based on how much you spend every month. The app then saves the money for you.
Automated savings apps are really cool and can be one of more mindless money saving strategies you use, but pay attention to the fees. If they help you save, that’s great, but if you’re just wasting money on apps you don’t use, then you’ve defeated the purpose.
8. Take advantage of your employer’s 401(k) match
If you want to learn how to effectively save money for retirement, use this tip! A 401(k) is a tax-advantaged investment account for retirement, and if your company is offering a match, they are putting more in your retirement savings – it’s almost like free money.
Here’s how 401(k) matches work:
- You enroll in your company’s 401(k) plan
- Set up monthly contributions (there are annual limits)
- Companies use different formulas, and some match up to a certain dollar amount or a percentage of your contribution
An example is if your employer offers to match 100% on all of your contributions up to 4% of your annual salary. That means if you make $60,000 per year, your employer is willing to contribute up to $2,400 to your 401(k). If you put more than that amount in your 401(k), it will go unmatched.
A 401(k) can also lower your income taxes, and because this is money that comes off the top of your paycheck, you’re also paying yourself first.
M$M tip: One thing I highly recommend doing with your 401(k), is to track it with Personal Capital. This is a free investment and net worth tracking tool that has robust features that can help you analyze fees that are associated with your investments. Check out my full Personal Capital review to learn why I have been using it for years.
9. Save your spare change
Do you remember being a little kid and being shocked by how much money you were able to save in your piggy bank? It helped if you had a generous parent who threw some pocket change your way, but the point is the same. Spare change adds up.
There are savings and micro-investing apps that work on that model – they round up transactions from a linked debit card to the next dollar amount and save the difference.
You spend $4.68 on a latte, and the app rounds that up to $5 and sticks the $0.34 in a savings or personal investment account for you.
Acorns and Stash are two of the most popular micro-investing apps, and my editor tried them both out for a few months. You can learn how these apps work and how much she was able to save in Acorns vs. Stash | Which is Better, How Much They Cost, and Should You Use Them?
10. Rethink the way you go out to eat
Everyone knows that dining out is probably the most expensive way to eat, but we still love it and keep doing it.
One of the obvious ways to save money is to stop going out to eat, but reducing how often you eat out and changing the way you approach it can help you keep the cost down.
- Go out for lunch instead of dinner. Most restaurants offer the same or very similar dishes at lunch but for much less.
- Get your meal to-go. Doing takeout instead of eating at the restaurant helps you save money on tips, drinks, and picking it up yourself saves a delivery fee.
- Drink water. Soda, alcohol, and other beverages add up quickly and restaurants have a huge markup on them anyway – close to 600% for alcohol!
- Share your meal. My wife and I sometimes split an appetizer and meal and I’m always shocked by how much money we save. Most restaurant servings are too big for one person anyway.
- Bring your own wine. Yep, you read that correctly. Some restaurants do charge a corking fee, so call first before bringing a bottle from home, but this is one way to save money on alcohol.
- Go during happy hour. Lots of places offer happy hour or late-night specials. You might have to adjust when you go out for dinner, but you can legit save money.
11. Destroy your debt
The reality is that debt is expensive – student loans, car loans, mortgages, personal loans – you pay more when you borrow money. That’s especially true for high-interest-rate consumer debt, which can have interest rates in the range of 15% to more than 20%.
When you’re only making the minimum payment, you prolong your debt payoff and increase the amount you pay over time. That’s one reason why it’s so hard to get out of debt.
Debt prevents savings. But destroying your debt as quickly as possible increases your ability to save for the future. Read How to Pay Off Debt and start making a plan to get out of debt today.
12. Cut your expenses and bank the difference
Reducing your expenses is common advice, but what makes it a good strategy for saving money is when you immediately start banking the difference.
Here’s an example: You find a cheaper cell phone plan that lowers your bill from $70/month to $35/month. You make your lower cell phone payment every month, but also start putting the $35 difference directly in your savings account.
You can do the same thing when you cut cable, negotiate for a lower car insurance rate, cancel some of your subscription services, and more.
13. Try a no-spend challenge
No-spend challenges are a fun way to reach your monthly savings goals. The idea is that you challenge yourself to go a set number of days without spending any money. There are a few different options:
- Give yourself a cash-only allowance for extras
- Only spend money on necessities
- Spend nothing by preparing in advance for a no-spend week or month
The rules are up to you, but the goal is the same – reduce the amount of money you spend on extras so you can start saving more.
14. Get a better savings account
This is one of the money saving strategies that is a no-brainer. That’s because the average savings account offers interest rates around 0.06%, while there are high-yield savings accounts with interest rates that are 25x higher or more.
Saving at a rate of 1.5% or higher doesn’t sound like much, but it’s an easy way to amplify your savings.
Online savings accounts can offer a higher yield because they don’t have the same overhead costs that brick-and-mortar banks incur. Many of these banks also offer lower fees, no minimum account balances, and still offer nationwide ATM access.
15. Find a side hustle
Making more money is honestly my favorite money saving strategy. See, there are only so many ways to reduce your expenses, and many people have already cut as much as they possibly can. Increasing your income gives you more options.
There are lots of legit side hustles out there that can help you earn $500, $1,000, or more every month. Some of my favorites are:
- Running Facebook ads for local businesses. I started this side hustle after I quit my teaching job to run this site full time, and a few months in, I was outearning my teaching salary. This is a flexible side hustle that allows you to earn $1,000+ per month in just a few extra hours each month.
- Deliver food for DoorDash or Instacart. Food delivery services are in high demand, and you can make $15-$20/hour in your spare time.
- Teach English online. VIPKid pays tutors $14-$22/hour, and you don’t need a teaching degree or a degree in English. You do need some experience working with kids, but the application process is painless.
- Start a blog. Starting this site literally changed my life. My wife was able to retire before she was 30, we travel more than ever, and I make money doing something I really love. Blogging is a slow game (and definitely not a get-rich-quick scheme), but you can start a blog in your spare time and grow it at your own pace.
There are lots of great options out there, the goal is to find a side hustle that fits in with your life and pays well for the work you’re doing. Check out my tips for finding the right side hustle in What is a Side Hustle? (And What to Know Before Starting One).
Best money saving strategies – the final word
I have just given you 15 different money saving strategies, now it’s time to pick or two (or more!) and start putting money aside for the future.
The hard truth is that saving money is a challenge for many, many people. But the sooner you find a method that works for you, the closer you are to reaching your savings goals.
Maybe that means you’re better prepared for emergencies, traveling more, buying a new house, retiring early, whatever. The point is: make a goal, find a way to save, and get to work.