Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals. This step-by-step guide to money-saving habits can help you develop a realistic savings plan.

i. Record your expenses

The first step to saving money is to figure out how much you spend. Keep track of all your expenses—that means every coffee, newspaper and snack you buy. Ideally, you can account for every penny. Once you have your data, organize the numbers by categories, such as gas, groceries and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this. If you bank online, you may be able to filter your statements to easily break down your spending.

ii. Make a budget

Once you have an idea of what you spend in a month, you can begin to organize your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance.

iii. Plan on saving money

Now that you’ve made a budget, create a savings category within it. Try to put away 10–15 percent of your income as savings. If your expenses are so high that you can’t save that much, it might be time to cut back. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out.. Tip: Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.

iv. Choose something to save for

One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—anything from a down payment for a house to a vacation—then figure out how long it might take you to save for it. 

Here are some examples of short- and long-term goals:

Short-term (1–3 years)

• Emergency fund (3–9 months of living expenses, just in case)

• Vacation

• Down payment for a car

Long-term (4+ years)

• Retirement*

• Your child’s education*

• Down payment on a home or a remodeling project *

If you’re saving for retirement or your child’s education, consider putting that money into an investment accounts . While investments come with risks and can lose money, they also create the opportunity for compounded returns if you plan for an event far in advance. More details in step No. 6 below.

v. Decide on your priorities

After your expenses and income, your goals are likely to have the biggest impact on how you save money. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Prioritizing goals can give you a clear idea of where to start saving. For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one.

vi. Pick the right tools If you’re saving for short-term goals, considers:

• Regular savings account

• High-yield savings account, which often has a higher interest rate than a regular savings account

• Bank money market savings account, which has a variable interest rate that could increase as your savings grow

• Securities such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer.

vii. Make saving automatic

Almost all Saccos  offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money to, or even split your direct deposit between your checking and savings accounts. Automated transfers are a great way to save money since you don’t have to think about it and it generally reduces the temptation to spend the money instead.

viii. Watch your savings grow

Check your progress every month. Not only will this help you stick to your personal savings plan but it also helps you identify and fix problems quickly. These simple ways to save money may even inspire you to save more and hit your goals faster.

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