How to Save Money: Simple Steps to Start Today

A savings account is a safety net that can cover unexpected expenses, like emergency medical bills or unexpected car repairs. But The Penny Hoarder’s 2025 State of Savings in America Survey found 42% of Americans don’t have $1,000 in emergency savings and only 37% keep a dedicated emergency fund at all.

If you’re new to saving, you might wonder about the best way to get started. Luckily, it’s not as overwhelming as it might seem. Even saving a few dollars each week can add up. If you’re ready to start building your emergency fund or want to save for an upcoming expense, here’s how to do it — even if you’re on a tight budget.

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How to Start Saving Money

The first step in saving money is often the hardest. But by breaking down your savings goal into more manageable chunks, you’ll notice your savings account start to grow. 

Follow these simple tips to start saving money.

Step 1: Track Your Spending

You can’t save money if you don’t know where you’re currently spending it. 

Make a budget to see where your money goes each month. Then, you can identify areas where you can cut back.

Use a simple spreadsheet or a budget app to organize your expenses into spending categories, such as:

• Housing (like your mortgage or rent payment)
• Insurance
• Utilities (like your electric, internet and phone)
• Loans
• Groceries
• Transportation or gas
• Entertainment
• Clothing
• Memberships
• Subscriptions

Step 2: Cut One High-Impact Expense

Now you know where your money’s going, it’s time to think about where you can cut back and free up money for your savings account. 

For example, can you negotiate your rent when you renew your lease? Do you qualify for a lower mortgage rate?

If you can cut one large recurring expense, you can save more money than you would by trimming several small ones. Even saving $50 a month adds up to $600 over a year.

Step 3: Automate Your Savings

There’s no easier way to grow your savings than to set up automatic transfers. You don’t have to remember to save — it just happens automatically.

You can set up automatic transfers from your checking account to your savings account through your bank. Even easier? See if your employer offers the option to split your paycheck so part of it is paid directly into your savings account, with no action on your part.

Step 4: Build a Starter Emergency Fund

Your emergency fund is exactly what it sounds like. It’s a savings account that you can use for unexpected expenses, like an emergency medical bill or a car repair.

Without an emergency fund, you might need to use a credit card or take out a loan. Even saving $1,000 can help you weather a financial emergency better.

Don’t forget to celebrate the wins — both big and small — as you work toward your goal. This can help you stay motivated as you approach and cross the finish line.

How Much Money Should You Save?

You already know that you should save money, but how much should you save?

The answer? It depends. A single person will need less savings than a family of four with a single income.

Experts recommend keeping three to six months’ worth of essential expenses in your emergency savings account. But that’s not always a reachable goal.

Start by setting a monetary goal — for example, saving $1,000. Once you reach that goal, congratulations! You’ve already built a savings habit that will be easier to keep up in the long term.

You might also use the 50/30/20 budgeting rule, which splits your monthly income into three buckets:

• 50% goes toward needs (housing, utilities, groceries)
• 30% goes toward wants (dining out, clothing purchases, subscriptions)
• 20% goes toward savings and debt repayment

If you don’t think saving 20% of your income is realistic, you can adjust the percentages to fit your needs. Even saving 5% of your monthly income consistently can be significant.

Ways to Save Money Each Month

There are many ways you can save money each month. Here are a few ideas to help pad your savings account faster.

Reduce Fixed Expenses

Fixed expenses are ones that stay the same each month. They are easy to predict — for example, you know exactly how much your mortgage or rent payment is each month. 

But fixed expenses can be hard to reduce. That doesn’t mean you can’t trim here and there, though. Here are some ideas.

• Re-shop your insurance. You’ve been loyal to the same insurance company for years. But if you shop around, you might find a better price elsewhere. This tool from The Penny Hoarder can help you shop around for car insurance. It gathers all your best options together in one place.
• Negotiate your rent. If you have a good relationship with your landlord and have been a good, reliable tenant, ask them whether they’d consider lowering your rent. It helps if you can show that you could get lower rates from other rental homes.
• Unplug unused appliances. You can often lower your electricity bill by unplugging “energy vampires,” like your phone charger, coffee machine, or laptop, that suck energy even when not in use.
• Adjust your thermostat. Another way to lower your electricity bill is to lower your thermostat by a couple of degrees in the winter, or increase it by a couple of degrees in the summer. Stock up on blankets to make sure you stay cozy.
• Refinance your loans. Are you struggling to pay off your student loans or credit card debt? Look into refinancing or consolidating your debt to get a lower monthly payment, and put the rest toward savings.
• Set up autopay. This won’t necessarily reduce your fixed expenses, but it can help you avoid late fees so you can keep more of your hard-earned money.

