How to Build Your Savings

How to Build Your Savings

It's a known fact: spending is easier than saving. It's always tempting to spend money on your wants, but you probably need to save more, and this takes time, patience, and practice.

You probably have some short-term and long-term financial goals planned, like saving for an emergency, vacation, new car, down payment on a home, or planning for college and retirement.

Whether you are saving as an individual or for a family, you should aim to build an emergency fund to help you take care of any unexpected bills or cover your living expenses, which most experts agree should be able to pay for three to six months' worth of rent, utilities, groceries, and other living expenses.

Thankfully, there are some simple methods you can use to build up your savings over time -- no matter what your budget.

How To Save


Set A Goal

Having a goal to work towards is a great first step in getting started with your savings: are you saving up for a nest egg or to pay off high-interest credit card debt?

If it helps to keep you motivated, aim for short-term victories as you save, like saving a few hundred after a few months, and continue turning those into long-term victories. You may have to do a little budgeting beforehand to set a realistic goal.

Speaking of budgeting...

Calculate Your Budget

How much you are able to save greatly depends on your income and expenses. Once you've prioritized what goals you want to save for, you need to record all of your expenses -- everything from your rent and utilities to your entertainment budget and debt repayment.

Now that you know what you spend your money on, you can see what you have left after you pay your bills and where you may potentially cut corners.

Repay Your Debt

It's difficult to build your savings if you're in debt, especially when you are paying interest on it. The bulk of your extra income should be put towards paying off debt.

There are a couple of methods you can use to repay your debt, the two most popular being the debt avalanche and the debt snowball.

The debt avalanche method is ideal for individuals with lots of credit card debt and involves paying off your debt with the highest interest rate first and then moving onto the card with the next highest debt until all of the debts are paid off. This method can save you hundreds or thousands on interest over time.

The debt snowball method has you pay off your debts with the lowest balances first and work your way up to the highest balances, which lets you see results faster and keeps you motivated to continue debt repayment.

With your debt out of the way, you'll have much more money to put towards your savings.


If you want to be on a budget but still have the flexibility for additional expenses, you may want to use the 50/30/20 savings method. This breaks down your income into the following: 50% for necessities and needs (rent, groceries, etc), 30% for wants, and 20% for savings.

Depending on your income and living expenses, you might have to make some adjustments for this to work for you.

Envelope Budgeting

Envelope budgeting is great for those who want to get their spending under control and it is exactly what it sounds like: setting aside cash into separate envelopes for each of your needs, such as rent, groceries, utilities, phone, miscellaneous, and more. At the end of the month when there is no cash left, you won't be able to spend money on that item.

Zero-Based Budget

A zero-based budget is the following: your income minus all of your expenses and savings equal zero. This ensures that every expense you make must be necessary and justified.

Find The Right Financial Institution And Account

Finding the right account is key when it comes to saving. A high-yield savings account can help you build up your account to its full potential.

If you're looking for quick access to your funds, you want to keep your savings in a liquid account from a bank or credit union such as a checking, savings, or money market account (money market funds can also be found at a brokerage firm or mutual fund company). Many of these accounts will allow you to withdraw your funds from an ATM with a debit card, write a check, pay a bill online, or transfer funds.

You also want to find an account which earns some kind of interest, although this may take a little more searching.

What if I find a better account than what I already have? It's absolutely worth it to switch financial institutions if you find a better account that can help you save even more than you initially anticipated in the long run.

Many of the best savings accounts can be found online and allow you to receive much higher interest on your savings accounts than traditional banks and credit unions. Shop around to compare fees, earned interest, and additional perks.

Here are our top recommendations for savings accounts.

Always Pay Yourself First

It's always tempting to spend the money you earn, but try this simple trick to change your mindset: view your earnings as an essential bill -- just like your rent, utilities, and phone -- and pay yourself first.

Even if it comes from a side gig or tax refund, use at least a portion of that cash to add to your savings -- you'd be surprised at what you can save up over time.

Replenish Any Used Savings

Need to access your savings for an emergency or unexpected bill? Make sure that you work on getting that account back to its initial size as soon as possible. You never know when you might need it again!

Track Your Expenses

Keep track of your expenses -- every single one. By seeing a list of all of your costs (whether you track this on paper or through an app), you can find areas in which you can lower your spending and add to your savings.

