We all have good intentions when it comes to saving money, right? We tell ourselves we’ll start saving once we reach a certain milestone, like when we hit a specific age, get a raise, or the kids move out.
But in reality, you’ll only start saving money when you develop healthy money habits and your future needs become more important than your current wants.
Don’t worry, it’s not as overwhelming as it sounds. With a few tweaks to your spending priorities, you’ll be on the fast track to saving money in no time.
We all know we need to save, but most people don’t save like they know they should. In fact, a report by the Federal Reserve found that about 40% of Americans surveyed would have difficulty covering a $400 emergency.(1) Why? Because they have competing goals.
A lot of times, the goal to save money isn’t a big enough priority to delay the purchase of that new smartphone, kitchen table, or TV. So, we spend our dollars away or—worse yet—go into debt to buy the latest want. That debt then becomes monthly payments that control our paychecks and our lives.
You can stop the cycle of living paycheck to paycheck with a simple secret: make a zero-based budget before the month begins. A budget is all about being intentional. It helps you create a plan to see where your money is going and how much you can save each month. It’s never too late to take control of your money!
A zero-based budget is simply when your income minus your outgo equals zero. You’re giving every dollar a name—or assigning it a job to do—before you save or spend it. And do it down to the last penny!
Start with your most important categories first. We call these the Four Walls:
Saving (and giving!) need to be a line item in your budget along with the Four Walls. After you’ve set aside funds for your savings and basic needs, fill in the rest of your budget with what’s left. When you plan this way, it prevents you from running out of money before you even start saving!
Making a budget is easy with our free budgeting app EveryDollar. It only takes about 10 minutes to set up your money plan! And you can even track your transactions on the go.
One of the hardest parts of budgeting is finding a few minutes each month to actually sit down and figure out your budget. Life gets busy, after all! But EveryDollar saves you time by copying your budget from the previous month. That way, all you have to do is make some minor adjustments (for that birthday gift or those travel plans) and you’re good to go!
Imagine how your life would change if you suddenly had money left in your monthly budget. What would you do with that cash over time? Beef up your emergency fund? Pay off your car? Finally take the vacation you’ve always dreamed of?
It can happen! Just take stock of your spending and identify areas where you can save. When you make a few tweaks to your expenses, you could be surprised at how much money you have left in your budget.
Monthly debt payments are the biggest obstacle to saving money. It robs you of your income! So, get rid of that debt. The fastest way to pay off debt is with the debt snowball method. This is where you pay off your debts in order from smallest to largest. It sounds intense, but it’s more about behavior change than numbers. Once your income isn’t tied up in monthly debt payments, you can finally use it to make progress toward your savings goals.
Most budgeters are shocked to find out how much they’re actually spending at the grocery store each month. Save money on groceries by planning out your meals each week and taking inventory of your pantry before you head to the store. This will help prevent you from overspending and wasting food. And think about cutting back on snacks and junk food that can send you over your budget!
Chances are, you’re paying for multiple subscriptions like Netflix, Spotify, gym memberships, trendy subscription boxes, or Amazon Prime. Cancel any subscriptions you don’t use regularly. If you really miss one, subscribe again—but only if it fits into your new budget.
In most cases, the only thing that’s better about brand-name products is the marketing. Generic medication, staple food items, cleaning supplies, and paper products cost far less than their brand-name, marked-up competitors.
It’s no secret that cable prices are continuing to rise.(2) The average monthly price for cable TV is about $106 a month—which adds up to over $1,200 a year!(3) Here’s the good news: cable isn’t the only way to watch your favorite shows these days. Cut the cord and find out how to save big with alternatives to cable like network apps and streaming services.
Save money without thinking about it. Set up your bank account to automatically transfer funds from your checking account into a savings account every month. Or, set up your direct deposit to automatically transfer 10% of each paycheck into your savings account.
When you get a work bonus, inheritance or tax refund, put it to good use. You’ll be better off using those funds to pay off your student loans or credit card balance than stashing it away. If you’re debt-free, use those extras to build up your emergency fund.
Bonus tip: If you regularly receive large tax refunds, adjust your paycheck withholding so that you bring home more money in your paycheck each month.
If you’re serious about saving money, be more mindful of your energy consumption. Simple things like taking shorter showers, fixing leaky pipes, washing your clothes in cold water, and installing dimmer switches or LED lightbulbs are easy wins. There might be an initial investment for new, more energy-efficient appliances; but if you work it into your budget, you should be able to pay cash for those improvements.
Email marketers are really good at what they do. They know the irresistible temptation of a flash sale or exclusive coupon! If you just can’t resist shopping when you see a special offer, click the unsubscribe link at the bottom of the email. You’ll be less tempted to spend and your inbox will be a lot less cluttered. It’s a win-win!
Need a tree trimmer for some weekend yard work or a handheld blender to make a batch of soup? Borrow it from a friend or neighbor instead of taking a trip to the store.
According to the Bureau of Labor Statistics, the average household spends approximately $3,154 on food outside of the home each year.(4) Buying lunch a few times a week may seem harmless in the moment, but it’s a pretty indulgent (not to mention preventable) expense!
You’ll never know unless you ask. Next time you’re getting tickets at a movie theater, museum or sporting event, ask if they have any special discounts for seniors, students, military, or AAA members.
If your employer offers a 401(k) match and you aren’t taking full advantage of it, you’re missing out big-time! Talk to your HR department to set up an account. Remember, wait until you’re debt-free (except your mortgage) and have an emergency fund of three to six months of expenses saved before you start saving for retirement.
If your monthly cell phone bill rivals your monthly grocery budget, it’s time to find ways to cut back. Save money on your cell service by getting rid of extras like costly data plans, phone insurance, and unnecessary warranties. And don’t be afraid to haggle with or completely switch your provider! It might require a little persistence and research, but the savings are worth it.
Don’t buy any nonessential items for a week—or even a month! Make it work by prepping meals with the food you already have, avoiding stores where you tend to impulse buy, and saying no to anything that isn’t a basic necessity.
Remember, saving money has to be at the top of your priorities (and the top of your budget) before you’ll gain any real traction with your goals. When you make a zero-based budget, you’re effectively saying, “I choose to put my future needs before my present wants.” It really doesn’t matter how much money you make—it matters how you spend and save the money you make.