Cut Variable Spending

While fixed expenses stay the same from month to month, variable expenses (like entertainment, clothing, travel and dining out) change, which makes them easier to cut.

Here are a few easy ways to cut your variable spending without completely losing the joy from your life.

• Limit dining out. Bring your lunch to work rather than buying it, or invite friends over for a home-cooked meal rather than meeting at a restaurant.
• Change where you shop. If you find yourself splurging on a new outfit every month, hit the thrift or consignment store instead of buying new. Or buy your groceries in bulk to save money.
• Find free entertainment. Does your city have free summer concerts or show outdoor movies at a park? What about parks and hiking trails? Free entertainment means extra money for your savings.
• Say no to impulse purchases. If you’re getting bombarded by the same ads for viral foundation or the best pillow ever, write it down and let it simmer for 24 hours rather than buying it immediately. After you think about it, you might realize it’s an unnecessary expense.
• Cancel unused memberships. Even if you had the best intentions when you joined the gym, you’re just throwing money away if you don’t go regularly. 

Lower Bills and Subscriptions

You probably don’t think too much about your monthly bills and subscriptions — until you realize just how quickly they add up. 

Luckily, you can lower these recurring bills to prevent your hard-earned money from draining your bank account.

• Check your subscriptions. We’ve all signed up for that clothing or dog toy subscription box on a whim. If you’re paying for things you don’t use or need, it’s time to cancel them and return that money to your wallet.
• Cancel unused streaming services. There are dozens of streaming platforms out there, and it’s easy to sign up for one to watch a certain show and then forget to cancel. Check your streaming subscriptions regularly and cancel any you don’t use.
• Negotiate or switch your phone and internet bills. Can you find a cheaper phone or internet plan with another provider? If not, call your current provider and ask if they will lower your bills.
• Choose a lower-cost plan. That ad-free Hulu subscription is nice, but is it worth the extra money? Switching to a lower-cost ad-supported plan can help you keep your costs down

Grocery and Food Savings

If you regularly throw out food, you might as well be throwing your money straight into the trash.

Even if you don’t waste food, you can often find groceries cheaper elsewhere if you shop around.

Here are some tips to save money on groceries.

• Shop at a discount store. Grocery stores like Aldi and Lidl often have lower prices than Kroger or Albertsons. See what you can buy from a cheaper store to save some money on your grocery bill.
• Use coupons. Many stores have apps that let you clip digital coupons. Check the app before you head to the store to see what savings are available.
• Use cash-back apps or credit cards. Platforms like Upside, Rakuten and Fetch offer digital coupons or cash-back for uploading your receipts. Certain credit cards also offer cash back for purchases. 
• Buy generic. Substitute name-brand items for store brands whenever possible. Often, they taste the same as the more expensive variety.
• Meal-plan. Decide what you’ll make for lunch and dinner each day, and make a list of all the necessary ingredients. That way, you only buy what you need, and you’re less likely to make impulse purchases.
• Freeze leftovers. If you make too much food, don’t throw it out. Instead, freeze the leftovers so you can eat them another day. Not only can this help your food budget go further, but it also decreases your food waste.

Transportation Savings

The daily commute isn’t just a bore — it can also be a drain on your finances.

With gas prices, insurance and car maintenance, you can easily spend thousands each year on your car’s upkeep.

Here are some ways to save:

• Compare your car insurance rates annually. Get quotes from several insurers or use an agent to compare multiple quotes and find the best price. Don’t just assume your current insurer has the best rates — even if you’ve been with them for years.
• Carpool when possible. If you and your neighbor work together, try carpooling rather than driving separately. You’ll save money on gas and parking while easing congestion — and you might just make a new friend.
• Combine errands. Make a list of any errands you need to run and plan a route to hit them all in one trip.

Maintain proper tire pressure. Your car’s fuel economy decreases by 0.2% for every 1 PSI drop in tire pressure. Plus, there will be more wear and tear on your car, which means higher maintenance and repair costs.

How to Save Money Fast

Saving money takes time — but you don’t always have time to spare. If you need to save money quickly, there are several strategies that can help you reach your goal.

No-Spend Challenge

A no-spend challenge doesn’t mean you stop spending money entirely. But it does mean cutting non-essential spending for a set period. 

Try doing this challenge for a week and see how you do, then consider extending it to a month or longer.

The best way to stick to a no-spend challenge is to tell your friends and family about it. They can help you stay accountable. They might even want to join you so they can save money, too.

