How to Save Money: 11 Tips to Follow

Quick Answer

You can embrace a number of ways to save money, such as sticking to a budget, automating your savings, getting rid of unused subscriptions and memberships and paying off debt.

Woman holding paper various expense bills and plans for personal finances at her home.

"A penny saved is a penny earned" is a maxim frequently attributed to Benjamin Franklin. In other words, it's a good idea to save money, not waste it.

While saving for the future might seem overwhelming, if you start by just putting away a little on a regular basis, it may be easier than you think. You can save money by doing such things as sticking to a budget, setting up automated savings and paying off debt.

Here are 11 steps you can take to save money.

1. Stick to a Budget

Why is budgeting so critical? It can help you live within your means, achieve your financial goals, wipe out debt and put aside money for emergencies. Of course, this works only if you stick to the budget that you've set up.

Fortunately, there's no right or wrong way to create a budget, which is designed to balance how much money is coming in and how much money is going out. Two types of budgets to consider are the 50/30/20 budgeting method and zero-based budgeting. To track your income and spending (and help you stick to a budget), consider using a spreadsheet or a budgeting app.

2. Set Up Automated Savings

Automated savings are a type of "set it and forget it" approach to stashing money. When you activate the automated savings feature of, say, a high-yield savings account, you schedule regular transfers of money to your savings account from another savings account. For instance, you might automatically transfer $100 a week from a checking account to a savings account.

This method allows you to save money without needing to be proactive about it. It happens automatically, and you're soon building up savings.

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3. Cancel Unused Subscriptions

You've probably got at least one unused subscription or membership that's gobbling up money. And that money could be going toward your savings instead of toward something you're not taking advantage of.

Recurring monthly subscriptions and memberships are easy to forget, since they're normally paid automatically through your bank or credit card accounts. But if you comb through your account statements, you can highlight your recurring costs and see which ones you should ditch. These might include gym memberships, streaming subscriptions or dating apps.

4. Pay Off Debt

Paying off debt is easier said than done. But if you put your mind to it, reducing debt can supply a pile of cash that you can steer toward robust savings.

How is that possible? You're likely paying interest on at least some of your debts, such as credit cards and personal loans. For every penny in interest you're being charged, you're losing out on money that could be targeted for savings. So, the more debt you wipe out, the more money you may be able to deposit into a savings account.

There are several ways to attack debt, including using the avalanche method and the snowball method, as well as consolidating debt to make payments more manageable and ideally less expensive.

5. Try a Savings Challenge

Saving money isn't as fun as riding a rollercoaster at your favorite amusement park or snorkeling in Hawaii, but you can spice it up a bit by embarking on a savings challenge. A number of savings challenges are out there, including:

  • The 52-week challenge: The 52-week challenge is simple: You begin by depositing $1 in the first week, then $2 in the second week, $3 in the third week and so on. To maximize your 52 weeks of savings, put the money into an interest-earning account.
  • The round-up challenge: In this challenge, follow the round-up rule: Anytime you make a purchase, round up to the nearest dollar and save the rest. So, if a purchase is $32.25, you'd round up to $33 and add the 75-cent difference to your savings. Some banks and credit unions let you automate round-up savings every time you make a purchase with a debit card. In addition, some apps enable you to round up debit card purchases.
  • The no-dining-out challenge: Dining at restaurants or ordering from food delivery services can eat away at your money—to the tune of hundreds or perhaps thousands of dollars a year. So, why not adopt the no-dining-out challenge? You might begin by preparing food at home one weekend. If that goes well, then you may want to expand the challenge to weekly or even daily.

6. Resist Overspending

Do you really need that fancy new pair of running shoes or that new high-end TV? Maybe not.

As you're trying to save money, consider your spending habits and focus on your needs rather than your wants. Your needs, of course, are expenditures like rent, groceries and health care. Your wants are along the lines of an expensive dinner out, a new electric bike or a Caribbean vacation.

Credit cards can make it easy to spend on things you want but don't need. To avoid overspending, give yourself some time to ponder a big purchase or simply leave your credit cards at home when you're shopping. You might even try sticking to cash-only purchases to help curb spending.

7. Curb Travel Costs

In the summer of 2023 alone, Americans were expected to spend a record-high $214.1 billion on vacation travel, according to an Ipsos poll conducted for Allianz Partners USA. As such, there may be room to prune the cost of hotel rooms and other vacation expenses. To pare your travel tab, consider:

  • Paying for travel with credit card rewards that have piled up
  • Creating a travel budget
  • Setting aside money in a travel fund
  • Searching for discounts on purchases like airfare, hotel stays and car rentals
  • Relying on public transportation or rideshares instead of renting a car
  • Covering travel costs with cash or a debit card rather than a credit card that charges interest
  • Flying on Tuesdays, Wednesdays or Saturdays, which tend to be the cheapest days for airfare
  • Opting for a budget-stretching, close-to-home "staycation"

8. Shop Around for Insurance

You may be able to shave a considerable amount of money off your home or car insurance premium by shopping for the best deal.

The Insurance Information Institute suggests comparing insurance quotes from at least three companies when you're hunting for a home or car insurance policy. To be sure, you should look at the price. But also consider factors such as the types of coverage available and an insurer's reputation before deciding which policy to purchase.

9. Reduce Housing Costs

Housing accounted for more than one-third (33.8%) of average household spending in 2021, according to the U.S. Bureau of Labor Statistics. That makes this category a great place to hunt for savings. Among the steps you might take to trim housing costs are:

  • Downsizing to a smaller, less expensive home or apartment
  • Moving to a more affordable area
  • Looking into refinancing your mortgage to score a lower interest rate
  • Getting a roommate to split expenses
  • Cutting back on energy use to cut your utility bills
  • Increasing your homeowners insurance deductible to decrease the premium
  • Learning how to tackle DIY home repairs
  • Furnishing your home with used items instead of new items

10. Explore Refinancing

Do you have a mortgage? What about an auto loan? If the loan's current interest rate is relatively high, you might investigate whether it would make sense to refinance it and secure a lower interest rate. If you're able to score a lower interest rate, you may wind up pocketing money that otherwise would be earmarked for interest payments.

Keep in mind, though, that this strategy works only if you can snag a lower interest rate and if your credit score and your finances are in good shape. Before refinancing, be sure to explore the costs associated with getting a new loan.

11. Consider a Balance Transfer Card

A number of credit card issuers offer cards with a 0% introductory annual percentage rate (APR) for balance transfers. A balance transfer card allows you to transfer high-interest debt from an existing card to a new card and pay off the balance over a certain period (such as 15 or 21 months) without paying interest.

Keep in mind, though, that this strategy yields results only if you pay off the entire balance before the intro APR expires. Once the 0% APR period ends, the standard interest rate kicks in and you'll start paying interest on any remaining balance.

The Bottom Line

Ideally, saving money should involve several strategies, not just one. For instance, you might promise to stick to a budget, reduce your debt and resist overspending. Whatever methods you choose, saving money can put you in a better position to realize your financial goals, such as buying a home or putting away money for your kids' college education. To track how your hard work is paying off for your credit, check your credit report and credit score regularly.