7 simple ways to start saving money

Let’s dive in.

Tip #1: Track your expenses

Before you can start improving your finances, you’ve got to know where you stand. Understanding your financial position will help you figure out how to save money with your existing income and savings.

For a month or longer, track all of your expenses. Use a tool to help you record how much you’re spending and on what. A tool like Excel will help you sort this data into columns and rows. It can even calculate sums for you.

By the end of a month, you’ll want to have a complete record of what you spend on:

• Rent or mortgage
• Food
• Home upkeep
• Car expenses
• Gas and electricity bills
• Retirement savings
• Fun (movies, books, eating out, etc.)
• Miscellaneous

Add everything you spend into this log. Also, record the amount of money you have in your savings and checking accounts. You want an accurate, complete picture of your finances.

Tip #2: Choose your goals

You need to know how much you need to save before you can commit to it.

Write down key items you’d like to save for. Identify short-term and long-term goals but focus on long-term goals. Long-term goals can include things like:

• Student or credit card debt
• An emergency fund
• Education
• Retirement
• A house
• A car

Since you’re just starting (or restarting) your savings journey, try to focus on one long-term goal. Figure out the cost of that goal, then determine when you want to achieve it. This calculation will help you figure out how much you need to save. For example, if you want a $10,000 used car in 12 months, you need to save $835 each month.

With a goal in mind, it will be easier to picture—and achieve—success.

Tip #3: Eliminate unnecessary expenses

With your goal in mind, you can return to your recorded expenses and decide how to save money. First, you’ll want to get rid of excess costs.

After reviewing your expenses in Excel or another tool, you’ll likely notice that you’re spending money on a few things you don’t need. Consider canceling or reducing:

• Unused gym memberships. Cancel your gym membership if you don’t go to the gym. Jog around your neighborhood or hike local trails instead.
• Redundant subscription services. You may love your TV subscription services. But do you need three of them? Choose one that you (and your friends) use the most.
• Extensive restaurant outings. Dinners out can drain your finances in a flash. Eat at cheaper options or cook at home more.
• Frequent events. You may love concerts and movies, but your wallet doesn’t. Consider attending free local events or hosting potluck dinners.
• Unnecessary shopping trips. You might tend to spend a lot on clothes, shoes, or other fun buys. Wait a few days before making big purchases.

Cut what you know you don’t need, but don’t deprive yourself of something you love. Include money in your budget for special treats. If your budget is too strict, you won’t stick to it.

Tip #4: Create and stick to your budget

Now, you can create your budget. When you’re figuring out how to save money, a budget is one of your best tools.

Record your budget in a clear format, so it’s easy to refer to throughout the month. If you used Excel to track your finances in the first place, that’s a great choice to use again.

To create your budget, you’ll want to:

1. Allocate money for monthly bills. These will include essential items like your rent or mortgage, water and electricity, and car payments.
2. Add money for your meals. This budget might include both groceries and dining out.
3. Set aside money for your savings. Use the goal you set to calculate how much you need to save each month.
4. Dedicate the rest of your income to extras. Feel free to spend the rest of your money however you’d like. When recording extra costs throughout the month, you can divide them into sections, or keep them together in a “misc.” category.

Once you create your budget, review it throughout the month. Track your spending and ensure each purchase is within the budget. However, you can be flexible. If you don’t spend much on meals for one month, you should feel free to reward yourself and spend that money on a treat.

Tip #5: Plan meals

Meals can be a big drain on your budget. This is especially the case if you don’t use grocery lists. If you need to figure out how to save money within your budget, planning meals is your ticket to success.

Excel can help you outline your meal plan. Plan for snacks as well as breakfast, lunch, and dinner. Create your grocery list as you plan, adding ingredients as you review recipes.

To make the most out of meal planning, you can:

• Plan meals that use similar ingredients. If you want to cook one Thai meal, you’ll have to buy special ingredients. Then, you might have a lot of those ingredients left over. If you crave Thai food, find recipes with similar ingredients, so you don’t waste anything.
• Stock up on frozen meals. Days don’t always go like we plan. For example, you might be too tired to cook one evening. Frozen meals can sate cravings and save you from a costly last-minute meal out.
• Schedule meals out. Don’t be too strict with yourself. Plan the meals that you eat out as well as those you cook yourself.

Once you start planning meals, you’ll be shocked at how much you save by cooking at home.

Tip #6: Let your savings grow

One of the best ways to save more money is to put your saved money to work. Savings can grow by themselves.

To grow your savings, you can:

• Put unused money into your savings account. Checking accounts usually don’t earn interest. However, cash in your savings account does earn interest. If you have money saved for future expenses, put it in your savings for now.
• Open a high-yield savings account. High-yield savings accounts offer a higher amount of interest than regular savings accounts. Sometimes, they offer up to a two percent annual percentage yield (APY) on your savings. (Most savings accounts only offer around 0.06%.) Even with this high return, they are safe. You cannot lose money in a reputable high-yield savings account.
• Invest your money. The stock market can be unpredictable in the short term. Plus, when you’re just learning how to save money, it can seem intimidating. However, in general, invested money tends to grow. Consider investing your money in a retirement account or other account. If you’re nervous about it, investments like bonds are a slow, sure bet.

If you’re nervous about any of these options, you might want to consult a financial advisor. An advisor can help you determine the best way to increase your wealth. (They can also offer personal tips about how to save money in general.)

Tip #7: Automate where you can

It’s hard to keep track of paying bills and adding money into your retirement account. So, don’t.

Many online banking and investment accounts allow you to automate your financial processes. For example, you can set your accounts to automatically:

• Pay off your credit card each month
• Add a certain amount of your income to retirement investments
• Pay your rent, electricity, Wi-Fi, and other bills

Automating these financial tasks can help you save money. For example, paying off your credit card can improve your credit score. (A high credit score has financial benefits.) Paying bills automatically prevents late fees. Adding money to your retirement accounts automatically ensures you remember to do it.

With a few automations in place, you’ll be primed to make the most of your savings.