The good news is that anyone can become a better saver. With the right approach and a few simple changes, small steps can lead to meaningful progress.
Let’s take a look at some common savings challenges as well as some practical strategies you can use to build stronger savings habits.
Why Saving Money Matters
Many people struggle to save money, often for the same reasons. Living paycheck to paycheck, dealing with unexpected bills, lacking clear goals, and overspending can all make saving feel out of reach. These challenges are common, but they don’t have to stop you.
Strong savings habits help you handle everyday challenges and plan for what’s ahead. They can help you:
- Cover emergencies without relying on credit
- Reach goals like buying a home, taking a trip, or paying for school
- Feel more secure when life changes unexpectedly
How Can I Start Saving Money?
You don’t need a complicated plan to get started. In fact, simple and consistent steps are often the most effective. Here are six beginner friendly strategies to help you build better savings habits.
1. Automate Your Savings. One of the easiest ways to save money is to make it automatic.
Consider setting up your direct deposit to send part of each paycheck directly into your savings account. You can also schedule automatic transfers from checking to savings. When saving happens automatically, you don’t have to think about it. That makes you less likely to spend the money before you save it.
2. Track Your Spending. Tracking your spending helps you understand where your money goes. It can reveal unused or unneeded subscriptions, small purchases that add up, or patterns of overspending. Budgeting apps and online banking tools make this easier than ever. When you know how you’re spending, you can make better choices about saving.
3. Set Short-Term and Long-Term Savings Goals. Clear goals make saving easier because you know what you’re working toward.
Short-term goals (within a year) might include:
- A $500 emergency cushion
- Holiday gifts
- Car repairs
Long-term goals (several years out) could include:
- A down payment on a home
- College savings
- Retirement
When your goals are specific and realistic, it’s easier to stay motivated and track your progress.
4. Build an Emergency Fund. An emergency fund protects your budget when unexpected expenses come up. Start by aiming to save one month of essential expenses. As your habits build, work toward saving three to six months’ worth of expenses. Saving just $20 a week adds up to more than $1,000 in a year. What matters most is consistency, not the amount you start with.
5. Choose the Right Savings Options. Not all bank accounts work the same way. The right account can support your goals, encourage consistent saving, and make it easier to stick with good habits over time. Here are some options to consider:
- Online Savings Accounts: An online savings account is designed to be managed digitally rather than in-branch. Because they don’t require in-person service, banks can reduce branch staffing costs and pass those savings along to you in the form of a higher interest rate. Some banks do charge a small fee for in-branch transactions on these accounts, but by using mobile and ATM deposits as well as scheduled transfers, you can meet your savings goals without incurring additional costs.
- Prize-Linked Savings Accounts: Prize-linked savings accounts are designed to make saving more engaging. Account holders are entered into drawings for cash prizes based on how much they save. By providing gamified incentives, these accounts can be helpful for those who are just getting started with saving or who need extra motivation to stay consistent. They reward saving, not risk-taking.
- Club Savings Accounts: Club savings accounts help you save for specific goals, such as holidays, vacations, or annual expenses. You typically make regular deposits over a set period of time, then access the funds when the club term ends. These accounts work well for planned expenses and can help turn saving into a routine.
- Certificates of Deposit (CDs): CDs allow you to set aside money for a fixed period of time, such as six months or two years. During this period of time, you agree to not withdraw your funds (doing so will typically earn you an early withdrawal penalty fee) in exchange for a predictable, guaranteed interest rate. CDs can be a good option for money you know you won’t need right away, or money you want to keep separate from everyday spending.
- Money Market Accounts: Money market accounts combine features of savings and checking accounts. They often offer competitive interest rates along with limited check writing or debit card access. These accounts can be useful if you want your savings to remain accessible while still earning more than a traditional savings account.
Choosing the right savings account boils down to finding an option that fits your lifestyle, supports your goals, and helps you stay consistent.
6. Start Small and Build Over Time. Saving doesn’t mean giving up everything you enjoy. Small changes can add up quickly. You might:
- Bring lunch from home instead of eating out
- Cancel subscriptions you no longer use
- Put your tax refund or work bonus into savings
- After paying your bills each month, move any extra money from checking into savings
These simple steps can grow into meaningful savings in the long run.
Start Building Better Savings Habits Today
Saving money doesn’t happen overnight, but every step you take helps build confidence and financial security. Whether you automate your savings, track spending, or open a new bank account, simple actions can lead to long-term results.
BankFive offers a variety of savings options designed to help you save at your own pace. Choose from online savings accounts, club accounts, prize-linked savings accounts, CDs, money market accounts, and more! Our team is here to answer questions and help you find the account that fits your goals—today and in the future.