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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.


The first step to saving money is to figure out how much you spend. Keep track of all your expensesóthat 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.

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 incomeóso 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. Find more information about creating a budget.

Now that youíve made a budget, create a savings category within it. Try to put away 10ñ15 percent of your income as savings. If your expenses are so high that you canít 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. Weíve put together ideas for saving money every day as well as cutting back on your fixed monthly expenses.

Tip: Considering savings a regular expense, similar to groceries, is a great way to reinforce good savings habits.

One of the best ways to save money is to set a goal. Start by thinking of what you might want to save foróanything from a down payment for a house to a vacationóthen figure out how long it might take you to save for it. If you need help figuring out a time frame, try Bank of Americaís savings goal calculator.

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

Short-term (1ñ3 years)

Retirement*
Your childís education*
Down payment on a home or a remodeling project
*If youíre saving for retirement or your childís education, consider putting that money into an investment account such as an IRA or a 529 plan. 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.


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 goalsóitís important that planning for retirement doesnít 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 youíre going to need to replace your car in the near future, you could start putting money away for one.

If youíre saving for short-term goals, consider using these FDIC-insured deposit accounts:

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
Certificate of deposit (CD), which locks in your money at a specific interest rate for a specific period of time


Almost all banks 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 donít have to think about it and it generally reduces the temptation to spend the money instead.