Sell Unused Items

Go through your home and consider what unused items you have that people would pay money for. 

That treadmill that’s currently used as a clothes rack could bring in the big bucks. And your collection of college textbooks could be worth a pretty penny if they’re in good condition.

You can sell your stuff online without even needing to leave your house.

Delay Big Purchases

Still hanging onto your trusty 2010s iPhone? You might think it’s time for an upgrade, but consider delaying your purchase unless your phone goes kaput. 

That doesn’t mean you have to hang onto the same phone forever. But delaying the purchase can help you reach your savings goal faster.

Start a Side Hustle

What unique skills do you have that people would pay money for? Perhaps you’re a computer whiz who can offer tech support to neighbors, or maybe you’re a dog whisperer with enough spare time to offer dog-walking services.
A side-hustle — even a temporary one — can boost your income and help you save faster. You might even enjoy it enough to make a full-time career switch if you become successful enough.

How to Save Money on a Tight Budget

Saving money can seem daunting if you’re living paycheck to paycheck. But it doesn’t have to be. Find a budgeting app like Cleo or Rocket Money that can track your spending and find places to save. For example, Rocket Money tracks subscriptions and helps you cancel the ones you don’t use.

Look over your budget and see where you can cut back. Can you share any streaming accounts with family members and split the cost? Are you spending more on clothes than you realize?

If your monthly bills seem high, do some research to see if you can get lower rates elsewhere for insurance or internet service. Some states have platforms where you can shop energy rates and opt for lower ones than you’re paying.

Next, look at your grocery bill. Can you use coupons to save on your essentials? Does another grocery store have lower prices? Consider where you can cut back without depriving yourself of nutrition.

Depending on where you live, you might be able to walk or bike more and drive less, saving money on gas.

Finally, if you find yourself making impulse purchases from social media ads, consider removing the apps from your phone temporarily to avoid temptation.

Even saving just $5 to $10 per week adds up to $260 to $520 per year. That’s a lot of money — especially if you’re starting from nothing.

Where to Keep Your Savings

By far, the best place to keep your savings is in a high-yield savings account (HYSA).

Most savings accounts pay interest, but traditional savings accounts’ annual percentage yields (APYs) are low. HYSAs can help grow your money faster than a traditional savings account can.

You can often find HYSAs with APYs in the 3% to 4% range. Compare that to the national deposit rate as of February 2026 — 0.39% — and you can see how a HYSA can make a difference to your savings power.

Let’s consider an example. Say you put $1,000 into a savings account and contribute an extra $100 per month. With no interest, you’d have $2,200 after a year. But here’s how much you’d have in a traditional savings account and an HYSA:

• Traditional savings account with 0.39% APY: $2,204
• High-yield savings account with 3.5% APY: $2,235

In the long term, keeping your money in an HYSA can pay off big time. Look for accounts with no monthly fees and federal insurance protection. Rates change, so verify current terms before opening an account.

Common Mistakes That Make Saving Harder

If you’re struggling to save money, you’re not alone. Here are the most common mistakes that can make it harder to reach your savings goals.

• Skipping automatic transfers. If you need to remember to transfer money to savings each month, you’re more likely to forget altogether. Setting up automatic transfers increases your chances of success.
• Trying to cut everything at once. Going cold-turkey on anything can sabotage your progress — that’s true of any strict habit, whether it’s cutting spending to save money or sticking to a new diet.
• Ignoring emergency savings. A savings account can stop you from relying on credit for emergency expenses. If you don’t already have an emergency fund, make that your top savings priority.
• Forgetting subscription renewals. It’s easy to forget about that clothing subscription you signed up for on a whim — especially if you pay annually. Review your subscriptions regularly and cancel the ones you don’t need before they auto-renew.
• Setting unrealistic goals. A goal to save 50% of your take-home pay might be impossible to reach. Set a budget to determine how much you can realistically save, rather than making lofty, unrealistic goals.
• Relying on credit for emergencies. Credit cards can be helpful tools, but overrelying on them can set you on the path to a debt spiral that’s difficult to escape. That’s why your emergency fund is so essential — without one, you’re more likely to become overreliant on credit.

Avoiding these pitfalls can make saving feel more manageable and help you reach your goals faster.

FAQs About Saving Money

Final Verdict

Saving money doesn’t have to be stressful. Make a realistic savings goal and find the right method that works for you.

Even small monthly changes to your spending habits can equal thousands of dollars over a year — and more financial stability over time.

Ohio-based contributor Catherine Hiles writes about finance, cars, pet ownership and parenting for The Penny Hoarder.

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