Experts Explain How To Save Money Realistically

Want to boost your bank account? These money saving tips will put you on the fast track.

July 28, 2018
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The struggle to save money is real.

With regular monthly responsibilities (rent, mortgage, car insurance, health insurance, cell service, and more) along with fun expenditures like your monthly yoga pass or happy hours with co-workers, expenses add up fast.

Fortunately, there are concrete changes you can make to your routine to help you save more money every month without completely killing your lifestyle.

Whether you’re saving up for a down payment, dream vacation, retirement, or emergency fund, we’re sharing the best ways to save more money every month—and how to stick to your plan for the long run.

Money Saving Tip #1: Shift your money mindset.

Our own beliefs about money and the beliefs of those around us impact our actions regarding money. “You have to be intentional with what you allow into your environment: what information you’re consuming and what you’re exposing yourself to when it comes to money,” says Amanda Abella, founder and CEO of Make Money Your Honey.

What influenced you as a kid and throughout your lifetime makes a difference. Do you believe you can save a lot of money? Or do you believe that you’ll always be scraping by?

Before you can make a money-saving transformation, you have to truly believe it’s possible to accumulate wealth. “If there’s a subconscious belief that you can’t do it, you’ll sabotage yourself,” explains Abella. “People aren’t accustomed to saying what they want. But you have to allow yourself to dream in order to make your savings goals a reality.”

That’s why Abella encourages people to seek out information on wealth consciousness and money mindset. From reading books like Think and Grow Rich by Napoleon Hill to listening to financial podcasts like Jamila Souffrant’s Journey to Launch, you can mentally condition yourself to believe wealth and financial stability are possible for you.

“People aren’t accustomed to saying what they want. But you have to allow yourself to dream in order to make your savings goals a reality.”

—Amanda Abella of Make Money Your Honey

Souffrant, a certified financial education instructor, blogger, podcast host, and money coach, says that shifting your mindset to “I’m going to save first, then spend what’s left” (instead of the other way around) is foundational and essential.

Money Saving Tip #2: Yes, you gotta have a budget.

If you don’t know what you’re spending compared to what you’re making, it’s difficult to make any financial progress. “A budget or spending plan is helpful because it gives you an inventory of your habits: what you spend on and where the leaks in your budget are,” explains Souffrant.  

The amount you spend per month on lattes or grocery shopping remains a mystery if you don’t track it. Luckily, you can make a budget retroactively. On a piece of paper, in a spreadsheet, or with an app, record your financial activity for the last two or three months, recommends Souffrant. Look at your credit card statements, checking accounts, and bank accounts to determine what you spend in each category. After you have this baseline, continue to track what you’re spending and where the money is going. Review each month’s budget to see where you can make changes.

“Look for repetitive patterns,” says Tanya Ince, PhD, a money coach and business consultant. “Maybe you have a monthly membership that could be canceled or downgraded.”

Ince teases: “I know coffee is important, but even $2 a day equals more than $700 a year.”

Money Saving Tip #3: Design crystal-clear goals.

“I knew that in order to start saving, I had to get clear on my ‘why,’” explains Abella. “I wanted to live by the water and run my own business. I knew it was going to require money.”

By taking time to determine her goals and how she wanted to live, she was able to calculate how much money she needed. From there, she reverse engineered her budget—knowing exactly how much she had to save.

So how can you get clear on what you want? “Identify your goal and make it specific, measurable, and timed,” encourages Ince. If your goal is to vacation to the Greek islands within the next year, estimate the total cost. “With a clear goal like this, you understand how much to save and how long you have to save that money.”

Ince suggests creating a mental or, better yet, a physical picture of your goal. Print a photo of the car you want or your dream vacation destination and put it on your fridge or computer monitor. That constant visual reminder will help keep you on track.

But quality is far better than quantity when it comes to financial goals. “If we have too many competing goals and desires, we become overwhelmed and make poor financial decisions,” explains Ince.

That’s why it’s important to pick one or two goals that are top priority. Is it a trip to Vegas or a down payment on a house? If it’s important to save for a house, you may have to forgo the trip (but don’t worry—you could always staycation as a cheaper alternative). “Some sacrifices will need to be made,” says Souffrant. “There might be times when you’ll need to cut back on things that don’t matter as much.”

Money Saving Tip #4: Automate, automate, automate.

Have you ever thought to yourself “I’ll put money in an account later” but it never happens?

Don’t worry, we’ve all been there.

“Your savings should be automatic. Ideally, they should be deducted before you see your paycheck and taxes,” says Souffrant. Many employers offer options to automatically deposit money into different accounts, including savings accounts and retirement accounts.

If your employer doesn’t offer multiple direct deposits, use an app to automate your savings. “It’s easy to start saving using robo-advisors and automatic savings apps, like Acorns or Stash,” explains Ince. “You can choose the right portfolio for you and the amount to save per month. Or choose an option to invest your leftover change from each transaction.”

When your savings are automatic, you don’t have to think about it. Your saving plan is on autopilot. It’s one less decision to make.

