There isn't really a way around it: Saving money is crucial to meeting your long-term goals. But knowing that doesn't necessarily make your job any easier. Even if you have the best of intentions, it's easy to get off track.
If you've dumped your savings strategy time and time again, the following three tips might be just the thing you need to finally make a long-term commitment.
1. Create rewards for yourself
Saving involves delayed gratification, and the longer you have to wait to reap your reward, the more difficult it can be to stick with it. So why not set up smaller rewards along the way?
These don't have to be related to spending money. For example, if your goal was to have $1,000 in your savings account, you could reward yourself by preparing a favorite dessert or doing a fun activity with friends every time you get $100 closer to your goal.
You decide which rewards will motivate you the most. Then, map out the milestones along the way when you'll earn them. If you need help sticking to your plan, enlist a friend to help you track your progress and celebrate your wins with you.
2. Create a savings challenge
If little rewards aren't enough for you, a savings challenge might work better. There are a lot of these, so you can choose the one that best fits your budget and goals. For example, you could spend a month not buying anything other than essentials or you could try to save $2,023 in 2023.
Gamifying your savings like this can give you additional motivation to keep going. Research from Commonwealth found that gamifying savings led users to save 25% more frequently than those who didn't use this approach.
This is another strategy you could bring a partner into if you wanted to. If you're saving on your own, you could share your progress updates with them. Or you could compete in a head-to-head challenge to see which of you could save more over a set period of time.
3. Try a budgeting app
Budgeting used to require some sort of spreadsheet and a lot of math, but apps can now do a lot of the work for you. You can link them to your bank account and use them to track your spending across various categories. This can give you valuable insights into where your money is going each month and where you may want to cut back.
Some budgeting apps even come with useful savings tools, like the ability to round up every purchase to the nearest dollar. They automatically deposit the change into your bank account so you save a little with every purchase.
It can take some time to find a savings strategy that works for you, and that's OK. You might try one of the tips above to find out it's not a good fit. Don't let that discourage you. Try a few approaches until you find your perfect match.
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FAQs
Set savings goals
One of the best ways to save money is to set a goal. Start by thinking about what you might want to save for—both in the short term (one to three years) and the long term (four or more years). Then estimate how much money you'll need and how long it might take you to save it.
What is the trick to saving money? ›
Set savings goals
One of the best ways to save money is to set a goal. Start by thinking about what you might want to save for—both in the short term (one to three years) and the long term (four or more years). Then estimate how much money you'll need and how long it might take you to save it.
What are the 4 steps to saving money? ›
Let's start with your monthly budget.
- Step 1: Make a budget. A written budget maps out your income and expenses by showing where your money goes, month-to-month. ...
- Step 2: Plan your savings. That extra money can build for the future. ...
- Step 3: Manage your debt. ...
- Step 4: Invest.
5 simple steps to start saving
- Set one specific goal. Rather than socking away money into a savings account, set specific goals for your savings. ...
- Budget for savings. Just because you decide to save doesn't mean it's going to happen. ...
- Make saving automatic. ...
- Keep separate accounts. ...
- Monitor & watch it grow.
Below are six ways you can make saving money less of a chore.
- Gamify your savings plan—try a savings challenge. ...
- Partner with an accountability buddy. ...
- Build a milestone timeline with rewards along the way. ...
- Envision your savings goals and name your accounts accordingly. ...
- Find new hobbies and simple pleasures.
The rule is to split your after-tax income into three categories of spending: 50% on needs, 30% on wants, and 20% on savings. 1. This intuitive and straightforward rule can help you draw up a reasonable budget that you can stick to over time in order to meet your financial goals.
What is the 1% saving rule? ›
James' 1% spending rule (not to be confused with the 1% rule in real estate) is straightforward: If you want to spend on something — a non-necessity — that costs or exceeds 1% of your annual gross income, you must wait one day before buying. During that time, ask yourself: Do I really need this?
What is the 7 rule for savings? ›
The seven percent savings rule provides a simple yet powerful guideline—save seven percent of your gross income before any taxes or other deductions come out of your paycheck. Saving at this level can help you make continuous progress towards your financial goals through the inevitable ups and downs of life.
What is the 30 day rule? ›
The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.
What is the 10 rule for saving money? ›
The 10% rule is not an actual rule per se. It is simply an idea people leverage where you save 10% of everything you earn towards your different financial goals. For instance, towards your emergency fund, saving for retirement, or investing. It's a common rule of thumb when it comes to savings.
These seven tips may be able to help.
- Understand your current financial habits. Not sure how to start spending less? ...
- Create an effective budget and stick to it. ...
- Look for ways to reduce spending. ...
- Set financial goals for future success. ...
- Save for emergencies or major purchases. ...
- Pay down debt. ...
- Stay aware of lifestyle creep.
- 10 Simple Ways to Save Money Each Month 10 Simple Ways to Save Money Each Month. ...
- Create a Monthly Budget. ...
- Set Monthly Savings Goals. ...
- Automate Monthly Transfers to Your Savings Account. ...
- Change Your Grocery Shopping Habits. ...
- Save Money on Restaurant Spending. ...
- Cancel Unnecessary Subscriptions. ...
- Open a High-Yield Savings Account.
50 - Consider allocating no more than 50 percent of take-home pay to essential expenses. 15 - Try to save 15 percent of pretax income (including employer contributions) for retirement. 5 - Save for the unexpected by keeping 5 percent of take-home pay in short-term savings for unplanned expenses.
How can I enjoy my money? ›
The key, it seems, is to spend money in ways that bring you closer to other people.
- Spend money on experiences. ...
- Better yet, spend money on experiences you share with others. ...
- Spend money on other people. ...
- Spend money on the right people. ...
- Express your identity through spending. ...
- Think less about spending.
Lack of a measurable savings goal
Some people's savings plans consist of this: get paid, pay the bills, spend like they normally do, and save whatever's left. What if you could do things a little smarter? Saving money is just like any other goal: it's much easier to achieve it if you specify a target to reach.
How can I save $1000 fast? ›
Financial expert Dave Ramsey has a lot of ideas on the subject, and here are some of the most practical ways to save your first $1,000 quickly.
- Cancel Subscriptions. ...
- Bring Your Own Lunch. ...
- Avoid Coffee Out. ...
- Re-Sell Old Items. ...
- Shop at Cheaper Grocery Stores With Rewards Programs. ...
- Buy Generic. ...
- Join a Carpool.
One of the most popular rules, the 30:30:30:10 rule, can be applied both in terms of income planning, as well as pension planning. The income planning version says that you put 30% of your income towards day-to-day expenses, 30% towards investments, 30% for retirement savings and 10% for emergency expenses.
