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7 Tips to Grow Your Savings


  • Most Americans only save around 3.5% of their disposable income, which isn’t enough to meet common savings goals.
  • To create a realistic savings plan to meet your goals, you must first understand how much you make and currently spend.
  • Having an emotional tie to your savings goal can help you stay focused and motivated to save.
  • Creating a budget, responsibly managing debt, reducing spending and increasing income are all important steps in saving more money.
  • We recommend keeping your savings separate from your disposable income in a savings account and automating savings when possible to help you meet your savings goals.

As of July 2023, the average personal savings rate for Americans was 3.5% of disposable income, according to the U.S. Bureau of Economic Analysis. At that rate, someone with $500 left after paying taxes and bills each month would save $17.50.

That’s not a whole lot, so even if you’re saving at the average rate, it might take you a long time to save enough to cover a large expense or to build a rainy day fund. What if you want enough for an emergency fund or the down payment on a mortgage? You might need to save more than the average to achieve such goals.

To help with that, we’ve created this guide for saving money, which includes big-picture detail-oriented tips for meeting your short-term and long-term savings goals and ways to stretch each paycheck for reduced spending.

Understand your finances

The first step to consistent saving is understanding your personal finances. Knowing how much you earn and how much you spend can help you determine how much to save.

Let’s start with your monthly income after taxes. If it’s a bit different each month, take the average of 6-12 months.

Next, create a list of all your expenses, such as:

There’s a good chance that you spend cash in other categories, so use the list above as a starting point.

Track your finances for a few months by recording all your expenses to get a better picture of your spending habits. Finally, subtract your income from your expenses to see what you might be able to save each month.

For example, if you make $3,500 a month and have $2,500 in bills and necessary expenses, you have $1,000 in disposable income. You could choose to save at the average rate of 3.5% and save $35 per month. Or, you could choose more wisely and save 50% or $500 a month.

Define your savings goals

While everyone might agree it’s nice to have more cash on hand, it’s important to know why you personally want to save. Tying a savings goal to a personal goal can keep you emotionally invested and focused.

Here are some hypothetical savings goals and how they might help someone stay focused.

Goal type Personal definition Emotional focus
Paying off debt Sue want to be a debt free other than her mortgage. If Sue doesn’t have any debt other than a mortgage, she doesn’t have to make as much money to cover day-to-day living. She doesn’t care for her job and wants the freedom to be able to quit and take a lower-paying job. This motivates her to save money to pay off debt.
Saving for college John’s financial goals involve saving enough to pay for college for his three kids. John doesn’t want his children to bear the same student loan burden he does. A desire for a better future for his kids drives him to save.
Building an emergency fund Megan wants an emergency fund of $2,000. Having just moved out on her own, Megan wants to be fully independent. That includes being able to cover small medical bills, car repairs or other expenses that might crop up, which is why she’s emotionally invested in building an emergency fund.
Saving for retirement Lisa is saving for retirement. Lisa saw her parents struggle with limited income during later years, so she’s determined to end up with a decent retirement account.

Create a budget

Once you understand your current financial status and have an emotional connection to why you should save, you can work on creating a budget.

Budgets can feel overwhelming, so start with short-term goals and work your way up to long-term goals. You can work with pen and paper, an Excel spreadsheet or a budgeting app.

Budgeting apps offer many benefits, including:

Manage your debt

Americans pay a massive $120 billion in credit card fees and interest alone, according to the Consumer Finance Protection Bureau.

Given that, there’s a good chance that debt is a major line item in your personal budget. If you add up your loan, credit card and other debt payments, you may be surprised to see that they add up to hundreds or even thousands of dollars each month.

Learning to manage your debt can help you reduce this budget item, so you have extra cash for your savings.

These are some proactive ways to manage your debt to support current or future savings:


Tackle high-interest debt aggressively

High interest rates mean your debt costs more over time. Paying it off sooner saves you money in the long run. Just make sure you don’t ignore other budget obligations.

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Avoid making new credit card debt

Only use credit cards for things you plan to buy with cash anyway, and pay off your statement every month to avoid interest expenses.

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Be honest about wants versus needs

It’s easy to create gray areas with wants and needs. Be realistic with yourself about what you have to buy versus what you simply want, so you can reduce how much you spend each month.

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Open a savings account

When you find money in your budget to save, don’t just keep it in your checking account.

It’s too easy to lump that money in with disposable income you’re allowed to spend, and you might find at the end of each month you didn’t save much after all.