Get Cash Back On Purchases

A cashback credit card can get you a percentage of cash from certain retailers, groceries, clothing, and more. As long as you use your card responsibly, pay it off in full, keep track of your spending, this is an easy way. (Just make sure you transfer your funds to your savings.)

Not using a cashback card (responsibly) is just leaving potential savings on the table.

Find A Way To Cut Back On Major Expenses

Look at your largest expenses such as insurance, mortgages, and loans and determine if there is any way you can save on them by refinancing (especially if you have student loans or a mortgage), shopping around for a different lender, or finding a carrier to bundle all of your policies (in the case of insurance).

But Don't Get Too Caught Up

Saving is great, but don't get too obsessed. You should still occasionally treat yourself and enjoy outings with friends while cutting costs and budgeting.

Plan For Major Purchases

When it's time to make a large purchase, wait for a sale before buying and make sure it's something that you truly need. Avoid making an impulse buy and wait a few days before purchasing.

Evaluate What You Are Saving For

What are your savings goals? Are you saving up for an emergency fund, large purchase, home, college, retirement -- or all of them? Depending on your goals, your methods might have to vary to build the largest savings.


If you're planning for retirement, there are several ways to save -- many with an added tax advantage:

  • 401(k) plans: These plans can include individual retirement accounts (IRAs), 401(k) plans for private-sector employees, and 403(b) plans for employees of nonprofits and schools.   A 401(k) is funded by money automatically withdrawn from your paycheck and put into your investments and/or mutual funds. In many cases, your employer will match your contributions.   You are not required to pay taxes on those funds or on any interest or dividends earned until you take it out in the future.
  • Individual Retirement Account (IRA): An IRA allows you to set aside funds for your retirement with either a traditional IRA or Roth IRA, where you can eventually withdraw the funds tax-free.


If you're planning for college, consider a 529 plan. This plan saves automatically and varies by state.

Depending on the state you reside, you may get a tax break which allows you to deduct your 529 plan contributions (up to a specific limit) on state income taxes and not require you to pay taxes on the funds you take out of your plan if you are using it for qualified education expenses.

While you won't get a tax break for your contributions, they won't tax the funds you take out if you use it for qualified expenses.

Use An App Or Automated Tool

Set up recurring transfers on your bank account or use an app that automatically transfers a set amount from your checking to your savings on a regular basis.

Collect Your Coins

When using cash, don't just dispose of the coins -- collect them and deposit it into your savings when you visit the bank. You'd be surprised at how much you save up over time!

Write Your Grocery List

And stick to it. It's easy to be tempted to purchase something not on your list, but you'll save more by buying only what you need. Use coupons, rewards points, and be sure to check what you need in your home before you head out.

Don't Be Tempted By Online Shopping

It's easy to lose track of how much you've spent when you're buying online. In addition to your purchase, you'll have to pay shipping fees.

Try to not save your personal information online to avoid making these large impulse buys.

Lower Your Electric Bill

Making an investment in a better air conditioner, programmable thermometer, blackout curtains, or another appliance for your home can lower your energy usage and your electric bill, potentially saving you hundreds each year. And if you can, consider repairing an appliance instead of buying it.

Cancel Old And Unnecessary Subscriptions

Do you have any old streaming accounts or a gym membership that you're not using? Cancel it. You may have to check all of your old subscriptions to make sure you're not paying for anything you don't need to.

Use Autopay

Missing a payment can result in late fees. You can avoid this by using autopay on all your online bills.

Free Entertainment

Of course you want to hang out with your friends and loved ones, and you shouldn't sacrifice that. You can find free entertainment or get a discount in certain cases (such as if you are a student, veteran, or senior).

Find A Side Gig Or Hobby

Finding a part-time job or hobby can contribute greatly to your savings. Some easy, at-home methods include taking online surveys (on sites such as My Points), selling your clothes (on sites such as ThredUp), and selling electronics (through the Decluttr app).

Want to learn more about how you can save and improve your finances? Look to our reputable services here.

How much money should I save each month?

This depends on your circumstances and needs, but most experts agree that you should be saving at least 20% of your monthly income. The 50/30/20 rule outlines that 50% of your budget should be essentials such as rent and food (your needs), 30% for spending (for your wants), and 20% for savings and/or debt repayment.

About The Author

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Bryan Huynh

Product Tester & Writer

Bryan Huynh, a committed Product Tester and Writer, ensures that you are well-informed, guiding you in discovering and comparing top-rated financial services, including personal loans, business loans, credit repair, and tax relief.