Money Saving Tip #5: Start small—and be consistent.

“Research shows that people increase their amount of savings over time. The hardest thing is to start. So, start small and save regularly,” encourages Ince.

Souffrant admits that the delayed gratification of saving is tough. “Many people say, ‘I work hard. I deserve this. Life is short, and I can’t take my money with me.’” But it’s not about whether you deserve something. It’s about remembering that the time is going to pass anyway. If you save small amounts, you can still enjoy life. “Saving money shouldn’t be a complete deprivation; it’s about being smart about the future,” Souffrant says.

A long-term goal like buying a house or traveling internationally can seem far away. But if you save consistently over time, you will get there. Souffrant explains: “It’s kind of like going to the gym once. You won’t see a flat tummy right away.” But if you save for even five weeks, you’ll see the progress. “Stick with it, and your future self will thank you.”

“Make a commitment to increase your savings by 1 percent each year,” Ince suggests. “Time works in your favor, and it really makes sense to start early.”

Money Saving Tip #6: Identify the best places for your money.

Dropping your money into a savings account isn’t always the most lucrative option.

Where you put your money depends on what you need it for, explains Souffrant. “Everyone needs an emergency fund, which should be easily accessible funds in a savings account.” Experts recommend three to six months of living expenses be stowed away in case of a job loss or unexpected bills. Rather than putting those charges on credit cards with high interest rates, you’re accessing your own cash.

And emergency funds aren’t just to prepare for negative circumstances. “That extra money also allows you to take advantage of an unexpected opportunity, like friends taking a trip or a training class that will improve your chances in the job market,” says Abella.

In addition to easily accessed cash, you’ll want to consider funds for long-term gain, like a retirement or investment fund. “If you’re saving for something that’s not a short-term goal, consider a mutual fund, IRA, or retirement account,” explains Ince. You’ll reap more reward, like an 8 percent compounding return on an investment, over the 1 to 3 percent interest you might see in a savings account.

“The longer we wait, the more money we lose. The power of time and accumulation is huge. The difference is in hundreds of thousands of dollars.”

—Tanya Ince, PhD, money coach and business consultant

“Remember: Investing in stocks, mutual funds, or index funds [is] riskier but offers a much higher return over time than a savings account. So don’t invest money you need in the near term,” says Souffrant.

Abella recommends opening different saving accounts with labeled names that represent your goals: a house down payment, a trip to Thailand. “Every time you log in, you see the specific goal and what you’re working toward.”

Money Saving Tip #7: Maximize your retirement matching.

“Make contributions to your retirement plan—at least enough to maximize how much is matched by your employer,” encourages Ince. At that point, it’s basically free money.

If you have access to a 401(k) or 403(b) through your place of employment, you’ll have different options for what you can choose to invest in, says Souffrant. “Call your human resources department or plan provider to understand where your money is going.” Compare fees and average return rates to maximize growth in your retirement accounts.

Money Saving Tip #8: Consider additional income streams.

Saving more money isn’t just about limiting your spending. “We either need to increase our income or cut down on spending or both,” Ince remarks.

To add income, ask for a raise, volunteer for more hours, or take on a part-time job or side hustle. “For those without a large gap between spending and income, there isn’t much money to save. In these cases, focusing on increasing income is the best strategy.”

Abella agrees, saying that it’s important to have your money coming from different sources. Whether it’s freelancing on the side, becoming a social media influencer, waiting tables, or selling items you no longer need, you’ll be in a position for setting aside more money. “If you pick up a side gig, make sure to save that money and live off of your normal income,” reminds Abella.

Money Saving Tip #9: Seek accountability.

As with changing any habit, follow-through is where many people get stuck. Finding someone or a group to hold you accountable can make all the difference. “When we state our goals verbally, we tend to stick to them more than if we don’t,” says Ince.

“Get a close friend on board with you. Make it fun and update each other every week,” says Souffrant. When someone is supporting your journey and goals, you’re more likely to follow through.

Don’t have folks in your life who want to save money like you do? “Listen to podcasts, follow people on social media who are on the same journey, and read inspirational material to keep you focused and motivated,” Souffrant suggests. If the people around you aren’t changing, connect with online groups and resources who will help motivate you.

Money Saving Tip #10: Begin now.

“The longer we wait, the more money we lose. The power of time and accumulation is huge. The difference is in hundreds of thousands of dollars,” says Ince. If you start saving now, your interest doesn’t just accumulate on the initial amount but on the interest itself.

Ince provides an example: If you start saving $300 a month at age 25 and you do it continually (consistency is key), by the age of 65, you’ll have accumulated $1 million (assuming an 8 percent interest rate). If you wait 10 years and start at age 35, saving the same amount monthly with the same interest, you’ll only have $450,000 at 65. If you start at 45, the amount reduces to $178,000. At 55, it would only be $56,000.

But don’t be discouraged if you’re getting a later start. “Starting now is always the best choice,” says Ince. You will accumulate far more wealth by starting to save now than if you begin in 10 years—so it’s certainly better late than never, and better now than later!

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