Instead, open a savings account and keep your saved money separate. A high-yield savings account will earn you more in interest, helping your money grow slightly. This type of savings account may require a minimum deposit and balance, so it works best if you can keep a few thousand or more in the account at all times.

Automating your savings is another good way to ensure you put money aside regularly. Many employers let you split your direct deposit, so you can have a portion go straight to your savings account. You can also use automatic transfers to move a certain amount from your checking to your savings on payday or any other time that might work well for you.

Our top picks for savings accounts

Reduce your spending

If you do the math for your budget and realize that you aren’t able to save as much as you’d like, you may need to cut back on spending even more to save money.

While it does take a bit of willpower, most people can find ways to reduce spending in their everyday budgets.

Some tips for reducing your spending include:

We’ll dive more into each of these ideas below.

Reduce your grocery bills

According to the Economic Research Service, Americans spent an average of 10% of their disposable income on food, with around half of that amount split between groceries and eating out in 2021. That’s a big part of anyone’s budget, and groceries are a good place to start when you want to spend less.

Consider these tips for cutting down on your grocery bill.

Reduce your energy consumption

Cut down on utility expenses by minimizing energy consumption when possible.

Installing energy-efficient appliances can save you money in the long run, but if you don’t have the budget for those big-ticket items, you still have some options.

Some simple things you can do include turning off lights when you leave rooms and taking shorter showers to cut down on your water bill. You can also make smarter use of appliances by running the washer or dishwasher only when you have a full load.

Cut or downgrade memberships and subscriptions

Look at your recurring monthly spend and decide if these subscriptions and memberships are really necessary. For example, do you make the most of your gym membership or can you get a good workout done at home?

Streaming services, app subscriptions and other small monthly payments can add up to hundreds of dollars. Many people don’t even realize what subscriptions they’re still paying for.

An app, such as Rocket Money, is an easy way to discover subscription services you’re paying for and cancel the ones you don’t want anymore.

Switch to a better deal

For each item in your budget, consider whether you are getting the best deal currently.

Can you save money by switching insurance, internet or phone providers? Is there an option to bundle services for a deal? If the interest rate on your mortgage is high and you’ve improved your credit or earnings situation over time, can you refinance and get a better rate and lower monthly payment?

Take this thought process into day-to-day spending too. For example, always check for promo codes when shopping online and don’t assume the deal you’re looking at is the best one. Research prices at other stores or vendors and ask your preferred store if they price match.

Lifestyle habits

Even one simple habit change can make a drastic difference in how much you spend.

Here are a few more options for reducing spending through lifestyle changes:

Increase your income

If you reduce spending and still don’t have enough money left every month to save, it might be time to consider how you can increase your income.

For example, if a married couple needs more money and only one of them is currently working, they might decide that both of them should have jobs.

Some ways to increase income for an individual or an entire household include:

Invest your money

Once you find a way to save money, put it to work by investing it.

An easy way to invest is in a high-yield savings account, which lets you earn more in interest than regular savings accounts. You could also invest in mutual funds or put money into an IRA for retirement.

FAQs: How to save money

How can I save $5000 easily?

Decide on a realistic deadline and determine how much you need to save each month. If you want to save $5,000 in 2 years, you only need to set aside around $210 per month. If you can use windfalls, such as a tax refund or annual bonus, you can save even faster.

How can I save $1,000 a month?

To save $1,000 a month, you may need to substantially reduce expenses while increasing your income. Enhance your chances of meeting this savings goal by automating savings. For example, you might have $500 of every paycheck deposited into your savings account, so you’re less likely to spend it.

What happens if you save $100 a month?

You end up with $1,200 or more in 1 year, depending on whether your savings account earns interest. If you save $100 a month for 20 years in an investment that yields around 7% return, you end up with around $50,000. In other words, it adds up.

What is the 30-day rule?

It’s a rule to reduce impulse buying. Instead of buying something you see and want, wait 30 days before purchasing it. The shine of most impulse items fades by then, which means you’ll make fewer unnecessary purchases.

Sarah Stasik
Sarah Stasik Finance Expert

Sarah Stasik is an editorial writer and a Six Sigma certified project manager. She is well versed in personal finance thanks to her previous role as a Revenue Cycle Manager for a Fortune 500 healthcare company. Using her inside knowledge and expertise, Sarah often covers topics ranging from insurance and the economics of private healthcare to personal finance and small business management.

Over the past 12 years, Sarah has contributed to numerous publications in the personal and small business finance sector, including content on budgeting, bankruptcy, small business accounting, and financial tech. Her writing focuses on making complex or seemingly daunting financial topics more accessible and providing helpful, relevant resources for readers.